Month: September 2015

IMF’s Lagarde: More volatility likely for emerging markets

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

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The head of the International Monetary Fund says there is reason to be concerned about the global economy.

In prepared remarks for a Wednesday speech, IMF Managing Director Christine Lagarde said her organization sees troubling signs in the world’s finances, and that it is unclear if the current situation is cyclical or if it represents a fundamental downturn.

“The simple answer is that there is no simple answer. Certainly, we are at a difficult and complex juncture,” she said, explaining that she is worried about recent global affairs — and international economics are similarly distressing.

“On the economic front, there is also reason to be concerned. The prospect of rising interest rates in the United States and China’s slowdown are contributing to uncertainty and higher market volatility,” she said.

“There has been a sharp deceleration in the growth of global trade. And the rapid drop in commodity prices is posing problems for resource-based economies.”

Read More Buffett: Economy ‘not bad’ but…

Lagarde will spoke with CNBC’s Squawk Alley after her speech, reiterating that “there is a recovery, don’t get me wrong, but it is definitely slowing down.”

Lagarde said global growth will likely be weaker this year than last, and she only expects a modest acceleration in 2016. While advanced economies are seeing a “modest pickup,” she said emerging economies will likely see their fifth consecutive year of declining rates of growth.

“If we put all this together, we see global growth that is disappointing and uneven. In addition, medium-term growth prospects have become weaker,” she said. “The ‘new mediocre’ of which I warned exactly a year ago — the risk of low growth for a long time — looms closer.”

Read More Weak productivity growth hits global economy: WEF

On China, Lagarde said she sees Asia’s largest economy as undergoing a fundamental and welcome transformation. The IMF head warned that this sort of transition can create “spillover effects” in trade, exchange rates, asset markets and capital flows.

China will likely reduce its appetite for commodities as its economy slows and the country invests less overall, Lagarde explained in her speech.

“This will contribute to what could be a prolonged period of low commodity prices — a change that will need to be managed by policymakers, particularly in the large commodity exporters,” she said.

In fact, Lagarde told CNBC after her speech that she expects emerging markets will likely see more volatility ahead.

Read More Yellen: Rate hike path more important than timing

The World Trade Organization announced that it had cut its forecasts for global goods trade earlier on Wednesday after quarterly growth turned negative, with trade shrinking by an average of 0.7 percent in the first two quarters of this year.

The WTO said it sees world trade growth of 2.8 percent this year and 3.9 percent in 2016, revised down from the forecasts it made in April of 3.3 percent and 4.0 percent, respectively.

— With input from Reuters.

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

US Senate approves legislation to avoid government shutdown

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

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The Senate on Wednesday overwhelmingly approved legislation that would avoid a government shutdown.

The continuing resolution, approved by 78-20, would keep the government funded until Dec. 11.

The House is scheduled to vote on the bill Wednesday afternoon. President Barack Obama must sign it before midnight to avoid a shutdown.

House Majority Leader Kevin McCarthy, R-Calif., said Tuesday he would try to avoid another shutdown threat and that he is open to working the Democrats to do so.

“We have a system in government that you’re going to have to compromise. I’m not going to get 100 percent of what I want,” said McCarthy, who on Monday announced his candidacy to succeed John Boehner as House speaker.

Read: So… What happens when the government shuts down?

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

Twitter launches ‘buy now’ buttons for retailers

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

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It’s been about a year since Twitter launched tests of e-commerce, and now it’s rolling out a “buy now” button system wide—so any US retailer big or small can sell physical products, digital goods or services all within a tweet.

Twitter says this puts it on its way being the world’s biggest social marketplace. Twitter is looking to make it easy for a wide range of retailers to come on board by integrating with all the major e-commerce platforms: Shopify, Bigcommerce and Demandware. Merchants can also list their products on Stripe Relay to share and sell products. (One big retailer that’s on board is Best Buy, which will be selling its products on Twitter through Stripe.)

Twitter hopes this will generate a new meaningful revenue stream as it struggles with stagnating user growth. The company will take a cut of many of the transactions as it hopes to drive ad dollars by helping retailers boost sales.

“We think of Twitter as the world’s largest direct-to-consumer channel,” Twitter’s head of commerce Nathan Hubbard said. “We have been from the beginning working to try to make those conversations transactional while appropriate. Brands are building direct relationships with consumers and they’re using platforms to build those direct relationships. What they don’t always have is distribution.”

Hubbard adds that demand for this kind of social commerce is huge: More than 50 million tweets a month say “I want” or “I need” something. Plus, over 100 million people follow a brand or a merchant on Twitter. Now, Hubbard predicts billions of dollars in e-commerce transactions will move into apps.

“The next big thing in mobile is ‘buy’ buttons. We’re just at the beginning of transactional mobile commerce. It’s clear to us consumers will be able to buy in the apps where they spend the most time,” Hubbard said. “What’s unique about Twitter is that it’s where people already connect with the things that they love.”

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

Asian markets mostly stage recovery from equity sell-off

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

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Asian stocks mostly stabilized early Wednesday from the carnage in the previous session, mirroring the finish on Wall Street overnight.

The blue-chip Dow Jones Industrial Average and S&P 500 edged up 0.3 and 0.1 percent respectively, while the Nasdaq Composite dropped 0.6 percent after
a volatile session.

However, there are analysts who warn that this could be a dead cat bounce.

“Some semblance of calm, if we may be so bold, has emerged. But experience says this may be no more than a dead cat bounce; woefully short-lived and
lamentably hollow,” Vishnu Varathan, a Singapore-based economist at Mizuho Bank, wrote in a note.

“Admittedly, some commodities are firmer. But even with an almost 2 percent gain, Brent prices are at an anaemic USD 48 per barrel while Copper is only
imperceptibly higher. Overnight gains in U.S. equities are surely nothing to write home about given losses for third quarter are near 9 percent. So any notion that
“risk off” sentiments are fading in the rear-view mirror is deserving of a good dose of skepticism. Fact is, China and other unknown risks are still playing out,” he
added.

Nikkei jumps 2.1 percent

Japan’s Nikkei 225 index staged a comeback, as bargain hunters swooped in a day after the benchmark index tumbled 4.1 percent to settle at an eight-month trough.

Below-view data released before the market open did little to dampen sentiment; industrial production fell 0.5 percent on-month in August, government data showed, missing expectations for a rise of 1.0 percent.

Meanwhile, retail sales rose 0.8 percent in August from a year earlier, also below market consensus for a 1.1 percent annual increase.

Exporters and financials were among counters that attracted the most buy orders; Toyota Motor, Nissan and Suzuki Motor opened up more than 2 percent each. Sony jumped 4.7 percent, while Toshiba rallied 2.7 percent ahead of an extraordinary shareholders meeting scheduled for later in the day.

Steelmakers such as Nisshin Steel and Nippon Steel and Sumitomo Metal leapt more than 3 percent each after being heavily sold down in the previous session.

By contrast, shares of Japan Tobacco plunged 6 percent after buying Reynolds American’s Natural American Spirit Tobacco brand for USD 5 billion in cash.

ASX gains 1.4 percent

Australia’s S&P ASX 200 index moved away from Tuesday’s two-year closing low, thanks to advances among banking heavyweights and miners.

Commonwealth Bank of Australia led gains in the banking sector, up 1.6 percent at the open. Investment firm Macquarie Group climbed 2.2 percent.

Market bellwether BHP Billiton rose 1 percent, clawing back nearly one-sixth of Tuesday’s slump. Rio Tinto and Fortescue Metals also advanced more than 1 percent each, as bargain hunting and short-covering bets helped to offset weaker iron ore prices overnight.

However, energy producers remain mixed. Santos and Oil Search extended losses, down 2 and 0.7 percent respectively, while Woodside Petroleum gained 2 percent.

Mainland markets up

China’s Shanghai Composite index opened up 0.7 percent, in line with the recovery region-wide.

Among the other indexes, the CSI300 Index notched up 0.7 percent and the smaller Shenzhen Composite gained 0.7 percent.

Kospi loses 0.8 percent

South Korea’s Kospi index underperformed its regional peers with sharp losses at the open, as it played catch-up after being shut for the previous sessions due to the Chuseok holiday.

The Seoul bourse was last seen trading at a near three-week low.

Heavyweight components Hyundai Motor and Posco plunged more than 2 percent each, while the bourse’s heaviest-weighted stock Samsung Electronics eased 1.4 percent.

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

Goldman cuts forecasts for S&P 500

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

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Goldman Sachs cut its year-end forecast for the S&P 500 on Tuesday, citing a combination of the slower pace of economic activity in China and the US and the fall in oil prices.

The US investment bank cut its year-end price forecast for the S&P by 5 percent to 2,000. It had previously forecast the index to rise to 2,100 by the end of the year.

Goldman also lowered its 2015 earnings-per-share estimate by 4 percent to USD 109 for the S&P 500, from a previous forecast of USD 114.

“The impetus for these reductions is that our models now incorporate a slower pace of economic activity in the US and China and a lower oil price than we had been previously assuming,” Goldman said in a note on US equity strategy.

The broad measure of US stocks fell to a one-month low on Monday and closed almost 2.6 percent lower at 1,881 points amid worries about the timing of US rate rises and the outlook for China, the world’s number two economy.

Read More: 5 things that keep Carl Ichan up at night

The investment bank also said it expected the US Federal Reserve to start raising interest rates in December. The central bank left rates unchanged at record lows at a meeting earlier this month and voiced concerns about the health of the global economy.

The S&P 500 has shed about 8.5 percent this year compared with a fall of about 10 percent in the blue-chip Dow Jones industrial average and a 4 percent decline in the tech-heavy Nasdaq.

Goldman said it forecast the US economy to grow 2.4 percent in 2016, down from a previous estimate of 2.8 percent. It also lowered its estimate for global growth outside the US, to 3.7 percent from 4.3 percent.

“Our baseline forecast is that the US economy will grow at a modest pace, earnings will rise, and the S&P 500 index will climb slowly while the P/E multiple declines as interest rates rise,” Goldman said. “‘Flat is the new up’ will be the 2016 investor refrain.

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

Icahn warns of potential looming catastrophe

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

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Danger ahead – that’s the warning from Carl Icahn.

The activist says low rates caused bubbles in art, real estate and high-yield bonds – with potentially dramatic consequences.

“It’s like giving somebody medicine and this medicine is being given and given and given and we don’t know what’s going to happen – you don’t know how bad it’s going to be. We do know when we did it a few years ago it caused a catastrophe, it caused ’08. Where do you draw the line?”

In a telephone interview, Icahn said he’s “more hedged now than I’ve been in years.”

“The Fed may have backed itself into a corner. They should have absolutely raised rates six months ago,” adding it’s difficult now because of global concerns.

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

Obama at the UN: I won’t hesitate to use force

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

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President Barack Obama called for a modern approach to the world’s problems in his Monday address at the United Nations.

“I lead the strongest military that the world has ever known. And I will never hesitate to protect my country or our allies—unilaterally and by force—when necessary,” he said. “But I stand before you today believing in my core that we, the nations of the world, cannot return to the old ways of conflict and coercion—we cannot look backwards.”

While also referencing Syria and China, Obama focused much of his address on Russia and its president, Vladimir Putin.

Criticizing Moscow’s actions in the ongoing civil war in Ukraine, the U.S. president said the situation would be better for Russians and Ukrainians alike if Putin had pursued a peaceful strategy.

“Imagine if instead Russia had engaged in true diplomacy and worked with Ukraine and the international community to ensure its interests were protected—that would be better for Ukraine, but also better for Russia, and better for the World,” Obama said, emphasizing that he had no wish to return to another Cold War.

He also echoed comments from last week, saying that the US is similarly pushing for China to resolve territorial disputes with its neighbors in the South China Sea because “like every nation gathered here, we have an interest in upholding the basic principles of freedom of navigation and the free-flow of commerce, and in resolving disputes through international law, not the law of force.”

Read More: Obama and Putin to meet on sidelines of UN

Recognizing that diplomacy is a difficult process, with often unsatisfying outcomes, Obama argued that powerful countries have an imperative to pursue these tactics.

“Leaders of large nations, in particular, have an obligation to take these risks—precisely because we are strong enough to protect our interests if and when diplomacy fails,” he said.

The president acknowledged that there will be times when “we must act” against global disorder, but he told those assembled at the U.N. that “we will be stronger when we act together.”

On the subject of Syria, Obama said the U.S. will not apologize for its use of force against the Islamic State (also known as ISIS or ISIL), but that internal cooperation will ultimately be needed to heal the country.

He said the U.S. stands ready to work with any nation—including Russia and Iran—to resolve the conflict, but he called for recognition that returning to the “pre-war status quo” is not the right solution. Russia has advocated supporting Bashar al-Assad’s reassertion of dominance over the country as a means to combat the extremist groups operating in Syria.

“Let’s remember how this started,” Obama said. “Assad reacted to peaceful protests by escalating repression and killing that in-turn created the environment for the current strife.”

The president argued that political realism demands compromises to defeat the Islamic State—as Moscow argues—but that it also requires a “managed transition” away from Assad and to a new leader.

Obama was one of the first speakers at the opening of general debate for the 70th session of the U.N. General Assembly. He was scheduled to be followed Chinese President Xi Jinping, Putin and French President François Hollande.

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

China August industrial profits fall 8.8% y-o-y

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

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Profits earned by Chinese industrial companies declined 8.8 percent in August from a year earlier due to rising costs and persistent falling prices, official data showed on Monday, adding to signs of weakness in the world’s second largest economy

Also hurting firms was the stock market slump, which pushed down their investment returns while yuan fluctuation increased companies’ financial costs in August, the National Bureau of Statistics (NBS) said.

During August, profits of industrial companies suffered the biggest annual fall since the NBS began monitoring such data in 2011.

For the first eight months of this year, profits were down 1.9 percent from
the year-earlier period, according to the NBS.

Read More: Four countries will keep Asia markets on guard this week

The bureau said firms were squeezed by rising costs and falling prices with profits falling more quickly in August than in July. In total, August profits were down 156.6 billion yuan (USD 24.59 billion) from a year earlier.

The NBS said investment returns for industrial companies from a year earlier increased by 4.12 billion yuan in August, compared with a 11.04 billion yuan gain in July.

Financial payments of industrial firms’ increased by 23.9 percent in August from a year earlier, compared to a 3 percent year-on-year drop in July.

Read More: Strategist: China fears way overblown

A plunge in China’s stock market over the summer and a surprise devaluation in the yuan have roiled global markets, and raised doubts inside and outside China over Beijing’s ability to manage its economy.

Among 41 industrial sectors, 31 sectors had year-on-year growth of profit in the first eight months of this year, while 10 recorded drops, the NBS said.

The mining industry was the laggard with profits falling 57.3 percent in the first eight months of the year from a year earlier.

Meanwhile, state-owned firms were the worst performers among all companies. Their profits dived 24.7 percent in the first eight months, compared to a rise of 7.3 percent for private firms.

The inventory of industrial firms increased by 5.7 percent in August from a year ago, easing from 6.8 percent growth in July and marking the second consecutive month of slower gains, the NBS said.

He of NBS suggested that an ongoing destocking process would help struggling firms.

“The easing growth in inventory would relieve companies’ inventory pressure and ease their operation difficulties,” he said.

Growth in Chinese manufacturing has been stagnating. A preliminary private survey showed flagging demand dragged China’s factory sector into its sharpest contraction in 6-1/2 years in September.

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