Tag Archives: Federal Reserve

U.S. job growth seen accelerating; unemployment rate steady

FILE PHOTO: Leaflets lie on a table at a booth at a military veterans' job fair in Carson, California October 3, 2014. REUTERS/Lucy Nicholson/File Photo

By Lucia Mutikani

WASHINGTON (Reuters) – U.S. employers likely stepped up hiring in June and boosted wages for workers, signs of labor market strength that could keep the Federal Reserve on course for a third interest rate increase this year.

According to a Reuters survey of economists, the Labor Department’s closely watched employment report on Friday will probably show that nonfarm payrolls increased by 179,000 jobs last month after gaining 138,000 in May.

The unemployment rate is forecast steady at a 16-year low of 4.3 percent. It has dropped five-tenths of a percentage point this year and matches the most recent Fed median forecast for 2017.

Economists say labor market buoyancy could also encourage the U.S. central bank to announce plans to start reducing its $4.2 trillion portfolio of Treasury bonds and mortgage-backed securities in September.

“June’s employment report could provide sufficient evidence to Fed officials that they are still positioned to proceed with their monetary policy normalization plans in the second half of the year,” said Sam Bullard, a senior economist at Wells Fargo securities in Charlotte, North Carolina.

The Fed raised its benchmark overnight interest rate in June for the second time this year. But with inflation retreating further below the central bank’s 2 percent target in May, economists expect another rate hike only in December.

June’s anticipated employment gains would be close to the 186,000 monthly average for 2016 and reinforce views that the economy regained speed in the second quarter after a sluggish performance at the start of the year.

But the pace of job growth is expected to slow as the labor market hits full employment. There is growing anecdotal evidence of companies struggling to find qualified workers.

As a result, some companies are raising wages in an effort to attract and retain their workforces. Economists expect worker shortages to boost wage growth, which has remained stubbornly sluggish despite the tightening labor market.

EYES ON WAGES

Average hourly earnings are forecast increasing 0.3 percent in June after gaining 0.2 percent in May. That could lift the year-on-year increase in wages to 2.7 percent from 2.5 percent in May.

“The days of month after month of 200,000 jobs being created are likely behind us,” said Ryan Sweet, senior economist at Moody’s Analytics in West Chester, Pennsylvania.

“We will see trend job growth continue to moderate. That doesn’t necessarily signal that the expansion is running out of juice or that a recession is imminent, it is just a symptom of a full-employment economy.”

The economy needs to create 75,000 to 100,000 jobs per month to keep up with growth in the working-age population.

Republican President Donald Trump, who inherited a strong job market from the Obama administration, has pledged to sharply boost economic growth and further strengthen the labor market by slashing taxes and cutting regulation.

But Republicans have struggled with healthcare legislation and there are also worries that political scandals could derail the Trump administration’s economic agenda.

Job gains were likely broad in June. Manufacturing payrolls likely rebounded after factories shed 1,000 jobs in May. But employment in the automobile sector probably declined further as slowing sales and bloated inventories force manufacturers to cut back on production.

Ford Motor Co has announced plans to slash 1,400 salaried jobs in North America and Asia through voluntary early retirement and other financial incentives. Others, like General Motors are embarking on extended summer assembly plant shutdowns, which will temporarily leave workers unemployed.

Further job gains are likely in construction.

The retail sector is expected to have purged jobs for a fifth straight month as department store operators like J.C. Penney Co Inc, Macy’s Inc and Abercrombie & Fitch struggle against stiff competition from online retailers led by Amazon.

(Reporting by Lucia Mutikani; Editing by Andrea Ricci)

Fed’s Fischer says more to be done to prevent future crises

FILE PHOTO: U.S. Federal Reserve Vice Chair Stanley Fischer addresses The Economic Club of New York in New York, U.S. on March 23, 2015. REUTERS/Brendan McDermid/File Photo

(Reuters) – Federal Reserve Board Vice Chair Stanley Fischer on Tuesday warned that while the U.S. and other countries have taken steps to make their housing finance systems stronger, more needs to be done to prevent a future crisis.

Fischer did not address the outlook for U.S. monetary policy or the economy in remarks prepared for delivery to the DNB-Riksbank Macroprudential Conference Series in Amsterdam.

Instead he focused on preventing financial instability, arguing that since the 2007-2009 financial crisis in the United States, “the core of the financial system is much stronger, the worst lending practices have been curtailed, much progress has been made in processes to reduce unnecessary foreclosures,” and a 2008 law helped clarify the status of government support for housing agencies Fannie Mae and Freddie Mac.

But to prevent a new crisis, he said, governments ought to do more, including stress tests for banks on their resilience should house prices decline dramatically, and making it easier to avoid foreclosures, which hurt both lenders and borrowers.

“(T)here is more to be done, and much improvement to be preserved and built on, for the world as we know it cannot afford another pair of crises of the magnitude of the Great Recession and the Global Financial Crisis,” he said.

(Reporting by Ann Saphir; editing by Diane Craft)

Fed’s Dudley confident U.S. inflation should rebound with wages

William C. Dudley, President and Chief Executive Officer of the Federal Reserve Bank of New York speaks during a panel discussion at The Bank of England in London,

y Jonathan Spicer

PLATTSBURG, NY (Reuters) – U.S. inflation is a bit low but should rebound alongside wages as the labor market continues to improve, an influential Federal Reserve official said on Monday, reinforcing the message that a recent patch of weak data is unlikely to derail plans to keep raising interest rates.

The comments by New York Fed President William Dudley, a close ally of Fed Chair Janet Yellen, were among the first after the U.S. central bank hiked rates last week in the face of a series of soft inflation readings.

“This is actually a pretty good place to be” with unemployment at 4.3 percent and inflation at about 1.5 percent, Dudley told the North Country Chamber of Commerce in Plattsburg, New York.

“We are pretty close to full employment,” he said. “Inflation is a little lower than what we would like, but we think that if the labor market continues to tighten, wages will gradually pick up and with that, inflation will gradually get back to 2 percent.”

Price readings have edged lower over the past few months, raising questions about the Fed’s general plan to boost rates one more time before the year-end, and another three times next year. Last week’s hike was the central bank’s third in six months.

Asked about a so-called flattening of yields in the bond market, which suggest investors are skeptical that this Fed policy-tightening cycle will last much longer, Dudley said pausing policy now could raise the risk of inflation surging and hurting the economy.

He said he did not read the market move as a negative signal for the U.S. economy, but rather one that reflects low overseas inflation and borrowing costs.

“I am very confident” that economic expansion “has quite a long ways to go,” Dudley said, adding he expected wage growth to rise to about 3 percent over the next year or two.

(Editing by Bernadette Baum)

Tech leads Wall Street higher; jobs data falls short

Traders work on the floor of the New York Stock Exchange (NYSE) in New York, U.S.,June 2, 2017.REUTERS/Brendan McDermid

By Chuck Mikolajczak

NEW YORK (Reuters) – U.S. stocks closed at record levels for a second consecutive session on Friday, as gains in technology and industrial stocks more than offset a lukewarm jobs report.

Nonfarm payrolls increased by 138,000 in May, well short of the 185,000 expected by economists. The prior two months were revised lower by 66,000 jobs than previously reported.

Average hourly earnings rose 0.2 percent in May, following a similar gain in April, but the unemployment rate fell to a 16-year low of 4.3 percent.

Despite the disappointing data, market participants still largely anticipate the Federal Reserve to raise rates at its June 13-14 meeting, with traders expecting a 90.7-percent chance of a quarter-point hike, according to Thomson Reuters data.

“It’s certainly surprising. It doesn’t really correlate well with virtually all the other data on the labor market that we’re seeing,” said Russell Price, senior economist at Ameriprise Financial Services Inc in Troy, Michigan.

The modest increase, however, could raise concerns about the economy’s health after gross domestic product growth slowed in the first quarter and a string of softening data this week, including reports on housing and auto sales.

The economy needs to create 75,000 to 100,000 jobs per month to keep up with growth in the working-age population. Job gains are slowing as the labor market nears full employment.

The Dow Jones Industrial Average <.DJI> rose 62.11 points, or 0.29 percent, to 21,206.29, the S&P 500 <.SPX> gained 9.01 points, or 0.37 percent, to 2,439.07 and the Nasdaq Composite <.IXIC> added 58.97 points, or 0.94 percent, to 6,305.80.

For the week, the S&P rose 0.95 percent, the Dow added 0.59 percent and the Nasdaq gained 1.54 percent.

Industrials <.SPLRCI>, up 0.49 percent, and technology <.SPLRCT>, up 1.04 percent, were the best performing sectors. The tech sector has been the top performer among the major S&P sectors, with a 2017 gain of 21.26 percent.

The tech sector was led by Broadcom <AVGO.O>, which rose more than 8 percent to hit an all-time high of $253.76, after the chipmaker’s quarterly results beat analysts’ expectations.

Shares of financials <.SPSY>, which benefit from higher interest rates, fell as much as 0.9 percent after the jobs data sparked some worry the Fed could become cautious after the June meeting, and closed down 0.37 percent.

Energy <.SPNY> was the worst-performing sector, down 1.18 percent. Brent oil tumbled below $50 a barrel on worries that President Donald Trump’s decision to abandon a climate pact could spark more crude drilling in the United States and worsen a global glut.

Lululemon Athletica <LULU.O> jumped 11.5 percent to $54.29 after the athletic apparel maker’s quarterly profit beat estimates.

Advancing issues outnumbered declining ones on the NYSE by a 1.34-to-1 ratio; on Nasdaq, a 2.07-to-1 ratio favored advancers.

The S&P 500 posted 28 new 52-week highs and 11 new lows; the Nasdaq Composite recorded 82 new highs and 70 new lows.

About 6.37 billion shares changed hands in U.S. exchanges, compared with the 6.65 billion daily average over the last 20 sessions.

(Additional reporting by Herb Lash; Editing by Nick Zieminski)

U.S. stocks open higher after strong private jobs data

Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., May 31, 2017. REUTERS/Brendan

By Sweta Singh

(Reuters) – U.S. stocks were higher on Thursday after better-than-expected private sector hiring showed that the labor market continues to strengthen, further boosting chances of a rate hike by the Federal Reserve later this month.

The ADP private sector employment report showed that 253,000 jobs were added in May, well above the 185,000 jobs estimated by economists polled by Reuters.

The report by payrolls processor ADP acts as a precursor to the much-awaited nonfarm payrolls data, due on Friday, that includes hiring in both the public and private sectors.

“I think the Fed has already made up its mind. Unless we have a real weak employment data tomorrow I think it’s a go-ahead for the Fed to raise rates in June,” said Peter Cardillo, chief market economist at First Standard Financial in New York.

San Francisco Federal Reserve Bank President John Williams said on Wednesday he sees a total of three interest rate increases for this year as his baseline scenario, but views four hikes as also being appropriate if the U.S. economy gets an unexpected boost.

Forecasts from Fed officials suggest that a median of two more hikes are planned before the end of the year.

Traders priced in an 89 percent chance of a rate hike in the upcoming Fed meeting on June 14, according to Thomson Reuters data.

At 9:52 a.m. ET the Dow Jones Industrial Average was up 21.5 points, or 0.1 percent, at 21,030.15, the S&P 500 was up 6.16 points, or 0.25 percent, at 2,417.96 and the Nasdaq Composite was up 26.51 points, or 0.43 percent, at 6,225.03.    Seven of the 11 major S&P 500 sectors were higher, with the health and technology sectors leading the gainers.

The Institute for Supply Management is likely to report that its national manufacturing index slipped to 54.5 in May from 54.8 in April. The data is expected at 10:00 ET.

“We have a multitude of macro news coming out today and that will set the tone for the market’s direction … I think we are looking at another trying session,” Cardillo said.

Deere’s shares were up 1.9 percent at $124.74 after the farm and construction major said it would buy privately held German road construction company Wirtgen Group for $5.2 billion, including debt.

Goodyear Tire’s shares were up 5.7 percent at $34.03 after Morgan Stanley raised its rating to “overweight” from “underweight”.

Box Inc was up 3.9 percent at $19.40 after the cloud storage firm’s quarterly earnings edged ahead of Wall Street analysts’ expectations.

Advancing issues outnumbered decliners on the NYSE by 1,931 to 657. On the Nasdaq, 1,707 issues rose and 624 fell.

The S&P 500 index showed 28 new 52-week highs and 11 new lows, while the Nasdaq recorded 82 new highs and 70 new lows.

(Reporting by Sweta Singh in Bengaluru; Editing by Saumyadeb Chakrabarty and Anil D’Silva)

Americans without college degree report worsening finances: Fed survey

Applicants fill out forms during a job fair in Los Angeles November 20, 2009.

WASHINGTON (Reuters) – The overall financial situation of U.S. households continues to improve but Americans without a college degree feel they are struggling more compared to a year previously, according to a Federal Reserve survey released on Friday.

The annual survey, which was conducted in October 2016, is now in its fourth year and acts as a temperature check on the financial wellbeing of U.S. families.

Seventy percent of those surveyed said that they were either “living comfortably” or “doing okay,” an improvement from 69 percent the prior year and 62 percent in 2013.

The improving statistics in part reflect a buoyant jobs market. Since the last survey the unemployment rate has declined to 4.4 percent from 5.0 percent, and is now near what many economists would consider full employment.

U.S. stocks have risen as well as home prices, both of which can also contribute to household wealth. However, that masks deep disparities and wage growth has remained sluggish even though the economy has largely recovered from the financial crisis.

Forty percent of respondents with a high school degree or less said they were struggling financially, one percentage point more than in 2015, at a time when those with more education felt their situation had improved. Seventeen percent of those with a college education described themselves the same way.

There were also differences based on race and ethnicity. Fifty-one percent of white adults said they felt better off than their parents compared to 60 percent of black adults and 56 percent of Hispanic respondents.

Former manufacturing towns helped propel President Donald Trump to the White House last November and there have been growing concerns over the lack of well-paying jobs for those without a college degree.

“The survey findings remind us that many American households are struggling financially, including fully 40 percent of those with a high school diploma or less,” Federal Reserve Board Governor Lael Brainard said in a statement.

Elsewhere, the survey showed that improved incomes did not necessarily mean large savings or job stability.

Forty-four percent of respondents said they would struggle to meet emergency expenses of $400, a drop of 2 percentage points from 2015, while 17 percent of workers, and 24 percent with a high-school education of less, said their work schedule was changed by their employer from week to week.

Within that, two-thirds received their schedule six days or less in advance and 37 percent had either on-call scheduling or received notice one day or less in advance, the Fed said.

The survey tallied the responses of 6,643 adults aged 18 and over.

(Reporting by Lindsay Dunsmuir; Editing by Andrea Ricci)

World stocks retreat from record highs as valuations give cause for a pause

FILE PHOTO: Visitors looks at an electronic board showing the Japan's Nikkei average at the Tokyo Stock Exchange (TSE) in Tokyo, Japan, February 9, 2016. REUTERS/Issei Kato/Files

By Vikram Subhedar

LONDON (Reuters) – Global stocks paused near record highs as worries over China’s banking system provided an excuse for investors to lock in some profits. The dollar was set for its best week of the year on bets the Federal Reserve will raise U.S. interest rates in June.

A dip on Wall Street overnight on signs of weak consumer spending and waning enthusiasm over the recovery in European corporate earnings has put MSCI’s gauge of world stock markets <.MIWD00000PUS> on track for its first weekly loss in four.

The index trades at now trades at more than 16 times forward earnings, according to Thomson Reuters data, and above its long-term average of 15.6 times.

U.S. stock futures <ESc1> were down another 0.2 percent on Friday.

“We’ve had a nervous twitch about China, over this week,” said Sean Darby, chief global equity strategist at Jefferies. “We’ve had a bit more of a regulatory overhang coming through in the financial system.”

China’s banking regulator this week launched emergency risk assessments of lenders’ new business practices, sources told Reuters, as Beijing extends its crackdown on shadow banking.

With corporate earnings seasons in the U.S. and Europe drawing to a close investors, focus is likely to shift back to central banks, particularly in the United States, where inflation pressures are growing.

U.S. data on Thursday showed producer prices rebounded more than expected last month, leading to the biggest annual gain in five years.

Combined with a tightening labor market, firming inflation backs market expectations that the Federal Reserve will raise interest rates at its meeting next month. The central bank has forecast two more increases this year after raising rates a quarter of a point in March.

The stronger fundamentals in the U.S. helped offset uneasiness over political turmoil after President Donald Trump abruptly fired FBI chief James Comey.

The dollar index, which tracks the currency against a basket of six major rivals, was flat on the day at 99.622 <.DXY>, but was up 1 percent for the week.

Sterling was steady on the day at $1.2886 <GBP=> after dropping to a one-week low on Thursday following the Bank of England’s decision to keep interest rates unchanged. Policymakers indicated that rates were unlikely to rise until late 2019.

EUROPE’S SWEET SPOT

In Europe, stock markets steadied this week. Company profits are expected to grow 20 percent in the first quarter, the best corporate results in a decade, according to Morgan Stanley.

Their outperformance this year against global peers remains intact, with the benchmark’s <.STOXX> 10 percent gains outpacing the 7 percent rise on the S&P 500 <.SPX>.

Greek stocks <.ATG> snapped a their longest winning streak in two decades.

“European stocks are still in the sweet spot of basking in the removal of political risk in Europe for the time being, though it is somewhat ironic that we could see a modest decline on the week as investors take stock,” said Michael Hewson, chief markets analyst at CMC Markets.

European equity funds pulled in a record $6.1 billion in inflows in the week to May 10, according to data from EPFR, with centrist Emmanuel Macron’s win in the French presidential election seen as a trigger.

Concerns over valuations are beginning to emerge. Credit Suisse strategists cut their rating on Spain, the euro zone’s top performing market for the year, to “underperform,” saying the strong earnings and economic momentum was moderating.

At the same time, the collapse in volatility across asset classes to multi-year or record lows, is tempting more investors into making bets that markets will remain calm given the brighter outlook for global growth.

Bank of America Merrill Lynch said its high-net-worth clients cut cash and resumed buying low-volatility exchange-traded funds.

Yields for the euro zone’s weaker borrowers, such as Italy, Portugal and Spain, were all also 1 to 3 basis points lower as investors awaited announcements of the volumes for expected bond sales next week by France and Spain.

Oil prices held recent gains as traders expected OPEC-led production cuts to extend beyond the middle of this year and as U.S. crude inventories fell to their lowest levels since February.

International Brent crude futures <LCOc1> were at $50.78 per barrel. U.S. West Texas Intermediate crude futures <CLc1> were at $47.85 per barrel, both little changed on the day.

(Reporting by Vikram Subhedar, editing by Larry King)

Dollar rises after sliding on Trump remarks on currency, rates

FILE PHOTO: U.S. dollar notes are seen in this November 7, 2016 picture illustration. REUTERS/Dado Ruvic/Illustration/File Photo

By Dion Rabouin

NEW YORK (Reuters) – The U.S. dollar rose on Thursday, rebounding after a slide that investors considered overdone following remarks by President Donald Trump that the currency was getting too strong and he would prefer the Federal Reserve to keep interest rates low.

The greenback and U.S. Treasury yields took a heavy hit after Trump’s comments to the Wall Street Journal, in which he said the strength of the dollar would hurt the economy.

But after losing 0.6 percent on Wednesday – its biggest one-day fall in more than three weeks – the dollar recovered on Thursday against a basket of major currencies <=USD> that tracks its value, rising 0.3 percent.

“Clearly, I think it was oversold yesterday,” said Peter Ng, senior currency trader at Silicon Valley Bank in Santa Clara, California. “The market was very sensitive to headlines given how nervous it has become due to geopolitical risk.”

Trading was also thinner than usual because of the impending Good Friday holiday in the U.S. and Europe this week, Ng said.

Having hit a five-month low of 108.73 yen in early Asian trading, the dollar steadied at 109.20 yen. <JPY=>

“Yes, it was negative what (Trump) said…but it’s not a big surprise – it wasn’t a U-turn in his rhetoric on the exchange rate so far,” said Commerzbank currency strategist Thu Lan Nguyen in Frankfurt.

“The question is: is he able to influence monetary policy in order to get a weaker dollar? That is still an open question.”

Trump’s remarks went against a long-standing practice of both U.S. Democratic and Republican administrations of refraining from commenting on policy set by the independent Federal Reserve. It is also unusual for a president to talk about the value of the dollar, a subject usually left to the U.S. Treasury secretary.

The dollar has shed 1.7 percent against the yen so far this week, its fourth week lower against the safe-haven Japanese currency in five, as a rise in tensions in Asia and Europe prompted yen buying.

Investors are concerned about the upcoming French presidential election as well as possible U.S. military action against Syria and North Korea, and an escalation of tensions with Russia.

The euro fell 0.5 percent to $1.0619 <EUR=> after touching a one-week high in overnight trading.

The dollar was little changed against China’s offshore yuan <CNH=D3>, after falling to a six-day low on Wednesday. It had risen to a one-month high at the start of the week.

(Additional reporting by Shinichi Saoshiro in Tokyo; Editing by Bernadette Baum)

Fed on track to raise U.S. rates twice more this year

A police officer keeps watch in front of the U.S. Federal Reserve building in Washington, DC,

NEW YORK (Reuters) – The Federal Reserve is on track to raise interest rates twice more this year after a policy tightening last week, and it could be more or less aggressive depending on inflation and fiscal policies from the Trump administration, a Fed rate-setter said on Monday.

The public comments from Chicago Fed President Charles Evans were among the first since the U.S. central bank lifted its policy rate a notch last week, as expected. It also forecast roughly two more moves in 2017 in a nod to low unemployment and some inflation pressures.

“Three is entirely possible,” Evans, speaking on Fox Business Network TV, said of hikes in 2017. “As I gain more confidence in the outlook I could support three total this year. If inflation began to pick up, that would certainly solidify (that expectation). It could be three, it could be two, it could be four if things really pick up.”

Asked about U.S. President Donald Trump’s promise to boost the economy to a 4 percent growth rate, from about 2 percent in the last few years, Evans said: “Four percent would be really an outsized number.”

While that level of growth could be reached “in any given year,” he said it was hard to imagine given the economy is already doing well, the labor market is “very strong,” and sectors like automobile sales are at all-time highs.

Evans, who is a voter on the Fed’s policy-setting committee this year and supported last week’s move, also echoed a comment from Fed Chair Janet Yellen on Wednesday that suggested the central bank could try to push inflation, now at 1.7 percent, above a 2-percent target.

“There is room to get inflation up to 2 percent and in fact going beyond 2 percent a little bit to make sure we get there, and that it’s a symmetric inflation objective, so that’s ok,” Evans said.

(Reporting by Jonathan Spicer; Editing by Chizu Nomiyama)

Dollar inches higher as investors look to Fed decision this week

Arrangement of various world currencies including Chinese Yuan, US Dollar, Euro, British Pound,

By Gertrude Chavez-Dreyfuss

NEW YORK (Reuters) – The dollar edged higher from two-week lows on Monday, recovering after Friday’s bout of profit-taking following a robust U.S. jobs report, as investors looked to this week’s Federal Reserve’s policy meeting in which it is expected to raise rates by a quarter percentage point.

“We remain bullish on the dollar, but as Friday’s events suggested, a lot of good news is already priced into the dollar at current levels,” said Shaun Osborne, chief FX strategist, at Scotiabank in Toronto.

“Yields are high enough and spreads are wide enough to keep the dollar broadly supported against its major currency peers for the moment, but additional gains will likely hinge on the messaging from the Fed at the FOMC.”

The Federal Open Market Committee will hold a two-day monetary policy meeting, which starts on Tuesday. Fed funds futures on Monday have priced in a nearly 90-percent chance the Fed will hike rates on Wednesday.

Sterling, which has been one of the worst performers against the dollar over the last two weeks, rose half a percent after the devolved Scottish government demanded the right to hold a new referendum on independence.

In late morning trading, the dollar was slightly higher  against a basket of currencies at 101.31 and was marginally up against the euro. The single European currency was last at $1.0664.

The dollar index earlier fell to a two-week low of 101.01.

Friday’s solid jobs number cemented the case for a rise in U.S. interest rates this week that will long predate any rise in European equivalents.

Britain is expected to formally lodge its request to leave the European Union, but was given another curve ball from Scottish First Minister Nicola Sturgeon’s call for a new referendum on independence.

But Sturgeon’s timeframe for the referendum, which at the earliest could happen by the end of next year when Brexit negotiations are expected to be concluded, partially eased concerns about the issue adding to more political risk over the next 12 months.

Sterling, as a result, held gains against the dollar rising 0.5 percent to $1.2229.

Against the yen, the dollar slipped 0.1 percent to 114.68 yen.

Scotiabank, in a research note, said there is speculation on the potential for changes at the Bank of Japan, including a possible shift to 10-year government bond yield target range from the current zero level. This is considered positive for the yen.

(Reporting by Gertrude Chavez-Dreyfuss; Additional reporting by Patrick Graham in London; Editing by Nick Zieminski)