European Union lawmakers provisionally agreed on Wednesday on a bill aimed at giving workers at online companies such as Uber (UBER.N) and Deliveroo (ROO.L) employee benefits, which if adopted would be a global first.
The new rules will prevent workers from being wrongfully classified as self-employed, and therefore not eligible for benefits, by introducing "presumption of employment".
Meeting two out of five indicators of control, or direction, will trigger the assumption the worker is employed by the company.
"Currently, at least 5.5 million persons performing platform work may be wrongly classified as self-employed ... and are missing out on important labor and social protection rights," the European Parliament said in a statement.
The rules were originally announced in late 2021 and if adopted will be a global first. They are part of a raft of legislation intended to ensure a level playing field between online and traditional businesses.
The proposals had been previously criticized by Delivery Platforms Europe, whose members are Bolt, Deliveroo, Delivery Hero (DHER.DE), Glovo, Uber, and Wolt.
The rules will also reduce the use of algorithms in decision-making, with human oversight required over issues such as the suspension of a worker's account, or dismissal. It will also give gig workers more insight into how algorithms used by online companies work and how their behavior affects decisions taken by the systems.
Under the new rules, digital platforms will also be unable to trick the system by using employment intermediaries, as workers performing the service via an intermediary will need to benefit from the same level of protection as those employed directly.
The agreed text will now have to be formally adopted by the European Parliament and the Council to enter into force.
Markets welcomed, with caution, the first details of President Javier Milei's plans to shock Argentina's beleaguered economy back on track.
His administration swept to office with promises of drastic economic changes to tackle negative reserves, inflation above 100%, and years of economic stagnation.
Bonds edged higher as investors cheered the changes unveiled late on Tuesday by Economy Minister Luis Caputo, including a more than 50% cut to the official peso rate, slashed energy subsidies, and canceled public works tenders.
"The news is positive," said Argentina expert Bruno Gennari at KNG Securities. "It is a massive fiscal effort, with 3 ppts of GDP of spending cuts and 2.2% of additional revenues."
International sovereign dollar bonds gained more than 2 cents and U.S.-listed shares of Argentinian state oil company YPF rose around 1% in premarket trading.
"Non-deliverable" FX forwards moved sharply, showing bets that the peso's value would continue to dive.
Six-month forwards were priced at a level of 1,022 per dollar and 1-year forwards at a level of 1,687.
The peso also lost ground on crypto exchanges, a proxy for the black market. The price of one tether - a cryptocurrency pegged to the U.S. dollar - was around 1,147.50 Argentine pesos at 1210 GMT, according to the crypto exchange Binance, down from a high of 1,175.90.
The IMF, which had previously hardened its view on the state of its $44 billion program with Argentina, also welcomed the "bold" changes that it said could help stabilize the economy and spur growth.
Jimena Blanco, chief analyst with Verisk Maplecroft, said the government was trying to temper an otherwise guaranteed economic crash landing.
"He promised a very tough pill to swallow and he's delivering that pill," she said. "The question is how long will popular patience last in terms of waiting for the economic situation to change."
In a note, Barclay's bank said the "governability" of the reforms would be the key challenge, as they could sharply accelerate inflation and spark a recession.
Argentina has artificially controlled the peso since 2019, creating a wide gap between the official exchange rate, which was at 366 per dollar before Caputo's announcement that it would move to 800, with plans for a monthly 2% devaluation.
The parallel rates were just above 1,000 per dollar earlier this week.
Caputo also unveiled a 2.9% of GDP cut to government spending, with nearly 1 percentage point of it coming from cuts to energy and transport subsidies, and outlined some new taxes.
Tesla (TSLA.O) is recalling just over two million vehicles in the United States fitted with its Autopilot advanced driver-assistance system to install new safeguards after a safety regulator said the system was open to "foreseeable misuse."
The National Highway Traffic Safety Administration (NHTSA) has been investigating the electric automaker led by billionaire Elon Musk for more than two years over whether Tesla vehicles adequately ensure that drivers pay attention when using the driver assistance system.
Tesla said in the recall filing that Autopilot's software system controls "may not be sufficient to prevent driver misuse" and could increase the risk of a crash.
Acting NHTSA Administrator Ann Carlson told Reuters in August it's "really important that driver monitoring systems take into account that humans over-trust technology."
Tesla's Autopilot is intended to enable cars to steer, accelerate, and brake automatically within their lane, while enhanced Autopilot can assist in changing lanes on highways but does not make them autonomous.
One component of Autopilot is Autosteer, which maintains a set speed or following distance and works to keep vehicles in its driving lane.
Tesla said it did not agree with NHTSA's analysis but would deploy an over-the-air software update that will "incorporate additional controls and alerts to those already existing on affected vehicles to further encourage the driver to adhere to their continuous driving responsibility whenever Autosteer is engaged."
The company did not respond to a question on whether the recall would be performed outside the United States.
'FORESEEABLE MISUSE'
NHTSA opened a probe in August 2021 into Autopilot after identifying more than a dozen crashes in which Tesla vehicles hit stationary emergency vehicles and upgraded it in June 2022. NHTSA said as a result of its investigation Tesla had issued the recall after the agency found "Tesla's unique design of its Autopilot system can provide inadequate driver engagement and usage controls that can lead to foreseeable misuse of the system."
Separately, since 2016, NHTSA has opened more than three dozen Tesla special crash investigations in cases where driver systems such as Autopilot were suspected of being used, with 23 crash deaths reported to date.
NHTSA said there may be an increased risk of a crash in situations when the system is engaged but the driver does not maintain responsibility for vehicle operation and is unprepared to intervene or fails to recognize when it is canceled or not.
NHTSA's investigation into Autopilot will remain open as it monitors the efficacy of Tesla’s remedies. Tesla and NHTSA held several meetings since mid-October to discuss the agency's tentative conclusions on potential driver misuse and Tesla’s proposed software remedies in response.
The company will roll out the update to 2.03 million Model S, X, 3, and Y vehicles in the United States dating back to the 2012 model year, the agency said.
The update based on vehicle hardware will include increasing prominence of visual alerts on the user interface, simplifying engagement and disengagement of Autosteer and additional checks upon engaging Autosteer "and eventual suspension from Autosteer use if the driver repeatedly fails to demonstrate continuous and sustained driving responsibility while the feature is engaged," Tesla said.
It did not provide more specifics about exactly how alerts and safeguards would change.
Shares in the world's most valuable automaker were down 1% in premarket trading.
Tesla disclosed in October that the U.S. Justice Department had issued subpoenas related to its Full Self-Driving (FSD) and Autopilot systems. Reuters reported in October 2022 that Tesla was under criminal investigation over claims the company's electric vehicles could drive themselves.
Tesla in February recalled 362,000 U.S. vehicles to update its FSD Beta software after NHTSA said the vehicles did not adequately adhere to traffic safety laws and could cause crashes.
NHTSA closed an earlier investigation into Autopilot in 2017 without taking any action. The National Transportation Safety Board (NTSB) has criticized Tesla for a lack of system safeguards for Autopilot, and NHTSA for a failure to ensure the safety of Autopilot.
With Zara-owner Inditex (ITX.MC) and H&M (HMb.ST) set to disclose their most recent sales results, investors will be focused on one major question: how are the two fast-fashion pioneers responding to the current market leader, Shein?
Shein has a huge valuation and is primed for an IPO. With sales almost entirely online, the retailer generated about $23 billion in global revenue in 2022, according to research firm Coresight.
Shein accounted for nearly one-fifth of the global fast-fashion market in 2022, outpacing Zara and H&M. Shein's low prices - $5 t-shirts and $10 sweaters - also draw shoppers who might have otherwise shopped at clothing discount stores.
“Shein’s actual strength is acknowledging that they have no idea what you want to wear,” said Rui Ma, an analyst and founder of the newsletter Tech Buzz China. “What they have confidence in is their ability to ramp up production very quickly.”
For Inditex, which reports results on Wednesday, and H&M, which reports quarterly sales on Friday, the China-founded e-tailer has emerged as a major threat in the market for cheap clothing and accessories.
On Dec. 6, Deutsche Bank analyst Adam Cochrane downgraded Inditex and H&M to a “sell” rating, citing challenges including price deflation within clothing, and pressure from Shein and its fast-growing competitor, PDD-owned Temu.
H&M declined to comment on Shein's market share. Zara did not immediately respond to a request for comment.
To be sure, Shein has some features in common with Zara and H&M, which are often credited with spearheading the concept of replicating runway looks and bringing them to shoppers for less, also known as "fast-fashion."
All three retailers have faced criticism for allegedly stealing designs from other brands, but some critics say that Shein's super-fast production cycle makes it an especially egregious offender.
A lawsuit in July for intellectual property infringement alleged Shein uses artificial intelligence and a proprietary algorithm to scrape the internet for design ideas, sometimes resulting in direct plagiarism.
But Shein’s key strategy, according to analysts and investors, is to tap a network of largely China-based suppliers, which buck traditional manufacturing trends by accepting small initial orders and scale up based on demand.
That ultra-flexible supply chain allowed Shein to create a fundamentally different business model than established fast-fashion players like Zara and H&M, which pioneered shorter production timelines but still largely rely on predicting what styles shoppers will buy.
“For the most part, a Zara or an H&M is still anticipating fashion trends, pre-ordering that product between three to 12 months ahead of the sale, and committing to fairly large order volumes,” said Simon Irwin, a former Credit Suisse analyst who has researched Shein’s pricing strategies.
One 2022 study found Shein typically receives orders within five to seven days and can then send the products directly to consumers via air freight.
Shipping can still take up to two weeks, depending on the product and a shopper's location. However, the direct-to-consumer model gives Shein an advantage over brick-and-mortar retailers, which must distribute apparel across a global network of stores and keep those locations stocked, according to Sheng Lu, a professor of fashion and apparel studies at the University of Delaware.
Patricia Cifuentes, senior analyst at Bestinver’s securities division, which holds Inditex shares, said delivery speed is a fundamental advantage for Zara compared to H&M and even Shein.
"The sooner a customer receives the garment, the less likely they are to return it. So Inditex wants to be the fastest in sending you the product, but also if you do not like it, they want to put it back into the system as quickly as possible to maximize the chances it will sell at full price."
From November 2022 to November 2023, Zara and H&M respectively brought 40,000 and 23,000 new items to the U.S. market, according to data from Lu. The data analyzes each retailer's "stock keeping units," or SKUs, used to identify individual products, including different sizes of the same garment.
Shein introduced 1.5 million products over the same period - 37 times more than Zara and 65 times more than H&M.
And while both companies still work with suppliers in China, Inditex and H&M have large manufacturing bases in other countries.
In 2022, 98% of Inditex’s production was based in 12 countries, including Portugal, Morocco, Turkey, and Spain, where the company is headquartered. H&M counts Bangladesh, along with China, as its largest production market for clothing, a spokesperson said.
Shein declined to comment on its supplier network, but recent import records show virtually all of its products imported in bulk to the U.S. came from China.
U.S. wholesale prices were unchanged in November in another sign of gradually easing inflation.
Cheaper gas gave a big assist to the benign inflation report, but prices in most major categories were also muted.
Economists polled by the Wall Street Journal had forecast a 0.1% increase in the producer price index.
The flat reading in wholesale inflation follows on the heels of a slightly warmer consumer price report.
Both inflation barometers point to a sufficient slowdown in prices to keep the Federal Reserve on hold Wednesday after its last big meeting of the year. The central bank is widely expected to leave interest rates unchanged.
Wholesale costs often foretell future inflation trends. The increase in wholesale prices over the past 12 months slowed to 0.9% from 1.2% in the prior month.
A separate measure of “core” wholesale prices that strips out volatile food, energy, and trade margins edged up 0.1% last month, the government said. Core prices are a better predictor of future inflation trends.
The increase in these so-called core prices over the past year decelerated to 2.5% from 2.8%, marking the lowest level since February 2021.
Inside the report, energy prices sank 1.2% in November after a decline in the cost of oil. That held down the headline wholesale inflation reading.
Food prices rose a sharp 0.6%, however, led by a 59% increase in the price of eggs. Another outbreak of avian flu could keep egg prices high for a while.
The cost of services, a big source of recent inflation, was flat in November. That might bode well for further declines in the rate of inflation.
Inflation further down the pipeline was also soft. The wholesale cost of partly finished goods was unchanged while prices of raw materials dropped 1.4%. Both are negative compared to one year earlier.
The PPI report captures what companies pay for supplies such as fuel, packaging, and so forth. These costs are often passed on to customers at the retail level and give an idea of whether inflation is rising or falling.
Wholesale prices have fallen further and faster than consumer prices, but the two gauges tend to move in tandem over time.
Most senior Fed officials appear convinced inflation in the U.S. will continue to ease toward their 2% goal as higher interest rates slow the economy.