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Qatar, Rolls-Royce to plough billions of pounds into green tech startups

Qatar and Rolls-Royce (RR.L) will team up in a multi-billion pound project to develop and invest in green technology start-ups in the UK and the Gulf Arab state which they hope will reach “unicorn” status as worth more than $1 billion.

In a joint statement on Monday they said they aim to create five such fast-growing companies by 2030 and up to 20 by 2040, adding the venture would be based at a pair of science and engineering campuses that Doha will fund in the north of England and in Qatar.

The partners said the campuses would be testing grounds for start-ups to “prove and scale” technologies to combat climate change. They said they hadn’t yet decided on the exact location or design of either campus but would announce more in “mid-2022”.

The announcement by the world’s largest liquefied natural gas supplier and the aerospace group – first reported by the Times of London on Saturday – came as world leaders began the COP26 climate change summit in Glasgow.

The project aims to create a “substantial” investment pool to finance research and development and provide early-state venture capital investment to create and scale-up businesses. Rolls is expected to provide engineering and manufacturing support.

The partners said they hope to attract co-investors and to create investment opportunities for Qatari businesses and investors. The project aims to create some 10,000 jobs.

The non-profit Qatar Foundation will administer the project for Qatar, in a shift for the wealthy Gulf state whose major investments in the UK are managed by sovereign wealth fund the Qatar Investment Authority.

Qatar holds several high-profile investments in the UK, including the Shard skyscraper, Harrods department store and the Savoy hotel.

Worsening shortages, high prices restrain U.S. manufacturing activity

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 as retail inventories continue to be depressed, which should keep manufacturing humming.

“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 were in short supply in October, some for as long as 13 straight months. That compared to 24 in September.

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 was also causing delays in getting materials to factories and retailers.

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

Other industries are also hurting. 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 remained 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. Prices for products like steel have increased for 15 consecutive months.

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. read more

Fed policymakers are due to meet on Tuesday and Wednesday. The U.S. central bank is expected to announce that it will start reducing the amount of money it is injecting into the economy through monthly bond purchases.

Stocks on Wall Street were trading higher. The dollar (.DXY) fell against a basket of currencies. U.S. Treasury yields rose.

‘SHIFTING PARADIGM’

“One interpretation of this dramatic fall could be manufacturers facing a shifting paradigm that accepts supply constraints as a new reality,” said Kurt Rankin, an economist at PNC Financial in Pittsburgh, Pennsylvania.

“Demand does not appear to be abating, raising the question of whether businesses’ patience and profitability potential is becoming exhausted and that new inventory management techniques and the promise of fewer goods on offer could be emerging.”

Factories hired more workers, with employment expanding for a second straight month. Though manufacturers said they were still struggling to find workers, there were hopeful signs.

According to the survey, “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 jump in consumers’ perceptions of the labor market last month, suggests employment gains accelerated 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, which was blamed on shortages and Hurricane Ida in late August. read more

Still, the spending composition 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 up to about a 2.2% rate from the published 2.0% pace when the government releases its second estimate later this month.

Tesla opens charging network to other EVs for the first time

Tesla Inc (TSLA.O) is opening its charging network to other electric cars for the first time with a pilot program in the Netherlands, as the world’s most valuable carmaker looks to bring electric vehicles into the mainstream.

The program will be tested at 10 locations in the Netherlands, the company said on Monday, adding that Dutch non-Tesla EV drivers can access the Tesla stations, or Superchargers, through the Tesla app.

Tesla drivers can continue to use these stations and the company will closely monitor each site for congestion.

Tesla operates more than 25,000 Superchargers worldwide, while other carmakers have formed alliances or invested in startups for networks as they rush new electric vehicles to market.

The Superchargers are open to cars with the Combined Charging System (CCS) favored by BMW (BMWG.DE), Mercedes-Benz maker Daimler (DAIGn.DE), Ford (F.N) and the Volkswagen (VOWG_p.DE), which includes Audi and Porsche.

Tesla uses the CCS standard in Europe, allowing a wide range of cars to charge in stations without an adapter that uses a similar connector.

Charging prices for non-Tesla drivers will include extra costs to support a broad range of vehicles and site adjustments to accommodate these vehicles, Tesla said. The price to charge can be lowered with a charging membership, it added.

“This move directly supports our mission to accelerate the world’s transition to sustainable energy,” the company said.

Tesla, which crossed $1 trillion in market capitalization for the first time last week, has defied supply chain issues and global chip shortages to mark a record quarter for car deliveries as demand ramps up and its investments in new factories pay off.

Amazon seeks U.S. approval to launch two internet satellites by 2022

Amazon.com (AMZN.O) on Monday asked the U.S. Federal Communications Commission for approval to launch and operate two prototype internet satellites by the end of 2022 as part of the company’s effort to create a space-based satellite network.

Amazon, which has pledged to spend at least $10 billion to build 3,236 such satellites through its Project Kuiper program, said the testing and demonstration launch is “an important step toward Amazon’s goal of delivering high-capacity, low latency broadband communications services to tens of millions of unserved and underserved consumers and businesses.”

Amazon said on Monday it “continues to invest in Project Kuiper as we approach full production launches and prepare to serve tens of millions of customers around the world.”

In 2020, the FCC approved the Project Kuiper plan for the constellation of low-Earth orbit satellites to compete with the Starlink network being built out by Elon Musk’s SpaceX.

Amazon has sparred with Musk, recently accusing the billionaire of ignoring a variety of government-imposed rules, including several Federal Aviation Administration (FAA) requirements.

“The conduct of SpaceX and other Musk-led companies makes their view plain: rules are for other people, and those who insist upon or even simply request compliance are deserving of derision and ad hominem attacks,” Amazon wrote. “If the FCC regulated hypocrisy, SpaceX would be keeping the commission very busy.”

Amazon founder Jeff Bezos and Musk are rivals in the private space launch business. Bezos’ Blue Origin has challenged the National Aeronautics and Space Administration’s decision to award a $2.9 billion lunar lander contract to SpaceX.

SpaceX has accused Amazon in its own filing with the FCC of seeking to delay SpaceX’s plan: “While SpaceX has proceeded to deploy more than 1,700 satellites, Amazon has yet to even attempt to address the radiofrequency interference and orbital debris issues that must be resolved before Amazon can deploy its constellation.”

Oil rises on demand outlook despite China fuel reserves release

Oil prices settled higher on Monday as expectations of strong demand and a belief that a key producer group will not turn on the spigots too fast helped reverse initial losses caused by the release of fuel reserves by No. 1 world energy consumer China.

Brent crude futures settled up 99 cents, or 1.1 %, to $84.71 a barrel after hitting a session low of $83.03.

U.S. West Texas Intermediate (WTI) crude futures gained 84 cents, or 0.6%, to $84.05, having fallen to $82.74 earlier.

A Reuters poll showed that oil prices are expected to hold near $80 as the year ends, as tight supplies and higher gas bills encourage a switch to crude for use as a power generation fuel.

Oil rallied to multi-year highs last week, helped by a post-pandemic demand rebound and the Organization of the Petroleum Exporting Countries and allies led by Russia, or OPEC+, sticking to gradual, monthly production increases of 400,000 barrels per day (bpd), despite calls for more oil from major consumers.

The increase in OPEC’s oil output in October fell short of the rise planned under a deal with allies, a Reuters survey found on Monday, as involuntary outages in some smaller producers offset higher supplies from Saudi Arabia and Iraq.

OPEC+ is expected by analysts to stick to the 400,000 figure at its Nov. 4 meeting, with members Kuwait and Iraq in recent days voicing their support for it, saying those volumes were adequate.

“We feel that their position will be one where the status quo will be maintained while a ‘wink and a nod’ will be provided in accepting violation of quotas should Brent values gravitate back up into new 7-year high territory,” said Jim Ritterbusch, president of Ritterbusch and Associates LLC in Galena, Illinois.

U.S. President Joe Biden on Saturday urged major G20 energy producing countries with spare capacity to boost production to ensure a stronger global economic recovery, part of a broad effort to pressure OPEC+ to raise supplies.

Prices rose despite China saying in a rare official statement that it had released gasoline and diesel reserves to increase market supply and support price stability in some regions.

Exxon (XOM.N) and Chevron (CVX.N) are looking to add drilling rigs in the Permian shale basin after sharply cutting crews and output in the region last year, the companies said on Friday.

American Airlines cancels more flights; total tops 2,300

Weather and staffing-led turbulence stretched into a fourth day for American Airlines (AAL.O), with the top U.S. carrier cancelling more flights on Monday to push the total number to nearly 2,300.

Staffing shortages have hit American Airlines, Southwest Airlines Co (LUV.N) and Spirit Airlines Inc (SAVE.N) in particular, as they ramp up flights ahead of the holiday season but face problems finding enough pilots and flight attendants.

“Flight Attendant staffing at American is strained and reflects what is happening across the industry as we continue to deal with pandemic-related issues,” flight attendants’ union APFA said.

American’s pilot union said last month they planned to picket the carrier’s major hubs to protest work schedule, fatigue, and a lack of adequate accommodation this summer.

The cancellations are another setback to the Texas-based company, which is already reeling from rising fuel and labor costs impacting the industry as the U.S. prepares to open borders to fully vaccinated travelers.

“The airline had particular weather issues that then spiraled into rippled cancellations and were compounded by an inability to fill out schedules from their labor reserves,” UBS analyst Myles Walton said.

Severe winds at the Dallas/Fort Worth International Airport reduced American’s arrival capacity by more than half, with the inclement weather also impacting staffing.

The company, however, hoped some of that impact could be mitigated with nearly 1,800 flight attendants returning from leave starting Monday.

“We expect considerable improvement beginning today with some residual impact from the weekend,” company spokeswoman Sarah Jantz said in a statement. American’s shares recovered losses to trade up 1%.

Meanwhile, rival airlines seemed to have fared better.

Delta Air Lines Inc(DAL.N)said on Monday it has not experienced any weather-related cancellations so far, while United Airlines(UAL.O)said there were no “widespread cancellations”.

SoftBank mulls options for Fortress, including sale

SoftBank Group Corp (9984.T) is considering a sale of Fortress Investment Group as it explores options for the asset manager, Bloomberg News reported on Monday, citing people with knowledge of the matter.

The Japanese conglomerate bought Fortress for more than $3 billion in 2017.

However, SoftBank was not able to mesh Fortress’s operations with its own, leading to its decision to explore other options, the report said, adding that discussions were at an early stage.

SoftBank and Fortress did not immediately respond to Reuters requests for comment.

Founded in 1998, New York-based Fortress manages assets on behalf of about 1,800 institutional clients and private investors worldwide, according to its website.