Tag Archives: United States

Relentless shortages, high prices hamper U.S. manufacturing

By Lucia Mutikani

WASHINGTON (Reuters) – U.S. manufacturing activity slowed in October, with all industries reporting record-long lead times for raw materials, indicating that stretched supply chains continued to constrain economic activity early in the fourth quarter.

The Institute for Supply Management (ISM) survey on Monday also hinted at some moderation in demand amid surging prices, with a measure of new orders dropping to a 16-month low. Still, demand remains strong amid depressed retail inventories, which should keep manufacturing humming.

According to the ISM, “companies and suppliers continue to deal with an unprecedented number of hurdles to meet increasing demand.” The government reported last week that the economy grew at its slowest pace in more than a year in the third quarter because of widespread shortages tied to the COVID-19 pandemic.

“Stress in U.S. supply chains isn’t abating, lending downside risk to our forecast for GDP growth in the near term and a clear upside risk to the forecast for inflation,” said Ryan Sweet, a senior economist at Moody’s Analytics in West Chester, Pennsylvania.

The ISM’s index of national factory activity slipped to a reading of 60.8 last month from 61.1 in September. A reading above 50 indicates expansion in manufacturing, which accounts for 12% of the U.S. economy. Economists polled by Reuters had forecast the index would fall to 60.5.

The ISM reported 26 commodities in short supply in October.

The economy is struggling with shortages across industries as global supply chains remain clogged. Supply constraints were worsened by a wave of coronavirus infections driven by the Delta variant over the summer, especially in Southeast Asia. Congestion at ports in China and the United States were also causing delays in getting materials to factories and retailers.

The motor vehicle industry has been the hardest hit. Transportation equipment manufacturers in the ISM survey reported they had diverted chips “to our higher-margin vehicles and stopped or limited the lower-margin vehicle production schedules.”

Other industries are also hurting. According to the ISM survey, manufacturers of computer and electronic products reported “extreme delays” and that “getting anything from China is near impossible.” Food manufacturers said “rolling blackouts in China starting to hurt shipments even more.”

Makers of electrical equipment, appliances and components said though demand continued to be strong, production continued “to be held back by supply chain issues.”

The ISM survey’s measure of supplier deliveries increased to a reading of 75.6 last month from 73.4 in September. A reading above 50% indicates slower deliveries. Economists and businesses expect supply chains could remain tight through 2022.

Longer waits for materials meant high inflation at the factory gate persisted. The survey’s measure of prices paid by manufacturers accelerated to 85.7 from a reading of 81.2 in September. Prices increased for 48 commodities last month, with only prices for wood falling.

These higher costs are being passed on to consumers which, together with surging wage growth, is raising concerns that high inflation could be more persistent rather than transitory as Federal Reserve Chair Jerome Powell has repeatedly argued. The government reported on Friday that wage growth in the third quarter was the strongest on record.

The ISM survey’s forward-looking new orders sub-index dropped to 59.8 last month, the lowest reading since June 2020, from 66.7 in September. With customer inventories remaining depressed, a rebound is likely.

Fourteen out of 18 industries reported growth in new orders, including furniture and related products, primary metals and machinery, as well as computer and electronic products manufacturers. Only the nonmetallic mineral products and plastics and rubber products industries reported a decline in orders.

U.S. stocks were mixed. The dollar slipped against a basket of currencies. U.S. Treasury yields rose.

GLIMMERS OF HOPE

Subsiding coronavirus cases could, however, encourage more consumption of services and curb demand for goods. Though a measure of unfinished work dipped last month, order backlogs remain significantly high.

Factories hired more workers, with a measure of employment increasing to a reading of 52 from 50.2 in September. Employment rose in the computer and electronic products, fabricated metal products and chemical products industries.

Though manufacturers companies said they were still struggling to find workers, there were signs improvement.

According to the ISM, “an increasing percentage of comments noted improvements regarding employment, compared to less than 5% in September.” It also noted that “an overwhelming majority of panelists indicate their companies are hiring or attempting to hire.”

This, combined with a massive improvement in consumers’ perceptions of the labor market last month, suggest employment gains picked up in October after the economy created the fewest jobs in nine months in September.

Worker shortages, however, remain a constraint. There were 10.4 million unfilled jobs at the end of August. The Labor Department is scheduled to publish its closely watched employment report for October on Friday.

A separate report from the Commerce Department on Monday showed construction spending dropped 0.5% in September amid broad declines in outlays on both private and public projects, which were partly blamed on Hurricane Ida in late August. Construction spending edged up 0.1% in August.

Still, the composition of construction spending was not as weak as the government had assumed in its advance third-quarter GDP estimate last week. That led some economists to anticipate that third-quarter GDP growth could be revised higher to about a 2.2% rate from the published 2.0% pace when the government releases its second estimate later this month.

(Reporting by Lucia Mutikani; Editing by Chizu Nomiyama and Paul Simao)

U.S. Supreme Court leans toward allowing challenge to Texas abortion law

By Andrew Chung and Lawrence Hurley

WASHINGTON (Reuters) – Conservative U.S. Supreme Court justices on Monday appeared to lean toward allowing a challenge by abortion providers to a Texas law that imposes a near-total ban on the procedure and lets private citizens enforce it, but seemed skeptical about whether President Joe Biden’s administration can do so.

The court, with a 6-3 conservative majority, heard three hours of oral arguments in separate challenges by abortion providers and the Democratic president’s administration to the Republican-backed measure considered the toughest abortion law in the United States.

Some justices signaled that existing Supreme Court precedent could accommodate the lawsuit brought by abortion providers despite the law’s novel design that makes it difficult for federal courts to block its enforcement. Instead of having state officials enforce a ban on abortions after about six weeks of pregnancy – a time when many women do not realize they are pregnant – the law lets individual citizens enforce it through lawsuits against providers.

U.S. abortion rights are hanging in the balance as the justices review the Texas law before hearing arguments on Dec. 1 over the legality of a Mississippi measure prohibiting the procedure after 15 weeks of pregnancy.

As the Texas challenges are being heard on an expedited basis, a decision potentially blocking the law could come quickly. In the challenge by abortion providers, the court on Sept. 1 declined to halt the law, with five of its six conservative justices in the majority. There were signs on Monday that some conservative justices were reconsidering their positions.

However, in the Biden administration’s challenge, conservative justices seemed skeptical about federal power to sue Texas over the law.

At issue is whether federal courts can hear lawsuits aimed at striking down the Texas law and whether the U.S. government even can sue to try to block it. If the justices keep federal courts out of the process by virtue of the law’s unique design, it could be replicated in other states and curtail abortion access in other parts of the country.

Justice Amy Coney Barrett asked clinic lawyer Marc Hearron about whether under the law’s structure the constitutional claims on the right to abortion could ever be “fully aired.” Under the Texas law, abortion providers can bring up that constitutional issue as a defense only after they have been sued.

Justice Brett Kavanaugh expressed interest in an outcome raised by liberal Justice Elena Kagan in which state court clerks would be barred from allowing lawsuits brought by private individuals seeking to enforce the law to proceed while litigation over the legality of the measure unfolds.

Kavanaugh wondered whether the court should close a loophole that he said the Texas law “exploited” in its precedents concerning when state officials can be barred from enforcing unconstitutional laws.

Kavanaugh also pondered if states could pass similar laws that could infringe other constitutional rights including gun rights. A state, for example, could allow for $1 million in damages against anyone who sells an AR-15 rifle, he said.

His tone was more skeptical during the argument over the Biden administration’s September lawsuit aimed at stopping the Texas measure, describing it as “different and irregular and unusual.”

Kagan said the law was written by “some geniuses” to evade the broad legal principle that “states are not to nullify federal constitutional rights.”

Like Kavanaugh, Kagan warned of the consequences of states passing laws that infringe upon rights, including same-sex marriage and religious liberty. If the Texas law remains, “we would live in a very different world to the world we live in today,” she said.

Conservative justices Clarence Thomas and Samuel Alito raised the question of whether anyone would have standing to sue under the Texas law without having a direct injury. Texas Solicitor General Judd Stone, defending the law, said “outrage” based on abortion opposition would be grounds to bring a lawsuit.

In the Biden administration’s challenge, conservative Chief Justice John Roberts questioned Solicitor General Elizabeth Prelogar on the “limiting principle” for the federal government suing states, noting that a different administration could also try to directly challenge states over their laws. Other conservative justices expressed similar doubts.

The Texas and Mississippi laws are among a series of Republican-backed abortion restrictions pursued at the state level in recent years. Lower courts blocked the Mississippi law.

LANDMARK RULING

Abortion opponents hope the Supreme Court will roll back abortion rights or even overturn its 1973 Roe v. Wade decision that recognized a woman’s constitutional right to terminate a pregnancy and legalized the procedure nationwide.

The Texas measure enables private citizens to sue anyone who performs or assists a woman in getting an abortion after cardiac activity is detected in the embryo. That feature made it more difficult to directly sue the state. Individual citizens can be awarded a minimum of $10,000 for bringing successful lawsuits under the law. Biden’s administration has called it a “bounty.”

The Texas law has an exception for a documented medical emergency but not for pregnancies resulting from incest or rape.

The law’s design has deterred most abortions in Texas, which is the second most populous U.S. state, behind only California, with about 29 million people.

The Texas dispute reached the Supreme Court with unusual speed. The justices agreed to take up the matter on Oct. 22, bypassing lower courts that are considering the challenges.

(Reporting by Andrew Chung and Lawrence Hurley in Washington; Additional reporting by Jan Wolfe; Editing by Will Dunham)

Biden meets with France’s Macron, calls U.S. ‘clumsy’ in submarine deal

By Jeff Mason and Michel Rose

ROME (Reuters) -President Joe Biden on Friday called U.S. government actions “clumsy” during his first meeting with French President Emmanuel Macron since a diplomatic crisis erupted last month over a U.S. security pact with Britain and Australia.

Biden used the meeting at the G20 summit in Rome, Italy, to try to turn the page on a relationship that came under strain over the U.S.-Australia security alliance, known as AUKUS, which also includes the United Kingdom. The pact effectively canceled a 2016 Australian-French submarine deal.

The U.S. decision to secretly negotiate a new agreement drew outrage from Paris. France temporarily recalled its ambassador from Washington, canceled a gala in the U.S. capital and officials accused Biden of acting like former President Donald Trump.

“I think what happened was, to use an English phrase, what we did was clumsy. It was not done with a lot of grace,” Biden said. “I was under the impression certain things had happened that hadn’t happened. And – but I want to make it clear: France is an extremely, extremely valued partner – extremely – and a power in and of itself.”

Biden also said the United States does not have an older and more loyal ally than France and that there is no place in the world where the United States cannot cooperate with France.

“I was under the impression that France had been informed long before that the deal was not going through. I, honest to God, did not know you had not been,” Biden told Macron.

Macron said his meeting with Biden was “important” and that it was essential to “look to the future” as his country and the United States work to mend fences.

“What really matters now is what we will do together in the coming weeks, the coming months, the coming years,” Macron said.

Since the rift erupted, Washington has taken several steps to fix the relationship.

Biden and Macron spoke to each other last week. Secretary of State Antony Blinken also visited Paris, where he acknowledged the United States could have “communicated better.” Vice President Kamala Harris also announced that she would travel to Paris in November and meet with Macron.

Biden and Macron met at the Villa Bonaparte, the French embassy to the Vatican, which a French diplomat said was a significant mark of goodwill from Biden.

“It’s an important gesture,” the French diplomat said, adding that the United States recognized that it underestimated the impact of its actions.

France now wants to see if Biden follows his words with actions. “Trust is being rebuilt. This is one step. Tokens of goodwill were given, we’ll see whether they follow through over the long term,” the diplomat said.

(Reporting by Jeff Mason and Michel Rose in Rome, Writing by Nandita Bose and Patricia Zengerle in Washington, Editing by Franklin Paul, Heather Timmons, David Gregorio and Marguerita Choy)

U.S. urges Sudan military to refrain from violence against planned protests -official

By Humeyra Pamuk and Simon Lewis

WASHINGTON (Reuters) -The United States on Friday urged Sudan’s military coup leaders to refrain from violence against peaceful protesters ahead of planned demonstrations on Saturday opposing the takeover, saying how the army reacts will be a litmus test.

“Tomorrow is going to be a real indication of what the military intentions are,” said a senior State Department official, briefing reporters on condition of anonymity to discuss sensitive matters.

“We call on the security forces to refrain from any and all violence against protesters and to fully respect the citizens’ right to demonstrate peacefully,” the official said.

Washington was relieved to see that ousted Sudanese Prime Minister Abdalla Hamdok had been allowed to return home, the official said, adding that it was not good enough because Hamdok was still under house arrest and unable to resume his work.

Sudanese General Abdel Fattah al-Burhan dissolved Hamdok’s Cabinet, and soldiers rounded up government ministers on Monday, prompting Western countries to cut off hundreds of millions of dollars in desperately needed aid to the North African country.

Opponents of the coup have called for mass protests on Saturday under the slogan “Leave!” At least 11 protesters have been killed in clashes with security forces this week, and residents say they fear a full-blown crackdown.

The coup has derailed a transition meant to steer Sudan to democracy, with elections in 2023, after long-serving ruler Omar al-Bashir was toppled two years ago.

‘FACE OF BETRAYAL’

The U.S. official called Burhan “the face of turning the clock back in Sudan” and said Washington understood the skepticism of Sudan’s civilian leaders to work with him and the military but added that a full exclusion of the army was not realistic.

“He’s the face of the betrayal of the aspirations of the Sudanese people, a face of the high-jacking of the civilian institutions,” the U.S. official said, adding that the civilian leaders would be looking for assurances before bringing themselves to work with him — something he said they should do nevertheless.

“Our civilian partners won’t like to hear me say this — but it’s not realistic to think that you’re going to be able to succeed in the transition if you’ve completely excluded the military from the process,” the official said.

Burhan on Friday said a technocratic prime minister could be announced in a week and left the door open for Hamdok to return and form the new government.

The U.S. official said Washington knew that there were problems with the transition but Sudanese military leaders never hinted at a takeover in their dealings last weekend with the U.S. delegation.

Jeffrey Feltman, President Joe Biden’s special envoy for the Horn of Africa, flew into Khartoum two days before Monday’s coup, as concerns mounted that the transition was running into trouble due to tension between the generals and civilians.

Reuters reported that Feltman warned Burhan not to take any steps against the civilian administration that was overseeing a democratic transition but the army ignored his advice.

(Reporting by Humeyra Pamuk and Simon Lewis; editing by Jonathan Oatis and Aurora Ellis)

U.S. moves to expand offshore wind beyond the Northeast

(Reuters) – The Biden administration on Thursday unveiled fresh steps toward building offshore wind farms in waters off the coasts of Massachusetts, the Carolinas and in the Gulf of Mexico.

The announcement is the government’s latest in an aggressive push to expand the nascent ocean industry to every U.S. coastline in a bid to wean the power sector off fossil fuels and address climate change.

To date, most U.S. development of offshore wind has taken place in the Atlantic Ocean off the coasts of Northeastern states. But the administration is eager to site projects in other areas, including the Southern Atlantic and West coasts.

In a statement, the Department of the Interior said it would propose an offshore wind auction in a 127,865-acre area off the coast of the Carolinas. The area could be divided into three leases and has the potential for enough energy to power more than half a million homes.

The public will be able to comment on the proposal for 60 days. The U.S. Bureau of Ocean Energy Management, a division of Interior, could finalize a sale early next year.

The agency also said it would invite the public to weigh in on the potential for wind energy development in a 30 million-acre area of the Gulf of Mexico. The area stretches from just west of the Mississippi River to the Texas-Mexico border.

The move is an early-stage effort to consider offshore wind in the Gulf, which is home to the nation’s biggest offshore oil and gas drilling industry. Before deciding on whether to lease in the Gulf, BOEM would have to conduct an environmental review and seek input from the public and a government task force set up to consider offshore wind in the region.

Finally, the administration said it would kick off an environmental review for a project off the coast of Massachusetts, Mayflower Wind. The wind farm will have up to 147 turbines with the potential to power 800,000 homes.

Mayflower Wind is a joint venture between Shell New Energies U.S. LLC and Ocean Winds, a joint venture between EDP Renewables and ENGIE.

(Reporting by Nichola Groom; Editing by Chizu Nomiyama)

U.S. agency ramps up fines for travelers failing to wear masks

By David Shepardson

WASHINGTON (Reuters) – The U.S. Transportation Security Administration (TSA) said Thursday it has recently ramped up proposed fines for travelers failing to wear masks at airports and in other transit modes.

The TSA said it has proposed $85,990 fines for 190 mask violators through Monday after more than 5,000 reported incidents since February 2 and issued warnings to more than 2,200.

On Monday, two U.S. lawmakers in the House of Representatives disclosed had issued just $2,350 in total fines to 10 passengers through mid-September, despite thousands of reports of airport travelers failing to comply.

House Homeland Security Committee chairman Bennie Thompson and Bonnie Watson Coleman, who chairs the House transportation subcommittee, said despite 4,102 reports of mask-related incidents TSA had issued just 10 fines through Sept. 13.

“We urge you to implement these enhanced penalties to curb the rising number of mask-related disruptive passenger incidents,” the lawmakers wrote.

The TSA said Thursday it has “taken steps to make enforcement and compliance more meaningful, including by increasing the penalties, reducing the processing time from receipt of incident reports to the issuance of enforcement actions and frequent and routine interaction with air carriers to improve incident reporting.”

The agency also said almost 200 people have faced criminal penalties. TSA Administrator David Pekoske in July said since the start of the pandemic there have been over 85 physical assaults on TSA officers.

In August, the TSA extended mask requirements on airplanes, trains and buses and at airports and train stations through Jan. 18 to address COVID-19 risks.

The requirements, first imposed in early February, have been the source of some friction, especially aboard U.S. airlines, where some travelers have refused to wear masks.

The Federal Aviation Administration, which has instituted a “zero tolerance” enforcement effort on unruly passengers, through Monday has received 4,941 unruly passenger reports – including 3,580 mask-related incidents.

Last month, the TSA said it was doubling penalties for violating the transportation mask mandate: $500-$1000 for first offenders and $1000-$3000 for second offenders.

(Reporting by David Shepardson; Editing by Alistair Bell)

U.S. economy slows sharply in third quarter; weekly jobless claims at new 19-month low

By Lucia Mutikani

WASHINGTON (Reuters) – The U.S. economy grew at its slowest pace in more than a year in the third quarter as COVID-19 infections flared up, further straining global supply chains and causing shortages of goods like automobiles that almost stifled consumer spending.

Gross domestic product increased at a 2.0% annualized rate last quarter, the Commerce Department said in its advance GDP estimate on Thursday. That was slowest since the second quarter of 2020, when the economy suffered a historic contraction in the wake of stringent mandatory measures to contain the first wave of coronavirus cases.

The economy grew at a 6.7% rate in the second quarter. The Delta variant of the coronavirus worsened labor shortages at factories, mines and ports, gumming up the supply chain. Economists polled by Reuters had forecast GDP rising at a 2.7% rate last quarter.

Strong inflation, fueled by the economy-wide shortages and pandemic relief money from the government over the course of the public health crisis, cut into growth. Ebbing fiscal stimulus and Hurricane Ida, which devastated U.S. offshore energy production in late August, also weighed on the economy.

Consumer spending, which accounts for more than two-thirds of U.S. economic activity, grew at a 1.6% rate after a robust 12% growth pace in the April-June quarter. Though automobiles accounted for a chunk of the stagnation, the Delta variant also curbed spending on services like air travel and dining out.

But there are signs that economic activity picked up as the turbulent quarter ended. The summer wave of COVID-19 infections has subsided, with cases declining significantly in recent weeks. Vaccinations have also picked up. The improving public health situation helped to lift consumer confidence this month.

Fewer Americans are filing new claims for unemployment benefits. That improving trend in labor market conditions was confirmed by a separate report from the Labor Department on Thursday showing initial claims for state unemployment benefits dropped 10,000 to a seasonally adjusted 281,000 last week, the lowest level since mid-March 2020.

It was the third straight week that claims remained below the 300,000 threshold. Economists polled by Reuters had forecast 290,000 applications in the latest week.

(Reporting by Lucia Mutikani; Editing by Chizu Nomiyama)

Investors on board as U.S. oil majors dismiss wind and solar projects

By Sabrina Valle and Ross Kerber

HOUSTON/BOSTON (Reuters) -Top U.S. oil firms are doubling down on drilling, deepening a divide with European rivals on the outlook for renewables, and winning support from big investors who do not expect the stateside companies to invest in wind and solar.

Among a dozen U.S. fund managers contacted by Reuters from companies overseeing about $7 trillion in assets, most said they prefer oil firms to generate returns from businesses they know best and give shareholders cash to make their own renewable bets.

With oil and gas prices jumping this year, the U.S. oil majors mostly have delivered higher returns and achieved better earnings multiples and dividend yields than rivals, cementing shareholder enthusiasm.

“At the end of the day, you don’t invest in a company because they promise nice things,” said Adams Funds head Mark Stoeckle, who favors U.S. producers and whose funds do not currently own Royal Dutch Shell Plc, TotalEnergies or BP Plc.

Michael Liss, senior portfolio manager of the American Century Value Fund, said it owns more of the U.S. majors than European partly because the American companies spend a lesser share of capital on things like renewable power and alternative fuels at a time when oil demand remains strong.

“We think their pace is going to be more realistic” in the adoption of new energy sources, Liss said.

The split strategies – returns or a faster energy transition – highlight differing investor and government pressures. They also show the difficulties of crafting a global plan to reduce fossil fuel use, the central topic of the coming United Nations COP26 climate change conference.

NO TREE PLANTINGS

Top U.S. oil firms Chevron Corp, Exxon Mobil Corp and ConocoPhillips reject a direct role in wind and solar and have put less of their outlays into energy transition plans compared with the Europeans. Most expect to increase oil production.

U.S. producers say they share concerns about climate change. They are pledging to produce the same barrels of oil with lower greenhouse gas emissions than before. They are also trying to make burying carbon in depleted oilfields commercially viable, as well as developing new cleaner fuels like hydrogen and biofuels from algae.

But as Chevron CEO Michael Wirth recently said, U.S. companies prefer to generate profits for shareholders “and let them plant trees.”

“There are some who believe we should do what the European companies are doing,” Wirth told reporters last month after giving an update on the company’s energy transition plans. “But I would say that’s not the majority of the shareholders that I hear from.”

Europe’s energy crisis – with natural gas and electricity prices soaring – partially reflects an underinvestment in fossil fuels, Exxon Senior Vice President Neil A. Chapman said at a conference this month.

U.S. and European governments differ on how they want oil companies to cut emissions. Where U.S. lawmakers favor increased spending on carbon capture and storage, German and British governments have passed laws requiring sharp reductions in greenhouse gases.

A Dutch court in May ordered Royal Dutch Shell to cut its carbon emissions 45% by 2030, a decision that would hasten its exit from fossil fuels. Shell and BP have shed U.S. shale holdings as part of their shift, while TotalEnergies has pledged 20% of its capital spending on electricity and renewables.

Shawn Reynolds, a VanEck fund manager, said current high oil prices lend support to the U.S. majors’ strategy and illustrate the danger of decarbonizing production without lowering carbon fuel demand. “There is this slow awakening that an energy transition isn’t going to happen overnight,” he said. Oil companies that expand into low-margin renewables will miss oil and gas profits, he said.

LIMITS TO GREEN INVESTING

Money flowing in to oil stocks runs contrary to a broader embrace of climate-aware funds. U.S. equity funds ranked as “sustainable” by Morningstar, meaning they largely avoid or underweight fossil fuel stocks, took in $25.7 billion this year through Sept. 30, equal to more than half the inflows into U.S. equity funds without an explicit focus on sustainability.

The total return of the XOP ETF, which tracks oil and gas stocks, was 92% for the year as of Tuesday afternoon, compared with a 22% total return of a representative ESG fund, the Vanguard FTSE Social Index Fund. The total return of the S&P 500 index was 23% over the same period.

Passive investors have become the largest holders of top oil companies. Those firms mostly cannot sell oil stocks to signal displeasure, and instead must channel their climate concerns through talks with companies and proxy votes.

BlackRock Inc and Vanguard, the two largest passive investment firms with some $17 trillion in assets between them, backed dissident directors at Exxon, and supported calls at Chevron’s and ConocoPhillips’ annual meetings to cut carbon emissions from customers’ use of their products. Neither company would comment on specific energy companies, nor would influential state pension funds in California and New York.

Among the 25 largest actively managed U.S. mutual funds, American Funds products were nearly the only holders of top U.S. and European oil firms, according to data from Morningstar Direct.

A spokesperson for American Funds parent Capital Group declined to comment. A Capital equity analyst, Craig Beacock, said in July that higher oil prices could create challenges for oil firms’ clean energy approaches.

STAYING INVESTED

Harvard University, Rockefeller Brothers and other U.S. institutions have joined a movement led by Norway’s sovereign wealth fund to cut exposure to fossil fuel stocks. A recent tally by activists found institutions with a collective $39.2 trillion of assets have committed to some form of fossil fuel divestment.

Investors contacted by Reuters said they were not ready to follow. Better to stay invested and press companies to explain how they can help limit global temperature increases, said Bruce Duguid, head of stewardship for EOS, an arm of Federated Hermes.

Iancu Daramus, senior sustainability analyst at investor Legal & General Investment Management, said companies generally should cut production and pay out dividends. He doubts emerging market growth will keep oil and gas demand high long-term.

Yet too many oil executives figure they can outlast the others as the world shifts to other fuel sources. Few CEOs want to make steep production cuts, he said.

“Every (oil) company we speak to tends to say they’ll be the last ones standing,” said Daramus.

(Reporting by Sabrina Valle in Houston and Ross Kerber in BostonEditing by Gary McWilliams and Matthew Lewis)

Israel moves ahead with thousands of settler homes despite U.S. opposition

By Jeffrey Heller and Maayan Lubell

JERUSALEM (Reuters) -Israel moved forward on Wednesday with plans to build some 3,000 homes for Jewish settlers in the occupied West Bank, defying the Biden administration’s strongest criticism to date of such projects.

A senior Palestinian official said the decision showed that Israel’s new government, led by far-right politician Naftali Bennett, was “no less extreme” than the administration of the veteran leader he replaced, Benjamin Netanyahu.

An Israeli defense official said a planning forum of Israel’s liaison office with the Palestinians gave preliminary approval for plans to build 1,344 housing units and its final go-ahead for projects to construct 1,800 homes.

It will be up to Defense Minister Benny Gantz, a centrist in Israel’s politically diverse government, to give the nod for construction permits to be issued, with further friction with Washington looming.

“This government is trying to balance between its good relations with the Biden administration and the various political constraints,” a senior Israeli official told Reuters.

The United States on Tuesday said it was “deeply concerned” about Israel’s plans to advance thousands of settlement units. It called such steps damaging to prospects for a two-state solution to the Israeli-Palestinian conflict and said it strongly opposes settlement expansion.

Washington desisted from such criticism when President Joe Biden’s Republican predecessor Donald Trump was in office.

A senior U.S. State department official said Secretary of State Antony Blinken had discussed the issue with Gantz on Tuesday. Their phone call was first reported by the Axios news website, which cited Israeli officials as saying the chief U.S. diplomat voiced U.S. opposition to the settlement plan.

The latest projects, as well as tenders published on Sunday for more than 1,300 settler homes, amounted to the first major test case over settlement policy with the Biden administration that took office in January.

“The behavior of the Israeli government under Bennett is no less extreme than what it had been under Netanyahu,” Bassam Al-Salhe, a member of the Executive Committee of the Palestine Liberation Organization, told Reuters.

“The U.S. administration has words, and no deeds, to change the policy that had been put in place by Trump,” Salhe said.

There was no immediate comment from Washington on Wednesday.

TIGHTROPE

Walking a political and diplomatic tightrope, Bennett has been facing calls from settler leaders to step up construction. Such projects are likely to be welcomed by his ultranationalist constituents, who share his opposition to Palestinian statehood.

But along with the prospect of straining relations with Washington, Bennett could also alienate left-wing and Arab parties in a coalition governing with a razor-thin parliamentary majority, if they view settlement plans as too ambitious.

Most countries regard the settlements Israel has built in territory it captured in a 1967 Middle East war as illegal.

Israel disputes this and has settled some 440,000 Israelis in the West Bank, citing biblical, historical and political ties to the area, where 3 million Palestinians live.

Palestinians seek to create a state in the West Bank and Gaza, with East Jerusalem as its capital. Israeli-Palestinian peace talks collapsed in 2014.

(Additional reporting by Dan Williams in Jerusalem, Nidal al-Mughrabi in Gaza and Humeyra Pamuk, Simon Lewis and Matt Spetalnick in Washington; Editing by Jonathan Oatis and Howard Goller)

U.S. announces international crackdown on DarkNet opioid trafficking

By Mark Hosenball

WASHINGTON (Reuters) – An international operation targeting trafficking in opioids on a clandestine part of the internet called the DarkNet has led to about 150 arrests in the United States and Europe and the seizure of drugs, cash and guns, U.S. and European authorities said on Tuesday.

The crackdown, called Operation Dark HunTor, was announced at a U.S. Justice Department news conference where Deputy U.S Attorney General Lisa Monaco warned cyberspace drug sellers: “There is no dark internet. We can and we will shed a light.”

Jean-Philippe Lecouffe, deputy director of the international police agency Europol, hailed the results of Operation Dark HunTor as “spectacular.” He said the operation sends a message that “no one is beyond the reach of law enforcement, even on the dark web.” The DarkNet and dark web are related terms concerning a part of the internet accessible only using a specialized web browser and the assortment of internet sites residing there.

An opioid epidemic has claimed the lives of hundreds of thousands of people in the United States alone in the past two decades due to overdoses from prescription painkillers and illegal substances, constituting an enduring public health crisis.

The Dark HunTor operation produced arrests of 150 people accused of being drug traffickers and others accused of engaging in sales of illicit goods and services.

There were 65 arrests in the United States, 47 in Germany, 24 in the United Kingdom, four each in the Netherlands and Italy, three in France, two in Switzerland and one in Bulgaria, the Justice Department said.

The department added that the operation resulted in seizures of more than $31.6 million in cash and virtual currencies as well as 45 firearms. It added that about 234 kilograms (515 pounds) of drugs including more than 200,000 ecstasy, fentanyl, oxycodone, hydrocodone and methamphetamine pills were seized, along with counterfeit medicines.

Kenneth Polite, head of the Justice Department’s Criminal Division, said such trafficking presents “a global threat and it requires a global response.”

The Justice Department said the crackdown built on operations conducted in late 2020 and early 2021 to disrupt dark web trafficking. It said that in January, an international crackdown targeted DarkMarket, the world’s largest dark web international marketplace.

(Reporting by Mark Hosenball; Editing by Will Dunham)