Month: September 2014

Is Asia the best place for women in finance?

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Asia might be the place to be for females working in finance, an industry infamous for its grueling hours and male-dominated management culture.

Eighty-four percent of finance professionals in Asia Pacific would recommend their company to a female friend, compared with 82 percent in the US, 80 percent in Europe and 66 percent in the Middle East, according to a global survey of 5,000 banking and finance professionals published by recruitment site eFinancial Careers on Tuesday.

“Asia Pacific is a friendly place for female professionals in financial services. We are seeing many of the local and international financial services institutions here developing gender diversity initiatives,” said George McFerran, director at eFinancial Careers.

Read More Gender wage gap in Asia set to get worse

“Flexible working hours, childcare benefits and mentoring programs are among the most popular. They are proven ways to improve the gender balance and they also help attract top female talent,” he said.

Mother-of-two Myra Lim, who is employed at ANZ in Singapore, enjoys flexibility in her work day.

“I get a lot of work-life balance as I’m left to do whatever I need to do without being micro-managed. If I need to rush off to look after my children there are no issues,” Lim told CNBC.

Read More Bet on women with Barclays’ new index

While Lim works five days a week, flexible work arrangements allow mothers at ANZ to have shorter work weeks.

“Frankly, I don’t see much gender discrimination here,” she added.

Her sentiment was shared by Cheong Mei Theng, who has spent over a decade working in Singapore’s private banking industry.

The institutions I’ve worked at have been very supportive of employees with children, she said. “I recall during my time at Citi, there were a few mothers in senior positions that wanted time off and managed to negotiate with the company to get a three-day work week.”

Cheong has also been involved with organizing events featuring powerful female corporate figures to recognize women leaders in business. While such events are positive for celebrating successful women, just 59 percent of financial professionals surveyed in Asia feel that women are fairly represented in management positions.

The global situation is similar; only 53 percent in the U.S., 48 percent in the Middle East and 37 percent in Europe agree that women are represented fairly in senior positions.

Read More One woman on the board makes a difference: Study

“Getting more women into senior positions is a priority for many financial services companies, and while many are spending a great deal of time and effort on this, there is no quick solution. Another crucial step will be addressing the perception of unequal pay, it is damaging both for the industry and the people in it,” McFerran said.

Only 52 percent of women working in the industry in Asia think they are fairly paid, compared with 50 percent in the US and 42 percent in the UK.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Fed could jolt markets, regardless of what it does

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

The Fed could jolt markets Wednesday regardless of what it does, simply because of the wide divergence in Wall Street views about its move toward more normal interest rate policy.

The Fed this fall enters a period of policy transition, with the final wind down of its bond buying program to be announced in October—and then a slow walk to its first rate hike sometime next year. It is a turning point, around which the Fed will be forced to manage expectations while trying to keep the markets and economy on an even keel.

The divide in opinion is over whether the Fed will alter the language in its post meeting statement to recognize that it is getting closer to the time when it will begin raising interest rates from zero.

The Fed also releases its economic forecasts and Fed officials’ views on the course of interest rates at 2 p.m. EST. Fed Chair Janet Yellen holds a press briefing at 2:30 p.m. EST, also a potential market moving event.

For days, markets have been moving closer to a view that the Fed will drop a dovish phrase from its statement, which says it would keep rates low for a “considerable time.”

In a CNBC survey, more than 40 percent of the 37 respondents see the Fed dropping the reference to “considerable time.” The market also has been speculating, but to a much lesser extent about the Fed altering language that says “there remains significant underutilization of labor resources.”

Read More Third quarter US growth outlook cloudy: Survey

“The risk going in is that the Fed materially changes the language. Most people think they won’t, and the market is more short than it was a week ago,” said Ian Lyngen, senior Treasury strategist at CRT Capital. “That doesn’t mean the baseline expectation was for a change. If you had to choose one risk it would be that the statement is a bit more hawkish. But the vast majority of people believe there will be no material change to the ‘considerable time.'”

Stocks have been choppy as the markets mulled the potential for changes over the past two weeks, and rates edged higher. Stocks had their worst weekly performance last week since Aug. 1 and the first weekly loss in six weeks. But on Tuesday, stocks rallied and the Dow rose 100 points after a Wall Street Journal article added fuel to speculation that the Fed would do nothing. Lyngen said there was short-covering in Treasurys.

Stocks tend to gain on average on Fed meeting days. According to Bespoke, since the Fed moved to zero interest rate policy in 2008, the S&P 500 has averaged a half percent gain, versus a 0.35 percent Fed day gain since 1995. On the last six meeting days, since the Fed began tapering quantitative easing, stocks were higher on four of them, including the last three.

“If nothing is changed, I think that is a bullish event for the Treasury market. In bonds, 10s (10-year notes) and 30s would lag in a rally if nothing is changed, I think that is a bullish event for the Treasury market. If they do change it, I think you could see the curve bear flatten, led by 3s and 5s and to a lesser extent and to a lesser extent 2s.” In essence, short-term rates would rise on expectations of a higher Fed funds rate.

Strategists said if the Fed does nothing, the dollar could weaken and stocks could rally a bit more.

Read More The Fed’s muddied message causing market mess

“Those are relatively small moves in comparison to the potential for the statement language changing,” said BlackRock’s Jeffrey Rosenberg of the recent speculative market moves. “It certainly tells you about the amount of short-term positioning in the market either way … looking at these market moves is disconcerting but you lose sight of the broader and bigger picture of whether its tomorrow, or October or December, we’re going to face a period of policy normalization. This is going to be a big deal and full of meaning” after six years of super low rates.

Wall Street’s economists are divided about whether the language will be changed. Goldman Sachs expects the “considerable time” phrase to remain, while Bank of America and JPMorgan expect the “considerable time” phrase to be dropped.

“The characterization of the labor market is at odds with incoming data, and that really is the debate. If the Fed is truly data dependent, then the language has to change,” said Rosenberg, BlackRock’s chief investment strategist for fixed income. “There is a conflict between the characterization, the language and the data, and that’s what’s getting the markets into a frenzy in terms of the speculation.”

Read More Fleckenstein on missing the rally: ‘So what?’

Jack Ablin, CIO of BMO Private Bank, said he doesn’t expect a change in the Fed statement yet, but he said if there is then interest rate sensitive and commodities-related stocks could get hit, as they are vulnerable to a higher dollar.

“I think there’s just much ado about nothing,” he said. But Ablin did take a look at how different asset classes performed when the yield on the 10-year yield moves higher by 10 basis points or more in the course of a week. The S&P 500 performed the best on average in the nine such occurrences over the past 50 weeks.

“The average return of the S&P was a half percent for the week because rates were rising on better economic news. It’s a positive. What got hammered? REITs and gold,” he said.

Lindsey Group chief market analyst Peter Boockvar said the focus should be more on the language about labor slack because if the Fed changes that line in the statement, it would be a real indication that it sees less labor slack and rates will rise sooner.

Rosenberg said markets will focus on the language, and then move onto the Fed’s forecast and the chart of interest rate expectations of Fed officials, which will now include 2017.

Read More Why this could be a brutal week for gold

Goldman Sachs economists expect to see the chart, which uses dots to represent anonymous Fed official forecasts, to show a small increase in the median forecasts for the Fed funds rate to 1.25 percent in 2015, an unchanged 2.5 percent in 2016 and a new rate of 3.5 percent in 2017.

Besides the Fed, there are mortgage applications at 7 a.m. EST, then CPI inflation data and the current account, at 8:30 a.m. EST. The National Association of Home Builders survey is at 10 a.m. Government oil inventories data is at 10:30 a.m. and will be important after West Texas Intermediate crude rallied more than 2 percent Tuesday on comments from OPEC that it expects lower production.

Earnings are expected from FedEx, General Mills, Cracker Barrel and Lennar, ahead of the opening bell. Herman Miller and United Natural Foods report after the close.

—By CNBC’s Patti Domm

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Mobius: Not worried about China hard landing

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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While recent economic data out of China has painted a grim picture of the world`s second largest economy, Mark Mobius says he`s not worried about a hard landing.

“I`m not worried because at 6 or 7 percent [growth], it`s [still] huge,” Mobius, the executive chairman at Franklin Templeton, told CNBC on Tuesday.

“If you look at the growth when they were at 10 percent growth back in 2010 – they were adding about USD 848 billion to the economy. At 7.7 percent you`re adding USD 986 billion. The numbers are very, very large. Even with lower percentage increase the dollar value is increasing,” he said.

China`s economy grew 7.7 percent in 2013. The government has set its growth target at 7.5 percent this year.

The emerging markets guru is equally sanguine on the outlook for Chinese equities.

“With the A shares being listed in Hong Kong, it`s going to be a lot of interest in buying more into the A shares and that will increase the overall size of interest and generally opportunity for China,” he said. “So I would think the outlook is pretty favorable.”

Next month, the Shanghai-Hong Kong Stock Connect, also known as the “through train” scheme, will come into effect. It will allow foreign investors to place buy or sell orders on Shanghai`s A-share market through brokers in Hong Kong. Chinese investors meanwhile will be able to use mainland brokers to invest in Hong Kong`s H-share market.

Mobius adds that the market also looks attractive from a valuation perspective, particularly when compared with other emerging markets like India.

Alibaba: to buy or not to buy?

Weighing in on Alibaba`s initial public offering (IPO), Mobius said he`s not looking to gain exposure to the Chinese internet behemoth at this point as there`s far too much hype.

“It`s a very, very hyped story. When it`s listed, I`m sure there will be a lot of support from investment bankers. But from a longer-term standpoint, we`d rather wait and get in at a better price, if we want it.”

Alibaba raise the range for its IPO to USD 66 to USD 68 a share on Monday, from the USD 60 to USD 66 range it set last week. The company began its roadshow for the IPO last week, attracting enough demand to cover its entire deal within two days, according to Reuters. Trading is set to kick off this week.

Trouble in Europe

With Europe`s fragile economic recovery sputtering, Mobius says the European Central Bank (ECB) is poised to step up its monetary stimulus.

“I think they are getting very worried and for that reason you`ll see more money being printed,” he said. “The European Central Bank is going to be much more aggressive than they have been up to now.”

Last month, the ECB surprised investors by cutting interest rates and announcing a program to pump money into the financial system and stimulate bank lending by buying private sector financial assets.

Contrarian call

Despite geopolitical risks clouding Russia`s outlook, Mobius is still investing there.

“We`re still in Russia,” he said. “We don`t think the situation in Ukraine is going to last forever and some agreement will be made…so I think this is a very short term event and a good opportunity to be in Russia.”

The Micex stock index, which tracks the prices of the 50 most liquid Russian stocks, is flat year to date, underperforming the broad MSCI emerging markets index, which is up 5.4 percent.

Copyright 2011 cnbc.com

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Apple on the brink of another ‘super cycle’

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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With the launch of the iPhone 6, Apple is poised to begin another `super cycle`, analysts at Cantor Fitzgerald told CNBC.

“We believe Apple is in the midst of another `super cycle` that begins with the rapidly growing `phablet` market via the iPhone 6 Plus and extends into the wearable category in early 2015 with Apple Watch,” said Brian White, managing director and global head of technology hardware, software and equity research at Cantor Fitzgerald.

White drew parallels with the success Apple enjoyed after launching the iPod in 2001, the iPhone in 2007 and the iPad in 2010. He said the technology giant, which has fallen out of favor with some investors due concerns it had lost its ability to innovate, is in for another period of strong performance.

Apple dominated the global smartphone market for years after launching the original iPhone in 2007. However, later models weren`t as successful and the firm lost considerable market share to Samsung, which tapped consumers` desire for large-screened smartphones far earlier.

Four years after Samsung, Apple has finally made its foray into the `phablet` market – a hybrid of a phone and tablet – with the launch of the 4.7-inch iPhone 6 and 5.5-inch iPhone 6 Plus last week. It also unveiled the long-awaited Apple Watch, which won`t be available until 2015.

Pre-orders for the two new iPhone models totaled four million units in the first 24 hours, twice the number of iPhone 5 pre-orders received in 2012, smashing all previous records.

“In our view, Apple demonstrated to the world last week that it is innovating like never before, expanding its addressable market with new product categories, strengthening its digital matrix, and eyeing new categories,” said White. He expects Apple`s price-to-earnings multiple to expand and sees the share price rising 21 percent to $123 over the next 12 months.

White is equally bullish on Apple`s foray into the wearable tech sector: “We believe Apple Watch will prove to be a home run with the fastest, new product, first-year unit sales volume in the company`s history, giving Apple a foothold in what we believe will be a large, wearable tech market,” he said. He also expects that a more robust Apple TV is on the horizon.

But not all analysts agree are upbeat.

“It`s right that it is a new category [for Apple] but it`s not right to say it`s similar to an iPhone or an iPod or iPad because those products were totally new,” Mark Newman, senior analyst at sell-side research and brokerage firm Sanford C. Bernstein told CNBC.

“I don`t really think `super cycle` is the right word, but the iPhone 6 is going to be a significant product. I think this year they are going to gain a bit of share back from Samsung… it will make a pretty big impact,” he added.

Although Apple`s fresh products could see the firm regain market share, Newman pointed out that some of the damage was not repairable.

“Some of it they can gain back but some of it has gone forever… It was their mistake and incompetence because they refused to understand what the customers were telling them,” he said, referring to demand for larger-screened phones.Copyright 2011 cnbc.com

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Pimco’s best investment ideas right now

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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While it may be harder for investors to find high returns in this market, many good opportunities still exist with the right names, Pimco’s Mark Kiesel told CNBC Monday.

The best investments can be found in industries with superior growth, both near-term cyclical growth as well as long-term secular growth, and are in industries with pricing power, he noted.

“Above all, we’re looking for high barriers to entry. These are companies that have unique licenses, spectrum, permits or real estate that make them very good long-term investments,” said Kiesel, the firm’s deputy chief investment officer and managing director, in an interview with “Street Signs.”

Read More: Why Thomas Lee is bullish on stocks

Here are his plays.

Energy

Cheniere Energy is a great play on the exporting of natural gas, which is expected to begin in two or three years, Kiesel said. He expects Cheniere to be exporting approximately 5 percent of the gas supply in the U.S. in about four or five years.

Read More: Why US needs to repeal oil export ban: Hess CEO

Targa Resources, which is involved in gathering, processing and fracking oil and natural gas, is benefiting from the boom in North America’s Bakken region, he said. “This is a company that’s growing at 20 to 30 percent a year. It’s unbelievable.”

Wireless

Verizon has 105 million subscribers, a growing average revenue of 5 percent, and $17 billion of free cash flow, Kiesel said.

“This is a company where the bond holders win and the equity holders win because of significant free cash flow,” he added.

Lodging

For a “pure play on luxury,” Kiesel likes Starwood.

“The business traveler is back. The consumer is finally travelling again.”

Read More: ‘Pruning portfolios’ ahead of Alibaba IPO: Cashin

Starwood North America’s RevPar (revenue per available room) is up over 6 percent, occupancy is up 3 percent and the company is raising rates about 3.5 percent, he noted.

Wynn Resorts is Kiesel’s play on Las Vegas. RevPar is up over 8 percent in the city and Wynn’s occupancy is near 95 percent, he said.

Read More: Take the gamble on these gaming stocks: Pimco’s Kiesel

On top of that, 73 percent of its future growth will come from Asia, where the company is spending $4 billion to build the most expensive casino in history, Kiesel said. He believes that will propel EBITDA (earnings before interest, taxes, depreciate and amortization) growth 20 percent going forward.

—By CNBC’s Michelle Fox

Dislcosure: Kiesel and Pimco own LNG, TRGP, VZ, HOT and WYNN

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Central banks in driving seat this week

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

Three central bank meetings will likely top the agenda for Asian markets this week, with particular focus on the US Federal Reserve.

On Wednesday, the Federal Open Market Committee ends its two-day review and traders are bracing for an increasingly hawkish tone from Fed Chair Janet Yellen.

Last week, global equity and currency markets came under pressure on speculation that the central bank could remove language about keeping rates low for a “considerable time”. Strategists say if that were to happen, it would start the countdown for the Fed`s first rate hike.

“With QE (quantitative easing) due to wind down completely, the Fed is expected to flesh out some detail around the exit strategy and no doubt the debate around the fed funds rate will continue,” said Stan Shamu, market strategist at IG, on Friday.

Emerging markets will pay close attention as potential tightening moves could spark another round of capital outflows, similar to 2013`s “taper tantrum.”

Back in Asia, Malaysia`s central bank is expected to hold fire at Thursday`s policy meeting after hiking rates in July for the first time since 2011.

“With Governor Zeti`s recent comments that a sharper-than-expected slowdown would not prompt further rate adjustments, we now expect the Monetary Policy Committee to pause next week, though this is a very close call,” said economists at Citi in a note.

“For now, with higher medium-term inflation and potential growth likely raising the neutral policy rate, we see the rate hiking cycle as delayed, not derailed, and we see the next window for a rate hike in November,” they said.

Lastly, the Bank of Thailand is also expected to leave rates on hold on Wednesday.

“Political uncertainty and the recent coup are weighing on growth and tempering inflation pressures. Rates are likely to remain accommodative for the rest of 2014, though any further deterioration in the outlook could prompt more rate cuts,” said Moody`s Analytics in a report.

On the economic calendar

Apart from central banks, traders will watch economic data releases.

On Monday, India`s wholesale price index (WPI) for August will be released. Inflation dropped to a five-month low of 5.19 percent on year in July. Moody`s expects prices likely rose 5.3 percent on year in August and sees them bottoming around 5 percent in the coming months.

On Thursday, Japan`s August trade report is due before Tokyo`s market open and could disappoint investors. Economists surveyed by MNI expect a 26th straight month of deficit while exports are seen declining 2.6 percent on year, compared with July`s 3.9 percent jump.

Finally, New Zealand`s second-quarter gross domestic product (GDP) is expected to show a modest 0.5 percent quarterly rise, following the first quarter`s 1 percent gain, according to Moody`s.

“The reconstruction of Christchurch and increasing residential building are supporting GDP growth. Weaker agricultural‐based manufacturing and softer net exports likely dragged on the headline figure. Firming global demand and solid domestic growth support a favorable outlook in the coming year,” the group said.

Copyright 2011 cnbc.com

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Why Middle East is a bigger risk than Russia

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

The unfolding Russia-Ukraine crisis isn`t a systemic risk, one analyst told CNBC, warning that political tensions across the Middle East and Africa (MENA) deserve greater attention.

“The Middle East and Africa, no question about it, is a greater systemic risk. Flare-ups in Nigeria, Syria, Iraq, potentially Libya, Saudi Arabia, and Kuwait are far more significant than Russia and Ukraine,” said Viktor Shvets, head of Asia strategy research at Macquarie.

It`s not just the rapidly-expanding militants of the Islamic State (IS) in northern Iraq and Syria that are spooking the MENA region. Libya also faces its own jihadists after Islamist group Dawn of Libya took power in Tripoli last month. Meanwhile, Nigeria`s Boko Haram recently seized the town of Baram in the northeast it attempts to create an Islamic state.

News versus risks

“What is important [for investors] is to decide what is news and what is systemic. The way I look at Russia-Ukraine, it is news,” said Shvets, noting the key to assessing systemic risks is whether players are rational or not.

“The Russia-Ukraine [crisis] is not systemic. Russia as a government might not necessarily agree with everybody but it is rational,” he said, highlighting the fact that Russia has been a nation for 1,000 years. On the other hand, the Middle East is facing a vacuum of power, he stated, describing the region as a tribal society that lacks defined, state-based leadership.

Poor governance has been widely cited as the key reason for much of the region`s political turbulence and economic upheaval in recent years, including the 2011 pro-democracy movements known as the Arab Spring.

Meanwhile, Putin`s leadership during the six-month long Eastern European offensive has soared. In the most recent opinion poll conducted in August, his approval rating stood at 84 percent.

“Whenever you have a vacuum of power, when there`s a circumstance where there is nobody who acts rationally, that`s where you have systemic risks, particularly if you have resources such as oil and gas. That`s why the Middle East and Africa is systemic and Russia-Ukraine is not,” he said.

Majority opinion

Just because something is organized doesn`t mean it isn`t systemic, said Vishnu Varathan, senior economist at Mizuho Bank, responding to Shvet`s logic. A systemic risk is one that pervades through the entire system, Varathan said.

Sentiment among the majority of experts is split as to which crisis is more concerning.

“Both are systemic risks. Tensions in the Middle East could risk sparking a second round of the `Arab Spring` while the economic impact of sanctions on Russia is just beginning to be felt in Europe. We`re going to see even more economic pressure with tit-for-tat sanctions and a potential escalation of military conflict,” said Varathan.

Meanwhile, retired US Army General Wesley Clark told CNBC last week that Vladimir Putin`s actions in eastern Ukraine and what that means for NATO and the future of the West are a much bigger problem than militant Islamists, which he views as “a particular, localized threat.”

Other risks

As for other geopolitical and economic concerns weighing on markets, Macquarie`s Shvets doesn`t see much cause for concern.

Regarding growth concerns in the world`s second-largest economy, he said “until China starts collapsing and having a credit crisis, it will become systemic. But right now, it`s not”.

He dismissed China`s offensive in the South and East China Seas, calling its shaky relations with Vietnam, Philippines and Japan just “news.”

And as for the prospect of an independent Scotland: “That`s far from being systemic for anybody; it`s not relevant to anybody except for a few select people,” he said.

Copyright 2011 cnbc.com

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Did Apple’s Tim Cook think differently enough?

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Apple CEO Tim Cook debuted a line of new products last week to consumers’ delight. The tech giant launched the iPhone 6 and iPhone 6 Plus, the Apple Watch and a new mobile payments system called Apple Pay.

So, how will the public like them apples? CNET.com Senior Writer Dan Ackerman thinks Cook made more of a case for software than hardware this time around, calling Apple Pay the company’s “big secret weapon.”

“It’s not as flashy as having a hardware product like a wristwatch or a phone, but it could really remake digital payments,” he remarked.

Apple Pay enables users to pay for purchases with a single touch of their phone, and secures credit and debit card information with encrypted numbers that are never stored on the device, not Apple’s servers.

So far, Apple Pay boasts participation from credit issuers Visa, American Express, Bank of America, and Chase and can be used at over 220,000 stores and restaurants including Macy’s, Walgreens and McDonald’s.

With some 800 million credit cards already on file via the iTunes store, can Apple really make a wallet-less future possible?

Read More iPhone orders hit three-week wait

“People have been trying to get into that digital wallet area for a long time,” Ackerman said. “It’s tough because you usually have to download a different app for every store; but if Apple can have a cohesive view of it where you just use your phone, it’s got your credit card in it, and it works at all the stores you go to, that would be really huge.”
As for the next generation of iPhones, Ackerman was more measured about whether consumers will be rushing to buy. (If pre-order sales are any indication, though, Apple will have no trouble selling them.)

Read More Apple pay faces huge challenges, says PayPal executive

“It’s a home run in the sense that they’ve caught up to where they need to be,” he explained. “The iPhone in particular felt kind of dated for a couple of years with much smaller screens. A lot of people switched to Android phones where you get a 5-inch screen.”
The company’s iPhone 6 and iPhone 6 Plus feature larger screens, longer battery life and an improved 8-megapixel rear camera, with a starting price of $199. They go on sale Friday, September 19.

The other big gadget was the Apple Watch, which won’t be available until January. Starting at USD 349, it comes in multiple styles and sizes and is loaded with features such as the ability to make phone calls and send texts, sensors for health apps, and mobile payments through Apple Pay.

While it will miss the Christmas season, Ackerman believes showing it early was a strategic move to get the tech community, i.e. developers, rather than the general public excited about the smartwatch.

Read More How hackers could still bypass Apple Pay security

“It’s definitely not ready yet,” he said. “It’s something they’re going to put out next year, but you have to get it out there and get software developers access in order to develop apps for it.”

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

The Fed: On course and on the money

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

Investors – as opposed to variable-frequency traders – should not play the game of trying to pinpoint the timing, the extent and the speed of policy changes by the US monetary authority (Fed).

Focus on inflation if you want to know what the Fed will do next. Inflation is the key part of the Fed’s mandate, and the only truly binding constraint to American monetary policies.

That’s what I shall do in this paper.

Start with the Fed’s laudable concern about U.S. labor market conditions. But don’t get distracted by reports about 19 labor market indicators allegedly guiding the Fed’s decisions.

Maybe the Fed is doing that. But you don’t have to.

Read More: Fed’s Charles Plosser on ‘risky’ policy, watching wages

Why? Because the demand-supply forces in the labor market are reflected in the price of labor – hourly compensations, employment cost indices (wages plus benefits) and unit labor costs (hourly compensation minus productivity gains).

And here is what these three measures of labor market pressures are telling us.

Subdued labor costs

In the first half of this year, the (nominal) hourly compensation in the U.S. nonfarm business sector increased 3 percent from the year before. That compares with an average 1.9 percent increase in 2012 and 2013.

Don’t read any particular message here because hourly compensations won’t cause inflationary flare-ups if they are offset by productivity gains.

We, therefore, have to look at unit labor costs. In the first two quarters of this year, they were up 2.1 percent from the same period of last year – some acceleration from an average 0.9 percent increase observed in the previous two years.

By contrast, the employment cost index is showing a trendless 1.92 percent quarterly year-on-year increase between the second quarter of last year and (including) the second quarter of this year.

Clearly, none of these labor cost indicators should sound alarm bells at the Fed.

Read More: Fed: US consumers have decided to ‘hoard money’

That is also what the weak labor market data are telling us. The actual unemployment rate in August was nearly double the officially reported 6.1 percent — once you add in 7.3 million of involuntary part-time workers (people who work part-time because they can’t find a full-time job), and another 2.1 million people who have largely given up on job search and dropped out of the labor force. And there are 3 million people counted as the long-term unemployed – nearly one-third of all the persons officially registered as being out of work.

Again, this simple and robust evidence shows that there is no need for 19 indicators to see that the actual labor market slack in the United States remains quite large.

These few numbers, taken out of a report compiled and published by the U.S. Bureau of Labor Statistics (BLS), easily pass the specificity test because they correctly identify the problem we are trying to measure (i.e., the magnitude of the labor market slack). They will also pass the sensitivity test because they will show that the changing demand-supply relationships in U.S. labor markets are directly reflected in changing manpower costs.

You can see that by relating the above-cited increases in hourly compensations and unit labor costs to the fact that the unemployment rate and the number of unemployed have declined by 1.1 percentage points and 1.7 million people in the year to August.

Modest capacity pressures in product markets

The next question is: How does the current state of labor markets look in the context of demand-supply conditions (or capacity utilization rates) in manufacturing and service industries?

Both are showing a steady progress of the US economy. The rate of capacity utilization in the U.S. manufacturing sector increased 1.7 percentage points to 79.2 percent in the year to July – a good number but still below the long-term average of 80.1 percent, and considerably below the cyclical highs of 85 percent observed in late 1990s.

The service sector is also doing well. The survey evidence for August indicates that service industries continued to register steady output gains, some excess supply (high inventories) and sharply falling prices.

Read More: A Fed phrase change could mean rate hikes sooner

So, that’s where we stand at the moment. To see where we might go from here requires a look at household incomes and credit conditions, the two key variables moving three-quarters of the U.S. economy (personal consumption and residential investments).

There has been a considerable improvement in both variables since the beginning of this year. The households’ real disposable income increased 2.5 percent in the first half of the year from the year before – a good rebound from a 0.2 percent decline during 2013. The current households’ savings rate of 5.1 percent is also a sign that steady consumer outlays can be sustained in the months ahead.

And then the Fed now has the evidence that its unprecedented monetary easing is finally gaining some traction. The bank lending to consumers rose nearly 7 percent in the year to July. That is good news after long periods of bank’s weak consumer loans when nonbanks were providing the bulk of household financing.

Investment thoughts

The Fed’s extraordinary monetary easing has restored the seriously damaged U.S. financial system and supported the economic recovery in an environment of remarkable price stability.

But the time to turn the leaf is upon us. A whopping $85.9 billion increase of the Fed’s monetary base (ie, its balance sheet) in the course of August is clearly unwarranted; and so is its 20 percent annual rate of expansion. A 0.08 percent effective federal funds rate (at the close of Friday’s trading) is also unnecessarily low. Such a key policy rate should be a thing of the past when the Fed was rescuing its grossly mismanaged financial institutions.

If a gradual withdrawal of the monetary stimulus is started at a time of quiescent inflation, financial markets need not be destabilized, and economic growth would not be stifled with unduly rising credit costs for businesses and households.

Read More: Fed’s Williams: First rate hike during 2015 seems reasonable

That time is now. The US inflationary expectations are sufficiently well anchored to prevent any major and sustained turbulence in bond markets. Foreign demand for U.S. debt instruments will also remain strong – given the alternatives and the dollar’s safe haven status at a time of deteriorating global security and unwise big power hostilities.

Although fully valued, the US equities still offer good long-term investments. They are strongly underpinned by a growing economy and rising profit shares as a result of subdued labor costs.

Equities remain my preferred asset class.

Michael Ivanovitch is president of MSI Global, a New York-based economic research company. He also served as a senior economist at the OECD in Paris, international economist at the Federal Reserve Bank of New York and taught economics at Columbia.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Markets await Scottish vote, ‘be very much concerned’

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

On Thursday, Scotland will take to the polls to determine whether it wants to break off from the United Kingdom. And while even a vote in favor would simply be the beginning of a long and extremely complex process, all of a sudden, markets are paying rapt attention to the potential outcome.

The upcoming Scotland vote has led investors to sell shares of Scottish companies, place bearish bets on the British pound—and worry about the widespread implications of the potential Scotland split-off.

“If you have investments in the UK, you should be very much concerned,” said Oliver Harvey, macro strategist at Deutsche Bank. “A ‘yes’ vote has big implications for U.K. growth and big implications for investments. And if you have assets in Scotland, all of the sudden they’re not under the same tax or regulatory regime.”

Read MoreLarry Summers: Scottish independence ‘grave mistake’

While most expect Scotland to eventually vote against independence, the polls have certainly been close. Many U.S. investors only started to pay close attention when a YouGov poll last weekend showed a narrow lead for independence voters. More recent polls have shown a lead for those voting against the move. Still, the “yes” vote has been broadly gaining momentum, and many likely voters report that they are still undecided.

On Friday, online betting sites were offering a payout of about 3-to-1 for a “yes” vote bet versus 2-to-9 for a “no” bet, indicating that a pro-independence result is being viewed as an unlikely, but not outlandish, scenario.

Meanwhile the pound has fallen dramatically against the U.S. dollar over the past two weeks, reflecting fears about what Scottish independence would mean for the British economy and currency. Scotland is a major producer of crude oil, and it remains unclear how Scotland and the remaining U.K. would divide up its energy resources. And Scotland’s currency options remain hazy and extremely complicated.

In Scotland, many companies—including major banks Royal Bank of Scotland and Lloyds—have said they will move to England if Scotland votes for independence. Shares of the two banks have been under pressure recently, though they have staged a rebound over the past few sessions.

Read More Scottish vote: UK business leaders scaremongering?

Harvey said that investors can be reassured by the fact that banks would move (at least technically) and that Bank of England Gov. Mark Carney is actively working to avoid a disaster scenario. It seems that in a “yes” vote situation, if RBS and Lloyd’s move to England, the BOE will remain their lender of last resort. That should prevent a massive capital flight, or a great degree of risk for those holding Scottish assets.

“It’s not a great outcome, but at least a very disruptive outcome will be avoided,” Harvey told CNBC.com. “Basically, what’s going to happen is that there will no longer be a Scottish banking sector.”

The ramifications of Thursday’s vote could stretch far beyond Scotland and England. Market participants have noticed a rise in Spanish government bond yields on the back of independence-friendly poll number. The connection here is the Spanish region of Catalonia, where a large degree of the population has always called for independence from Spain, and a massive demonstration in favor of an independence referendum was held on Thursday.

If Scotland votes for independence, or even if the Scottish “yes” vote fails by a thin margin, the Catalonia movement may gain ground in discussions with Spain.

Even if Catalonia never prevails in succeeding, any headway in that movement might hurt the financial position of Spain, according to a recent note from UBS.

“The market reaction might not ultimately be benign. One of the central issues behind the independence movement in Catalonia is that of fiscal independence, as Catalonia pays a large part of its tax income in fiscal transfers to the rest of the Spanish state. As a result, any compromise would likely mean more fiscal devolution which might imply fiscal challenges for the central government in Madrid,” wrote a team at UBS.

Read More Commentary: Why Scotland should step back from the brink

Of course, when it comes to the Scottish vote, there remains the possibility that markets (and perhaps the financial press) are doing what they do best—making a big deal out of a situation that ultimately won’t amount to very much.

“This is a very low probability event that the market’s very emotional about,” summed up Kathy Lien, managing director of FX strategy at BK Asset Management.

To capitalize on both the short-term fear and the likely outcome, Lien is recommending that clients short the pound through Tuesday evening or Wednesday morning, at which point she advises closing out the shorts and placing buy orders a bit above where the pound is trading.

This will allow them to capitalize on the pound’s upward momentum if the “no” vote wins, and avoid being exposed to any precipitous drop in the unlikely scenario of a win for the pro-independence crowd.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow