Category: News

‘Bernanke right to be worried about false dawn’

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

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Fed Chairman Ben Bernanke is right to be worried about a false dawn for the US economy, Randall S. Kroszner, a former governor of the Federal Reserve told CNBC on Friday.

Earlier this week, Bernanke told CNBC the economy remained challenging despite signs of improvement in the economy and the rise in yields on Treasurys.

“I would agree with Chairman Bernanke that we don`t want to start popping the champagne corks yet,” said Kroszner, who`s now Professor of Economics at the University of Chicago Booth School of Business.

“We`ve seen some very important false dawns in the US labor market. In early 2010, we created more than 800,000 jobs in one month alone, then, it started to fall to a contraction. In early 2011, we started to see very strong job creation, more than 200,000 a month, for three months, then things fell again.”

Kroszner, who served as a member of the Federal Reserve Board between March 2006 and January 2009, said the central bank needs to see a couple of more months of positive data before it can be confident of the recovery.

One potential problem facing the Fed is that investors no longer believe the Fed will keep interest rates unchanged until late 2014. A number of Fed officials have also been warning that rates may have to rise earlier.

According to Kroszner, the problem the Fed faces is trying to forecast the economy too far out in the future, when the “crystal ball gets really cloudy.”

He cited Fed`s decision in January to keep rates at exceptionally low levels until at least late 2014. Yields on Treasurys haven`t fallen in response. In fact, the reverse happened last week: the unconvinced markets, faced with improving economic data and the prospect of higher inflation, drove 10-year Treasury yields to around 2.4%, though yields have fallen in recent days.

Kroszner said the Fed had more success in guiding the market last summer, when the forecast for rates was over a shorter time period.

“They achieved a lot of over the summertime when they said they were going to hold interest rates low until mid 2013, markets moved exactly there. When you try to put the horizon out that long until late 2014, three years, it`s a little bit tougher.”

Copyright 2011 cnbc.com

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

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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 slowdown in China could actually help US economy

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

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A contraction in Chinese manufacturing has sparked fears of a hard landing in that country and an overall global slowdown. But that could actually prove a positive for US economic growth.

Stock and commodity markets stumbled Thursday on news that a key Chinese factory index hit a four-month low, showing the sector is contracting. US equities shed nearly 1% at their lows, while oil and metals also both suffered sharp losses on fears that a China slowdown will reverberate across the globe.

But experts on the world`s second-largest economy see the drop as signaling only a cooling off, not a plunge.

Moreover, they say, the US could benefit from a China slowdown that could slow escalating energy costs as well as provide an opening on the world manufacturing stage.

“I don`t think anybody could have expected that China was going to grow (gross domestic product) at 8 percent into perpetuity,” says Barry M. Sine, director of research at Drexel Hamilton, a New York-based broker-dealer. “The growth had to slow down. But it`s still just an incredible growth rate.”

Sine does not expect China to see the hard-landing scenario generating market apprehension over the past several weeks.

“Here`s a country with USD 2 trillion in cash sitting in reserves. They can do an awful lot in terms of stimulating any weak segment in the economy, whether it`s real estate, bank balance sheets, state-owned industrial companies,” he says. “It`s like the lottery question: What could you do with a million dollars? What could you do with USD 2 trillion?”

Moreover, if Chinese manufacturing should stay in contraction mode – the HSBC Purchasing Managers Index registered a 48.1, below the 50 that indicates expansion – American businesses could end up the beneficiary.

The HSBC survey found that Chinese export orders were “sluggish” while domestic demand was “still softening.”

“One of the fundamental stories in the US economy is we`re seeing manufacturing come back,” Sine says. “Companies like Caterpillar are bringing jobs back. GM is hiring again, and even the Japanese auto companies, they`re starting to produce in the US and use that as an export base.”

Another way the slowdown could work in favor of the global economy is the likelihood of more stimulus from the Peoples Bank of China.

While the PBOC had been tightening policy to quell inflation fears, an economic slowdown likely would give the central bank the impetus it needs to enact more aggressive easing. That comes at an important time given that the Federal Reserve has been ambiguous about its plans for a third round of quantitative easing

“When you have these weaker-than-expected PMI numbers that come out of China, that in itself provides an easier backdrop for the government as well as the PBOC to stimulate through policy easing,” says Joseph Tanious, global market strategist at JPMorgan Asset Management. “Now that inflation numbers in China have begun to roll over, we think the PBOC can shift its gears and try to focus on economic growth.”

The probability of policy easing “bodes well for a soft-landing story” while a likely decrease in energy prices represents “a net positive as far as the U.S. economy is concerned,” Tanious adds.

Yet investors are unlikely to be as dismissive about China concerns.

Some big market names, most notably hedge fund titan Jim Chanos at Kynikos Associates, have turned bearish on the country in part due to a weakened real estate market and because the country has instituted more than 350 deals over the past five years worth about $400 billion, many of which appear shaky.

Shelly Goldberg, director of global resources and commodities strategy at Roubini Global Economics, helmed by the famed “Dr. Doom” Nouriel Roubini, cites “wasted, unproductive investments” that “at the end of the day are going to result in a choke on growth in the coming years, and there`s really no offset.”

The most likely economic outcome for China, Goldberg says, is a hard landing that likely will not be felt completely for a few years.

“We do expect some easing toward the property markets in 2012 and a partial bailout of local government banks and developers in 2013,” she says. “It`s really a longer-term issue and there`s a number of things they need to do which they`re not really doing.”

In the commodity markets, industrial metals are likely to suffer the most, followed by energy and then grains, Goldberg says.

In stocks, though, strategists expect that the recent slowing in the US market rally is as much about a natural pause than it is about larger concerns. After all, American stocks have rallied more than 30% since October, so a correction here likely would be positive and provide a better entry point for investors on the sidelines – another, if coincidental, benefit from China slowing.

“People are on pins and needles waiting for the next correction,” says Drexel`s Sims. “They want to book those gains before they lose them.”

Tanious says JPMorgan remains positive overall about the stocks outlook, despite the questions over China`s growth.

“You had a tremendous rally in the markets year to date. Investors are looking for opportunities to take some gains,” he says. “So long as the global economy continues to pick up steam, which we think it will, equities will head higher from here. The pace of the rally you`ve seen is unsustainable.”

Copyright 2011 cnbc.com

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

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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

Is North America the next Middle East for energy?

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

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Increased production of energy from a number of sources including deepwater drilling, natural gas exploration and Canada`s oil sands could make North America the next Middle East, according to a new report from Citigroup.

The bank estimates that total North American energy production will rise from 15.4 million barrels per day in 2011 to almost 26.6 million barrels per day by 2020, boosting gross domestic product (GDP) and creating ripple effects throughout the economy.

Citigroup analysts say the US will see large gains in oil production from deepwater drilling, while Mexico will begin to reverse recent declines in output. Production of shale gas liquids will increase by 3.8 million barrels per day by 2020. The report says this new production would amount to about 7% of additional global production, “a higher growth rate than OPEC can sustain.”

That increase in energy supply will also be accompanied with a decline in demand. US consumption of oil products has fallen by 2 million barrels per day since its peak in 2005, and the Citi report says demand will fall by another 2 million barrels per day over the next decade.

“The economic consequences from this supply and demand revolution are potentially extraordinary,” Ed Morse, head of global commodities research at Citigroup Global Markets and his team of analysts wrote.

Citgroup expects the shift in energy supply and demand to increase real GDP by between 2 and 3.3%.

It also estimates that some 550,000 new jobs will be created directly in the oil and gas extraction sector by 2020. An additional 2.2 to 2.3 million new jobs will be created from the resulting economic stimulus effects of new production by 2020.

The US became a net exporter of refined oil products in 2011, for the first time since 1949, according to the Energy Department. But it remains a net importer of crude oil, importing around 9 million barrels per day.

Alejandro Barbajosa of Argus Media, a specialist data and information provider for the energy industry, says it`s unlikely that the US will ever become the next Middle East because the country will remain a net importer of crude oil for the foreseeable future. He also says infrastructure constraints will limit the country`s ability to export liquefied natural gas.

“There is no way in this world that it could become the largest energy exporter,” Barbajosa told CNBC.

“As US oil demand declines because of more efficient use, the US will still remain dependent on imports from Canada, and to a lesser degree, the Middle East,” Barbajosa added. “North America does not have the capacity surplus that the Middle East has. It is unlikely that it becomes the next Middle East in terms of oil and gas exports.”

In its analysis, Citigroup acknowledges infrastructure bottlenecks and legislation that blocks exports of crude oil of US origin. It also points out that new environmental regulations could prevent the scenario from playing out. But the analysts point out the surge in energy production could be game-changing.

“It would not only improve incomes and create jobs, but also improve national energy security and reverse perennial current account deficits.”

Copyright 2011 cnbc.com

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China’s slowdown is good for long-term Growth: IMF’s Zhu

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

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A slowdown in China`s growth engine is good news for the country because it gives Beijing space to create a new economic model that is more sustainable and equitable, according to Zhu Min, deputy managing director of the International Monetary Fund.

It is about time that China focused on the quality of economic growth rather than on the top-line number, and this should be built on the expansion that the nation has experienced over the past 30 years, Zhu told CNBC in an interview on Wednesday.

“7.5% growth is a very good target because it sends a signal to local governments that we need to build more institutional capacity, work on income distribution, to ensure that growth become more equal,” he said.

Changes in China`s demography and labor supply also mean that there may be less urgency for the government to create as many jobs as they have over the past 10 years, Zhu said. The more important task is to “improve efficiency,” he added.

China wants to boost the share of domestic consumption and services in China`s economy and reduce reliance on exports and investments. Such a shift would help China ease the pain from a global downturn because the services sector generates about 35% more jobs per unit of gross domestic product, compared to the manufacturing and construction sectors, Stephen Roach, the former non-executive chairman of Morgan Stanley Asia, told CNBC on Monday.

“They can have slower growth but actually more labor-absorption per unit of output and maintain the social stability concerns and objectives that have long been at the heart of the Chinese model,” Roach said.

US stocks fell on Wednesday, dragged partly by comments by BHP Billiton`s CEO that the company was seeing signs of “flattening” iron ore demand from China, raising concerns over the nation`s economic outlook.

China may grow between 8%  and 9% this year, despite the crisis in the euro zone, Roach said on Monday. This is higher than the Chinese government`s official target of 7.5%.

Such a slowdown may only slightly reduce demand for raw materials, Zhu said. “Domestic consumption also needs imports of iron ore and other things but in a more balanced way,” he added.

Copyright 2011 cnbc.com

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

Is it time to look beyond China & India stocks?

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

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With economic growth slowing in both China and India and policymakers facing increasing challenges, analysts tell CNBC that investors should look beyond these two countries for profitable returns in 2012.

As these two economic powerhouses begin to lose some of their competitive edge, experts recommend the economies of Southeast Asia, which have seen a surge in foreign investment and rising incomes in the past few years.

“China is becoming an increasingly expensive place to produce and India is a regulatory quagmire,” Amar Gill, Head of Thematic Research, CLSA, told CNBC. On the other hand, Gill says countries from the Association of South East Asian Nations (ASEAN) are in a “sweet spot.”

“Foreign direct investment (FDI) into ASEAN has tripled in the last three years. This is a region which is gradually integrating, where the buying power of consumers is rising and it is attractive to manufacture and (to build) production bases here,” Gill said.

On the other hand there are growing worries over rising manufacturing wages in China and a policy paralysis in India, which is coming in the way of attracting foreign investment.

“India doesn`t have leeway to move…(it is) in a policy trap right now,” Stephen Roach, former Non-Executive Chairman of Morgan Stanley Asia, told CNBC. “The budget deficit underscores how that trap gets tougher and tougher to get out of.”

On Friday, India`s stock market dropped and bond yields jumped after the government released a budget that lacked bold reforms.

While in China data over the weekend showed the country`s property prices fell for a fifth consecutive month.

Frederic Neumann, Co-Head of Asian Economics Research at HSBC wrote in a report on Monday that investors should take note of the fact that Southeast Asian economics had regained a competitive niche, even as China`s wages were soaring and India`s manufacturing sector suffered from inadequate infrastructure.

Neumann said a declining dependency on external demand coupled with increasing consumption and investment spending has boosted ASEAN economies.

For investors though, betting on Southeast Asia isn`t a slam-dunk case based on their mixed performance this year.

While Vietnam`s stock market is up 25 percent this year, making it the best performer in Asia, other markets in Southeast Asia haven`t fared that well.

Indonesia`s benchmark Jakarta Composite (Jakarta Stock Exchange: .JKSE) has risen only 5% this year, while Malaysia`s Kuala Lumpur Stock Exchange (Kuala Lumpur Stock Exchange: .KLSE) is up 3%.

That`s much less than the MSCI Asia ex-Japan Index, which is up 14%. On the other hand, India`s Sensex is up 11.8%, while China`s Shanghai Composite (Shanghai Stock Exchange: .SSEC) is up 9.6%.

“Indonesia in particular is the result of strong performance from last year, and concerns right now that some key sectors will be affected if China sees a major slowdown,” Gill told CNBC. “Malaysia might face some political uncertainties ahead of a general election that is expected some time in coming months.”

Despite these challenges, Gill is bullish on the region and says there are a number of companies that have returns on equity of 25 to 30%.

Gill`s top picks for the region include Indonesia`s Bank Rakyat, Malaysia`s Public Bank and Thailand`s CP Foods.

Copyright 2011 cnbc.com

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Fed keeping powder dry for now but could take action in Q2

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

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The Fed is expected to hold its firepower for now and will probably not say much new after it meets Tuesday.

But some Fed watchers say it is possible the Fed will act next quarter, to help the economy before the effects of fiscal tightening take hold next year.

“There`s all indications it`s going to be a quiet meeting. All the tea leaves point to April being the more interesting one,” said Pierpoint Securities chief economist Stephen Stanley.

April is when the Fed will issue its new economic forecast, and it could be then or June, when the Fed is likely to decide whether to pursue a third round of so-called “quantitative easing” or QE3.

What the Fed Fears

Pimco portfolio manager and strategist Tony Crescenzi said he expects the Fed eventually to do another round of easing, and it`s likely it would buy mortgage bonds to push interest rates lower, as Fed officials have publicly discussed.

“It`s going to be data dependent. The trajectory of the data is very good right now for employment, but other data needs to show improvement,” Crescenzi said. “Final demand and consumption trends are still subpar.”

The April time frame may also give the Fed enough economic data to persuade members to vote in favor of easing, but he thinks it`s more likely for the Fed to act later in the quarter.

“The odds are still pretty good that it happens eventually because the economy continues to face many headwinds…There`s a risk from what people call a `fiscal cliff.` There`s over USD 500 billion of fiscal drag that the US faces on Jan. 1, 2013,” he said.

Crescenzi was referring to the expiration of tax cuts and automatic implementation of budget cuts. He said it`s possible that Congress may not want to address these issues in an election year and will leave it for the next Congress to deal with in early 2013.

The full USD 525 billion equals 3.5% of GDP, but it`s more likely less than half of that will be the final number, Crescenzi said.

“The central banks of the world are carrying the weight of national governments that have very little ability to engage their balance sheets, to stimulate economic activity so it`s left to the central bankers,” he said, adding that globally there have been 75 easing moves in the past six months.

Nomura Americas Treasury strategist George Goncalves said the Fed is likely to anticipate the impact on the economy of next year`s fiscal tightening, and the potential for acrimony in Congress as it addresses the situation. “They (the Fed) could get ahead of the curve and do it in the summer, when there`s some pull back in data, some uncertainty,” he said.

Stanley said the Fed would probably not act after July, for fear of being seen as behaving politically ahead of the November presidential election.

_PAGEBREAK_

Still Doing the Twist

The Fed holds its one day meeting against the unusual backdrop of improving employment reports but other spotty data readings that are leading to sluggish economic growth forecasts. Stanley said due to Friday`s trade numbers, he cut his first quarter GDP forecast to 1.3%.

“Over the past few years, they have really put very little emphasis on GDP stuff and mostly focused on the labor market… now the data has flipped and the labor market numbers are strong and the activity data is weak,” he said.

The Fed may say something in its Tuesday statement about `Operation Twist,` a program under which it has been buying longer dated securities while selling the same amount of shorter dated securities in its portfolio. It is expected to continue that program until the scheduled end in June.

Crescenzi said the Fed is also likely to maintain the line in its statement that says it will regularly review the size and composition of its securities holdings and be prepared to adjust the size of the holdings as appropriate.

The Wall Street Journal has reported that the Fed may consider a modified QE, or sterilized version, in an effort to quiet program critics who worry it creates inflation . The Fed could still buy mortgage or Treasury securities, but tie up that money by borrowing it back for short periods at low rates.

What Else to Watch

While the Fed`s 2:15 p.m. EDT statement is expected to be a highlight of the trading day, traders are also watching the February retail sales report, expected at 8:30 a.m. Retail sales are expected to show a 1.1% gain, due to a jump in gasoline prices and improved auto sales. The NFIB small business survey is also released at 7:30 a.m. and business inventories are at 10 a.m.

The rise in gasoline prices is being watched closely for its impact on consumers and business, but also for its contribution to inflation, as too hot an inflationary environment would also keep the Fed on hold.

The inflation concerns could also creep into the bond market Tuesday, as the Treasury auctions USD 21 billion in 10-year notes.

Ward McCarthy, chief financial economist at Jefferies, said it would not be a surprise to see a sloppy auction “ahead of the FOMC meeting and ahead of some ugly inflation numbers.” Producer prices are reported Thursday, and consumer prices are reported Friday.

Stocks traded quietly Monday on extremely low volume, ahead of the Fed meeting. The roughly three billion shares made for the lowest volume of 2012. The Dow was up 37 at 12,959 and the SandP 500 was up less than a point to finish at 1,371. The Nasdaq was down 4 at 2,983.

The yield on the 10-year note fell slightly to 2.030%.

Oil prices fell nearly a percent to USD 106.34 per barrel, on worries about Chinese growth slowing. Natural gas lost another 2.4% to USD 2.2690 per million BTUs, on concerns about oversupply.

Copyright 2011 cnbc.com

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

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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

Will Portugal follow Greece into debt relief?

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

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Despite the official line that the Greek debt situation was unique, the chances of further debt restructurings in Europe are growing.

The bond markets seem to be preparing for a Greek-style debt reduction in Portugal. Portugal`s 10-year bonds were trading at a 47% discount to face value on Friday. Its 10-year debt yields 13.71%. This is an improvement from January`s record high of 18.29%, but still far from any level indicating confidence or sustainability. The bonds are rated “junk” by Moody`s, SandP and Fitch.

Almost every news story on the situation in Portugal quotes a bond market participant proclaiming that the end is nigh.

“The market doesn`t believe that Greece is a unique case. Portugal is very similar,” Matteo Regesta, a senior fixed-income strategist at BNP Paribas SA in London, tells Bloomberg.

Policy-makers are still in denial, however.

Last week, German Finance Minister Wolfgang Shaeuble described Greece as a “completely unique case.” Bloomberg cites Vitor Constancio, ECB vice president and former Bank of Portugal governor, as saying that Portuguese austerity measures were on track – denying that the Greek restructuring would need to be repeated.

An editorial from Bloomberg more or less advocates a Greek-style orderly default and restructuring for Portugal:

“Portugal is the prime one. Estimates of interest rates and economic growth from the International Monetary Fund suggest that, in order to keep its debt burden stable, the government would need to run a primary budget surplus (excluding debt payments) of nearly 2% of gross domestic product – a feat it has achieved in only three of the past 17 years. If it wrote down its debts by 40%, the required surplus would be a much more manageable 1% of GDP,” the Bloomberg editors argue.

The real question might not be whether Portugal will get restructured, but whether debt relief can be confined to just Portugal and Greece. Bloomberg figures that Ireland might be in for some minor restructuring but that this is unnecessary for Spain and Italy.

This may be true on a purely financial level. It is possible that Spain and Italy will not absolutely need to default. But just as there are wars of necessity and wars of choice, there are defaults of necessity and defaults of choice. Greece was a default of necessity. There was no way it could pay its debts as they came due. For Italy and Spain, a default could come as a result of domestic political demands, rather than the absolute unavailability of funds.

Italian and Spanish voters and politicians could easily look with envy at the debt relief successfully demanded by Greece and seek it out for themselves. Threats about losing access to “credit markets” may not have as much credibility as they once did.

This will bear watching very closely.

Copyright 2011 cnbc.com

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

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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

Jobs Report: Warm winter may boost February number

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

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About 210,000 jobs were likely created in the US in February, but some of those may be the beneficiaries of a warm winter.

Economists expect to see a third month of 200,000 plus job growth, breaking the streak of extremely sluggish growth that characterized 2011.

The unemployment rate is expected to stay at 8.3% when the government employment report is released Friday at 8:30 a.m. Eastern.

“Ten to 20% of the gains we’re seeing through the winter were weather related,” said Diane Swonk, chief economist at Mesirow Financial.

She said the weather likely resulted in gains in construction in February and retail, as a result of spring apparel sales. Gains in manufacturing, which had been a leader in job growth, could start to slow down.

Swonk expects to see a total 220,000 jobs created, with 230,000 in the private sector.

“It’s better but it’s still not good enough,” she said, adding the warm weather hiring could result in a give back in future months. “I’m expecting employment to slow down as we move into the summer,” she said.

One area of concern for economists is the potential hit from high energy prices on the economy. The warm winter has benefited consumers, by reducing heating bills, but some of those gains were offset by a quick jump in gasoline prices.

“It’s certainly much different than in 2008, when both gasoline and natural gas were moving higher,” she said.

Natural gas prices are at a decade low, as a result of the boom in shale gas drilling. The industry has been credited with adding hundreds of thousands of jobs, both directly and in support jobs.

J.P. Morgan economist Michael Feroli said , however, when analyzing those jobs, data shows the industry directly added about 6,000 per month for the past two years, after a steep decline during the recession. Feroli`s expectations for February’s employment report is for a total 220,000 nonfarm payrolls, with 235,000 added in the private sector.

As for the employment rate, he says it could slip to 8.2%. “It will be similar to last month. It looks like manufacturing is still doing well, and then I think private services should probably continue adding jobs,” he said

Feroli said the energy industry itself is not especially labor intensive but it can create a ripple effect, generating related jobs. The industry also creates jobs when it begins production, and it has been a steady provider of jobs recently..

Shell Oil CEO Peter Voser said his company will begin drilling the North Slope of Alaska this summer and the resulting job creation should be significant.

“We have calculated that and over the lifecycle of that project, we could generate 50,000 jobs in the US, not just in Alaska, but across the US And we will generate a few tens of billions of revenues for the country which can be reinvested in the economy afterwards,” Voser told CNBC`s Sharon Epperson in an interview.

It’s clear the energy industry is making an impact in regions where it is active. According to Dallas Fed President Richard Fisher, the level of employment in Texas is now above its prerecession peak, and the same is true of just two other states – Alaska and North Dakota, both energy producing states.

At the CERAWeek energy conference in Houston this week, where Fisher and Voser both spoke, energy executives said they were hiring, but some of it is an part of an ongoing process. For instance, Timothy Brown, director of communications at Alstom, a power generation company, said his firm has 600 positions open in the US for engineers.

“People who are in demand are in demand in any economy,” he said. The company employs 6,500 in the US and 95,000 globally.

Cheap natural gas is also making an impact, beyond the drilling areas.

Celanese is adding 70 jobs at a facility in Clear Lake, Texas, where it expects to use a new process called TCX, using natural gas and other feed stocks to create ethanol. Celanese President Steve Sterin said if legislation is passed to allow other materials, beyond corn, to be used in ethanol, he would quickly look to construct a plant that would provide construction jobs for several years and jobs for a permanent work force of several hundred..

Sterin said his company is close to an agreement to build another facility using the technology in China.

Follow Patti Domm on Twitter: @pattidomm

Questions? Comments? Email us at marketinsider@cnbc.com

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

Pinterest’s rapid rise boosts small business sales

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

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Fine art photographer Carl Christensen, 47, had to be nudged by his wife to use social media to increase his sales. He joined Facebook reluctantly. He blogged uneasily.

“I really approached it kicking and screaming,“ said Christensen, who operates his own gallery, Integrity Studio, in New Hope, Pa. “I found no intrinsic value in talking constantly and inanely about myself.“

But recently, Christensen found a social media site that not only suits his nature, but also boosts his revenues. He credits the fast-growing site Pinterest for amplifying his online sales to 50% of his current business. On the site, he can let his art speak for itself.

Pinterest invites visitors to set up their own “pinboards” and tack up photos they like in categories they invent – from vintage motorcycles to meat loaf recipes. The Palo Alto, Calif., firm makes it easy even for the computer-shy to capture photos from Web magazine layouts, retailers` websites, blogs, or their own computer files. Each image added to a pinboard is called a “pin.” After Christensen started pinning his own photos last year, other users snapped them up for their own boards on Pinterest.

The site`s meteoric recent growth has marketing experts buzzing and companies of all sizes leaping in. Pinterest received more than 103 million total visits in February, according to Experian Hitwise. As of last week, according to Hitwise, it was the third most popular social networking site behind Facebook and Twitter in the U.S., with users spending an average of 16 minutes per visit on the site.

Marc Andreessen, a co-founder of early Web browser Netscape whose venture capital firm Andreessen Horowitz, has invested in Pinterest, told CNBC`s Squawk Box, “It`s on fire, it`s doing phenomenonally well. It`s one of these companies with about 20 people building a service that now tens of millions of people are using.”

Pinterest allows members to comment on each other`s picks and follow their friends` pinboards. Users might assemble ideas for their home renovation plans on one board, and showcase their favorite books or charities on others. They can “re-pin“ pictures they like from other people`s boards. The result is an electronic word-of-mouth network that can lead to snowballing attention for a workout regimen, barbecue techniques, or a manufacturer`s product.

Chobani, the Greek yogurt maker based in Norwich N.Y,, found that bloggers were using Pinterest to feature dishes using its product, said digital communications manager Emily Schildt. So Chobani jumped in, creating its own pinboards for “Chobaniacs“ to enhance its engagement with customers. “Pinterest is huge in terms of referral traffic,“ Schildt said.

Pinterest offers its own hints for brands that want some bounce from the site: Repinning the picks of other users is one of the best ways to build a network of followers, it suggests on its site. Also, Pinterest suggests businesses spotlight “aspects of your brand that may not come to mind at first,“ such as work with charitable foundations. And make use of the interplay between Pinterest and other social media sites, the Palo Alto company advises.

Pinterest cites the Travel Channel`s tactic: It asked its Facebook users what pinboards it should create. Bergdorf Goodman`s strategy also earned a mention from Pinterest. The department store asked Facebook followers to complete the sentence “In the morning I never forget…” and then displayed the responses on a company pinboard.“

For Christensen`s small business, Integrity Studio, Pinterest has become an electronic display window that leads directly to sales. It funnels customers to his online shop on another site, Etsy.com, where they can buy his photographs. Etsy, a popular vendors` marketplace for craftworkers and visual artists, recently added Pinterest`s “Pin It“ button next to each item on sale. Customers press the button to add an item to their pinboards. Even if they don`t buy it, the artist benefits from greater exposure on Pinterest.

Small retailers engaged in e-commerce should explore Pinterest – especially if their products have strong visual appeal, said Jason Hennessey, CEO of the digital marketing agency Everspark Interactive of Atlanta, Ga.

But they need to invest time in Pinterest to reap the rewards, Hennessey said. Small marketers must generate interest in their work by participating in Pinterest communities, rather than simply promoting their products. For example, business owners can create pinboards highlighting the ideas of others whose taste they share. A custom cabinetry maker could exhibit the best projects from top woodworking magazines.

Retailers should follow other people and invite customers to post their own images on company pinboards, Hennessey said. “People will see your engagement and start to follow you.“

Online retailers should also take advantage of Pinterest features not frequently used by casual visitors, Hennessey said. For example, consumers often add little or no text to photos they pin. But businesses can add brand names and descriptions, with key words that move their images to the top of Pinterest search results, he said.

Businesses can also make sure that a Pinterest user who clicks on their photos will be taken directly to the site where they originated, such as the company website or online shop. Pinterest allows such web addresses to be added, Hennessey said. If no information is entered, Pinterest will only display the site from which a photo was pinned or repinned – but this could be a blogger`s site. This is called a “dead link“ if it doesn`t help visitors find a product`s maker, for example, or the recipe for a dish that`s pictured.

Carl Christensen labels his photos, and tracks the Pinterest response to each one. Based on that, he decides which images to display in the front window of his gallery, and which to enlarge into the mural-sized prints he sells there for more than $3,000. His wife Ina Christensen, who encouraged him to use social media, runs her own jewelry business using Etsy and Pinterest. When they added Pinterest to the mix, their online sales rose from 30 percent to 50 percent of their revenues, Christensen said.

Swapping images and ideas with Pinterest followers is a comfortable fit for Christensen, who said he always chats up visitors to his gallery about their work and other experiences. On Pinterest, he can build similar bonds with visitors, their friends, and their friends` friends, he said.

“Like in life, nothing attracts a crowd like a crowd,“ Christensen said.

To follow CNBC`s pinboards, click here: http://pinterest.com/cnbcpins/

Email us at SmallBiz@cnbc.com

Copyright 2011 cnbc.com

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

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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

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Why Greece hasn’t defaulted on its debt-so far

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

Listen to the Article (6 Minutes)

Does Greece’s recent debt restructuring constitute a default? The widely-watched decision on Thursday was no-or at least not yet.

Credit default swaps (CDS) are a form of insurance that investors can buy in case the issuer of a bond they`ve bought defaults, or can`t pay them back in full. If there is a default, also known as a “credit event,” the credit default swaps pay off the bond investors.

Deciding whether there is a “credit event” is the job of a group called the International Securities and Derivatives Association. The ISDA decided Thursday that Greece had not, in fact, defaulted on its bonds so far.

However, Greece still faces several major events that are far more likely to lead to a default, which would trigger the CDS payouts.

The ISDA was asked to rule on two questions related to the Greek government`s recent offer to bond holders to pay them only 46.5% of what they are owed.

The first question was whether a recent bond swap between the European Central Bank and the Greek government caused all other bondholders to be subordinated-or put behind the ECB is getting paid back. Subordination is usually one of the triggering events for payout of CDS insurance.

The ECB`s bond swap with Greece didn`t include the 53.5% haircut that the other bondholders faced. The ISDA was asked if this was not effectively a “subordination” of other debt holders. The committee of 15 voted unanimously no.

The second question was whether the current offer to bondholders, in and of itself, was a credit event. The committee also unanimously voted no.

Experts on CDS, and holders of Greek debt say these two votes aren`t necessarily noteworthy because they`ve been taken too early in the process to be meaningful.

For the ISDA to vote that something constitutes a credit event, a bondholder first must not get paid back. So far, all bondholders have been paid in full.

The real test will come on March 20, when Greece has a debt repayment of more than USD 14 billion euros (USD 18.6 billion). Greece is hoping to complete a debt exchange before then that would cut that payment by more than 50%.

As part of the offer, the Greek government has told bondholders it has the right to retroactively impose something called a “collective action clause.”

This means that if more than two thirds of bond holders agree to tender their bonds and take less money-the government can then impose the deal “collectively” on all the bondholders, even those who didn`t want to go along with it. That will be likely be decided by the end of next week.

At that point, a bondholder can complain to ISDA. The ISDA then will have something real to consider rather than something that is currenly only proposed or theoretical.

In fact, ISDA itself said: “The situation in the Hellenic Republic is still evolving and today`s decisions do not affect the right or ability of market participants to submit further questions… as to whether a Credit Event could occur at a later date.”

So this Greek drama isn`t done yet.

Just this morning, Pimco co-founder Bill Gross told CNBC that the decision on Greece is a “disappointment” to buyers of credit default swaps. Even so, Pimco-which is on the ISDA`s voting committee-joined the other members in deciding there was no default.

Still, Gross suggested that Greece still could trigger a “credit event” that would cause future payouts on the credit-default swaps. He added, however: “If I were a buyer of protection on Greece and have seen the result this morning in terms of no protection, you know I would be upset.”

When asked about this on Capitol Hill, Federal Reserve Chief Ben Bernanke said that the question could be asked once again that if and when a collective action clause is imposed, then the question will likely be reconsidered. Nearly everyone involved in the process believes that would be a triggering event for CDS.

The European Union originally wanted to avoid the triggering of CDS payouts for fear the ripple effects would be similar to what occurred in the market post-Lehman Brother`s bankruptcy. But those fears have faded, as the possibility of a Greek failure has been priced into the markets.

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