UPDATE 3-U.S. sees early ‘challenges’ dealing with new Philippines administration

Adds Blinken comment

By David Brunnstrom and Michael Martina

WASHINGTON, May 11 (Reuters) – The United States is seeking early engagement with the newly elected administration of Ferdinand Marcos Jr. in the Philippines, although historical considerations mean there will probably be some initial challenges, the chief U.S. policy maker for Asia said on Wednesday.

“Time will tell, but our desire will be to get off to a good start,” Kurt Campbell, the White House coordinator for the Indo-Pacific said of Marcos’s decisive victory on Monday in the Philippines’ presidential election.

“We are seeking early engagement,” he said. “There are some historical considerations that probably (mean), at least initially, there will be some challenges in that communication.”

The Philippines is a long-standing treaty ally of the United States, but the victory of Marcos – son and namesake of the country’s former dictator – is a potential blow to U.S. efforts to push back against China, Washington’s main strategic rival.nL2N2X30B2

Marcos’s relationship with the United States has been complicated by a contempt-of-court order for his refusal to cooperate with the District Court of Hawaii, which in 1995 ordered the Marcos family to pay $2 billion of plundered wealth to victims of Marcos Sr.’s rule. nL3N2WV114

Marcos has not visited the United States for 15 years, fearful of the consequences of the rulings.

The U.S. State Department and Department of Justice did not respond to requests for comment on Tuesday about whether Marcos would be granted diplomatic immunity if he visited, although lawyers and analysts say this would be customary.

U.S. Secretary of State Antony Blinken said that the United States looked forward to working with Marcos to strengthen the “enduring alliance” between the two countries, describing it as a special partnership rooted in a long and deeply interwoven history and shared values and interests.

“As friends, partners, and allies, we will continue to collaborate closely with the Philippines to promote respect for human rights and to advance a free and open, connected, prosperous, secure, and resilient Indo-Pacific region,” Blinken said in a statement.

On China, Marcos has long-standing ties with Beijing and is seeking a new deal with Chinese ruler Xi Jinping over the contested waters of the strategic and resource-rich South China Sea.

Campbell, speaking at an event at the U.S. Institute of Peace ahead of President Joe Biden’s summit with Southeast Asian countries on Thursday and Friday, said Washington would seek continued close partnership in the security realm and to increase trade and economic ties.

The Philippines will not attend the summit at the leader level due to its transition. nL5N2X26Z1

Campbell said U.S. relations with outgoing Philippine President Rodrigo Duterte “really rebounded” toward the end of his term, “at least at the strategic level.”

“Our expectation is we’ll be able to continue to work closely,” he said.

(Reporting by David Brunnstrom, Michael Martina and Simon Lewis; Editing by Mark Porter, David Gregorio, Bernadette Baum and Bernard Orr)

((michael.martina@thomsonreuters.com;))

U.S. seeks early engagement with new Philippines administration -U.S. official

WASHINGTON, May 11 (Reuters) – The United States is seeking early engagement with the newly elected Philippines presidential administration of Ferdinand Marcos Jr., U.S. Indo-Pacific coordinator Kurt Campbell said on Wednesday.

Campbell made the comment during an online event held by the U.S. Institute of Peace ahead of President Joe Biden’s summit with Southeast Asian leaders this week.

(Reporting by Simon Lewis, Michael Martina, and David Brunnstrom; Editing by Mark Porter)

((michael.martina@thomsonreuters.com;))

U.S. wants ASEAN to play more engaged role in Myanmar diplomacy – U.S. official

WASHINGTON, May 11 (Reuters) – U.S Indo-Pacific coordinator Kurt Campbell on Wednesday said Washington wants members of the Association of Southeast Asian Nations (ASEAN) to play a more deeply engaged role in diplomacy on the next steps in Myanmar following the coup there last year.

ASEAN has disinvited the leader of Myanmar from the grouping’s meetings and the leader of the country’s ruling junta will not attend meetings between the regional blocs leaders and U.S. President Joe Biden in Washington this week.

(Reporting by Simon Lewis and David Brunnstrom; Editing by Mark Porter)

((simon.lewis@thomsonreuters.com; +1 (202) 680-0055;))

UPDATE 1-Wall Street watchdog to ramp up scrutiny of risky derivative products

Adds context

By Katanga Johnson

WASHINGTON, May 11 (Reuters) – The chair of the U.S. Securities and Exchange Commission warned on Wednesday that the agency may bring more enforcement actions in cases involving risky derivatives, saying such products can create “system-wide risks” during times of market stress.

Last month, the agency brought charges against Bill Hwang, the owner of private fund Archegos, and other executives, alleging they engaged in fraud and market manipulation to create huge exposures to a handful of stocks using sophisticated equity swaps. nL3N2WP422

“Market participants’ use of derivatives touch so many parts of our markets, from SEC-registered funds wrapping these products in publicly offered strategies, to numerous private funds using derivatives at significant exposure levels,” SEC Chair Gary Gensler told an industry audience on Wednesday.

“The use of derivatives can present unique and potentially significant risks to investors across market sectors … even to sophisticated investors, and can potentially create system-wide risks by operating in unanticipated ways when markets experience volatility or stress conditions,” he added, citing recent enforcement actions against such behavior.

“There may be more (enforcement actions) to come.”

U.S. and British financial regulators have been in discussions with market players including broker-dealers as they try to determine the fallout from the Archegos default.

Even more, Gensler’s comments breath new life into a long-running project at the SEC to apply stricter oversight to the securities portion of the derivatives market, as directed by the 2010 Dodd-Frank financial reform law.

The Commodity Futures Trading Commission has the bulk of responsibility for overseeing derivatives, but the SEC has lagged in its efforts to write required rules for the relatively small portion of the securities-based derivatives market.

Separately, Gensler also warned that swaps based on cryptocurrencies would generally be considered reportable security-based swaps under its rules.

“Without prejudging any one token … if a swap is based upon a crypto asset that is a security, then that is a security-based swap. Thus, our rules apply to them,” he said.

(Reporting by Katanga Johnson in Washington
Editing by Paul Simao)

((Katanga.Johnson@tr.com; 202-579-4165; Reuters Messaging: @kjspeakstruth))

U.S. seeks to boost investment to ASEAN countries -U.S. official

WASHINGTON, May 11 (Reuters) – The United States is seeking to create opportunities for more U.S. investment in ASEAN countries, U.S. Indo-Pacific coordinator Kurt Campbell said on Wednesday, ahead of President Joe Biden’s summit with Southeast Asian leaders this week.

Campbell, speaking at an online event at the U.S. Institute of Peace, said there is a deep sense in the Biden administration that other pressing global challenges cannot distract the United States from the Indo-Pacific region.

The leaders are set to discuss issues including China, Myanmar, and the war in Ukraine, he said.

(Reporting by David Brunnstrom and Michael Martina; Editing by Mark Porter)

((michael.martina@thomsonreuters.com;))

UPDATE 2-Sterling edges up against dollar, little changed versus euro

Recasts, adds background

May 11 (Reuters) – Sterling barely changed against the euro on Wednesday, while it edged up versus the dollar but still within striking distance with its lowest since June 2020.

The dollar weakened after moving sharply off its lows and briefly turned positive on the day after economic data showed inflation was unlikely to cause the Federal Reserve to adjust their aggressive path of monetary policy. nL2N2X31E0

Analysts said the pound would be capped by markets scaling back hawkish expectations about the Bank of England’s policy stance and by uncertainty around the British economic outlook.

Money markets were pricing in around 110 basis points (bps) of Bank of England rate hikes by year-end, from 120 bps late last week and around 145 bps at the end of April. BOEWATCH

Expectations for rising interest rates usually boost the value of a currency.

“Sterling is the easier short because the rate hikes are priced in, the slowdown is happening before our eyes, and the political backdrop is a threat to sterling too,” SG forex analysts said.

Britain is on course to enter a technical recession in the second half of this year, an economic think tank said on Wednesday. nL5N2X2762

At 1509 GMT, the pound was up 0.1% against the U.S. dollar at $1.2336, GBP=D3 just above its lowest level since June 2020, which was $1.2262, reached on Monday.

It was down 0.02% versus the euro at 85.47 pence. EURGBP=

“Politics is never far from sterling and could weigh on it at any time,” ING analysts said, mentioning risks of UK-EU trade relations deteriorating again.

Britain rejected on Wednesday European Union proposals to resolve a standoff over post-Brexit trade rules for Northern Ireland, saying it might take direct action in a move Ireland said would trigger legal action by Brussels. nL5N2X325R

Britain wants a full overhaul of the agreement, while the EU is looking for changes within the terms of the existing deal.

(Reporting by Stefano Rebaudo; Editing by Angus MacSwan)

((stefano.rebaudo@thomsonreuters.com ; +39. 0266129431; Reuters Messaging: stefano.rebaudo.thomsonreuters.com@reuters.net))

UPDATE 2-Brazil’s inflation hits highest for April in 26 years, +12.1% in 12 months

Adds comments from economists

By Marcela Ayres

BRASILIA, May 11 (Reuters) – Brazil’s inflation slowed in April but still posted the steepest rise for the month in 26 years, pushing the 12-month figure to over 12% amid continued pressures on food and fuel, official figures showed on Wednesday.

Consumer prices as measured by the benchmark IPCA index rose 1.06% in April, slightly above the 1.0% increase forecast by economists in a Reuters poll, but lower than the 1.62% increase seen in March.

According to the statistics agency IBGE, the monthly result was again driven by the rise in food and beverages (+2.06%), and transport (+1.91%), groups that have been impacted by skyrocketing commodities and disrupted supply chains in the wake of the Russia-Ukraine war.

Eight of the nine groups surveyed showed increases in April, reinforcing the spread of inflation in Latin America’s largest economy. Only expenditures with housing fell (-1.14%) due to cheaper energy tariffs.

In the 12 months through April, prices were up 12.13%, against 12.07% expected in the poll, and higher than the 11.3% print seen through March.

That is even further from this year’s official target of 3.5%.

Deteriorating inflation has made economists worsen their outlooks not only for 2022, but also for next year, which led the central bank to signal a likely interest hike in June, after already raising rates to 12.75% from a 2% record low in March 2021. nL2N2X20U6

The latest figures point to a broad-based increase in price pressures, said William Jackson, Chief Emerging Markets Economist at Capital Economics, who expects additional 75 basis points of hikes over the coming months, to 13.5%.

Felipe Oliveira, an economist at MAG Investimentos, said that inflation should slow down due to cheaper electricity and a lower increase in food prices from June, the harvest season.

But he pointed out that gasoline is about 20% below international prices, with possible adjustments helping to keep inflation high, “although below the rates observed in recent months”.

(Reporting by Marcela Ayres; Editing by Angus MacSwan)

((marcela.ayres@thomsonreuters.com; +55 11 5047-2444;))

UPDATE 1-Philippines’ Marcos to ‘hit the ground running’ as president

Marcos says economic team crucial

Political affiliation not issue in cabinet selection – Marcos

Nominates president’s daughter for education minister

Recasts, adds details, quotes

By Neil Jerome Morales

MANILA, May 11 (Reuters) – Philippines election winner Ferdinand Marcos Jr said on Wednesday he would hit the ground running as president and was looking very carefully at candidates for his economic team, with infrastructure, jobs and energy prices his priorities.

Marcos, the son and namesake of the late dictator who ruled for 20 years before his 1986 overthrow, said his first nominee for his cabinet was Sara Duterte-Carpio, his vice presidential running mate and daughter of incumbent President Rodrigo Duterte.

“My intention is to hit the ground running. If the proclamation pushes through later this month, we have to be ready. We are already talking about the appointments,” Marcos told a news conference.

“The economic managers are going to be critical for the next several years because of the pandemic and the economic crisis. So that is something that we are looking at very carefully.”

Marcos said political affiliation was not a factor in selecting people to work in his government.

“I continue to be guided by, as I said before, competence and willingness to work with the next administration. In our discussions, we removed immediately what their political leanings have been.”

Duterte-Carpio was the only potential cabinet member mentioned by Marcos.

She was a vital component of the Marcos campaign, making inroads for him in new voter territory and helping him to tap her father’s huge support base.

He had said very little about his objectives during his campaign, focusing on an ambiguous message of unity in a country that has long been divided in its opinions of the Marcos family and its far-reaching political influence.

His skipping of debates and media appearances frustrated business and university groups, who said he was avoiding scrutiny and denying voters the chance to hear his platforms.

In his statement, he said critical focus areas for his presidency were energy prices, jobs, infrastructure and education.

He said he wanted a government that gives voice to everyone who wants to help and that he was guided by the 31 million Filipinos who voted for him and “have agreed to unify and help us unify the country”.

(Reporting by Neil Jerome Morales; Additional reporting by Karen Lema; Writing by Martin Petty; Editing by Nick Macfie)

((martin.petty@tr.com; +66896070413))

UPDATE 1-No quiet retirement for Philippines’ Duterte when Marcos takes over presidency

Adds attempts to reach Marcos and Duterte paragraph 15

By Karen Lema and Neil Jerome Morales

MANILA, May 11 (Reuters) – A quiet retirement for Philippines President Rodrigo Duterte is unlikely when he makes way for successor Ferdinand Marcos Jr., but efforts to put him on trial for thousands of killings in his “war on drugs” appear unlikely to prosper.

Duterte’s daughter, Sara Duterte-Carpio, helped get Marcos elected by agreeing to be his vice presidential running mate, allowing the son of the late dictator to tap her father’s huge support to seal a comeback for the disgraced Marcos dynasty.

Though there has been no formal quid-pro-quo, political experts say it is unlikely Marcos would risk burning crucial bridges by allowing the International Criminal Court (ICC) to investigate Duterte over the alleged execution-style killings in his war on drugs.

Duterte, 77, will be stripped of the legal armour shielding him from legal action once he becomes a private citizen next month, making him an open target. Unbowed, he has said he will search for drug peddlers after he retires and “shoot them and kill them”.

At least 6,200 people have been killed in the war on drugs during Duterte’s six-year rule. Rights groups and critics say law enforcers summarily executed drug suspects, but police say those killed were armed and had violently resisted arrest.

The ICC in September approved an investigation into the killings, but temporarily suspended it in November at Manila’s request. The ICC did not immediately respond when asked for an update on the probe’s status. nL1N2SA2YK

“He will be safe, untouchable. Worse, even as ex-president, he could still weigh in on policy,” said Carlos Conde, senior Philippines Researcher at Human Rights Watch.

Marcos, during the campaign, has already intimated what he might do with the ICC investigators. “I will let them into the country, but only as tourists,” he said in January.

“We have a functioning judiciary that is why I do not see the need for a foreigner to come and do the job for us,” Marcos said, mirroring the position of Duterte, who has repeatedly said he will not cooperate with the ICC.

POLITICS IN HIS DNA

However, it is not only the ICC that Duterte would have to contend with but also families of victims and human rights groups demanding accountability for the killings and other violations in the past six years.

Randy delos Santos, an uncle of high-school student Kian delos Santos, whose death in 2017 led to rare convictions of police officers in the drug war, hoped the ICC would resume its probe.

“There are so many families of drug war victims, not just me,” said Delos Santos, who cited many other cases belying government claims the victims had fought back.

Cristina Palabay of human rights group Karapatan said: “We are also preparing cases to file against Duterte after he steps down from office.”

Spokespersons for Rodrigo Duterte and Marcos did not immediately respond to requests for comments.

Duterte has only given hints on his future plans. He said this week he will return to his hometown of Davao city, where he served as mayor for more than two decades before becoming president in 2016.

“I will stay here in Davao. Even as a civilian, I will still help you. Just like what I promised when I first became mayor,” Duterte said after casting his vote on Monday.

Earl Parreno, author of a biography of Duterte entitled “Beyond Will & Power”, said he finds it difficult to imagine the president totally dropping out of politics. “Will he really retire quietly?” he said.

Duterte may decide to run for local office in the mid-term polls in 2025, Parreno said. It is not uncommon for former presidents in the Philippines to seek lower posts in office.

“If you have politics in your DNA, it would be difficult to stay away from it,” he said.

True to form, Duterte did not mince words when telling supporters of his plans after the presidency.

“I will go riding on a motorcycle and roam around…and I’ll search for drug peddlers, shoot them and kill them,” he said.

(Reporting by Karen Lema
Editing by Ed Davies and Raju Gopalakrishnan)

((karen.lema@thomsonreuters.com; +632 841-8938;))

Philippines presidential election winner Marcos says will hit the ground running

MANILA, May 11 (Reuters) – Philippines presidential election winner Ferdinand Marcos Jr said on Wednesday his intention was to hit the ground running when he takes office next month, and said he was looking very carefully for economic managers, whose roles are critical.

Marcos, the son and namesake of the late dictator who ruled for 20 years before his 1986 overthrow, told a news conference his first nominee for cabinet was Sara Duterte-Carpio, his running mate and winner of the vice presidency, who is daughter of the incumbent president.

He said critical areas for his presidency were energy prices, jobs, infrastructure and education.

(Reporting by Neil Jerome Morales; Writing by Martin Petty)

((martin.petty@tr.com; +66896070413))

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