Month: November 2013

Why better US growth may not boost commodities

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

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Developed markets, including the United States, may be recovering, but the long-suffering commodities segment may not feel the love.

“It’s not a build-construct scenario,” said Bhaskar Laxminarayan, chief investment officer in Asia at Bank Pictet and Cie, which has around USD 433 billion under management. Previously, commodities were driven higher by the emerging market growth story, which included huge investments in infrastructure, he said.

While Pictet recommends investing in equities that will benefit from a US domestic demand revival, such as autos and housing, “it’s not as significant as building highways all around the world or putting up factories,” he said. “It’s not enough for a bull-run case for commodities.”

Emerging markets’ demand for commodities may not pick up the slack, he noted. India, for example has had a complete deceleration of investment, with at least USD 120 billion of projects stalled by the end of last year, he said.

“There are just too many projects that are stuck. And that has a sentiment effect on businesses that want to invest into the country, plus local businesses that want to partner with them,” Laxminarayan said.

Other analysts are giving commodities the cold shoulder as well, with Credit Suisse saying the segment may be at the start of a secular bear market.

“The ‘glory days’ of the commodity bull market are well behind us, with prices likely to continue to revert to more normal levels over coming years,” said Ric Deverell, head of global commodities at Credit Suisse, in a note.

He expects commodity prices to come under pressure in 2014 as emerging market industrial production growth slows.

“The combination of increased supply for many commodities, as well as continued structurally weaker emerging market growth (we expect China to slow back toward 7 percent) is likely to cause many prices to continue to stagnate through 2014, with those commodities experiencing a long-awaited increase in supply coming under the most pressure,” he said.

Credit Suisse expects prices of iron ore, copper and gold to fall substantially, while tin, thermal coal, U.K. and U.K. natural gas, Brent oil and silver will remain flat.

Another factor which may keep commodity prices in check is US dollar strength.

Early next year, “quantitative easing will be reduced in some form. That means the easy money that has flown to the rest of the world will, in some form, go back to the US,” Laxminarayan said. “That will provide some strength for the US dollar. If I look out three to five years from now, we are in a very structurally strong US dollar market.”

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

Hate your job? You probably live in the US

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

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The relentless drudgery of working nine ’til five is a common gripe all over the world, but according to a survey by recruitment website Monster.com, US workers hate going to the office the most.

The survey, which was sponsored by Monster.com and conducted by market research firm GfK, found that 15 percent of American workers said they disliked or hated their jobs. This was the highest level of job dissatisfaction among workers surveyed in seven countries.

GfK interviewed 8,000 people as part of the survey over the telephone, including 1,007 respondents based in the US For the countries profiled – Canada, France, Germany, India, Netherlands, UK and US -respondents were asked to choose one of five options when asked how they felt about their jobs: love it, like it a lot, like it, don`t like it, don`t love it at all.

Read more: Nearly half of global employees unhappy in jobs: Survey

Of the US candidates, just over half said they liked or loved their jobs, while 31 percent said they were merely satisfied. However, despite having the highest level of dissatisfied workers, the US also clocked the highest amount of workers who said they loved their jobs so much they would do it for free, at 22 percent.

Canadians are the happiest workforce, according to the findings of the survey, with 64 percent liking or loving their jobs and only 7 percent saying they disliked or hated work.

Other happier workforces included the Netherlands and India, where 57 percent and 55 percent of the respondents said they were happy in their jobs, respectively. India had the lowest level of respondents saying they hated their jobs, at 5 percent.

Read more: Americans hate their jobs, even with office perks

“What is striking about the findings is that the strength of a country`s labor market doesn`t necessarily correlate with workforce contentment,” said Chris Moessner, vice president for public affairs, GfK. “While workers in challenged markets may have had fewer opportunities to advance in terms of promotions or salary during the recent downturn, it has not necessarily affected their happiness,” he added.

The survey also delved into possible links between monetary compensation and job satisfaction and found that US workers with the lowest salary were the most likely to be unhappy at work. More than one in five paid less than USD 50,000 per annum said they either disliked or hated their jobs.

“Regardless of what a worker`s priorities are – being challenged, feeling valued or even making more money – it`s important for anyone who is not in love with their jobs to remain vigilant about finding [a] better [job],” said Joanie Ruge, employment industry advisor and senior vice president of Monster.

Read more: Just 14% of global firms to hire in 2014: Survey

From a regional perspective, workers in the Northeast of the US are most satisfied with their jobs, with 60 percent saying they liked or loved their jobs. Only 48 percent in the Mid-West and 45 percent in the South said the same.

On average, US workers have longer working weeks and a smaller allotment of vacation time compared with other countries worldwide.

According to economic research website FRED, the average employee in America works around 1,700 hours per year, while the average employee in France worked around 1,480. Workers in Asia work much longer hours, with Singaporeans putting in a whopping 2,300 hours a year.

-By CNBC`s Katie Holliday: Follow her on Twitter @hollidaykatie

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

China makes right noises on yuan, but doubts remain

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

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China’s central bank is making all the right noises when it comes to moving towards opening up its domestic currency, but analysts warn that any concrete action is still a long way off.

On Tuesday after China’s central bank reiterated its plan to gradually stop intervening in its foreign exchange market, the dollar index, which trades against other major currencies, slipped 0.3 percent.

“One thing that we have to remember, we had a huge raft of reforms announced as part of the third plenum, but none of it is really happening today, tomorrow or indeed next week,” said Robert Rennie, global head of FX strategy at Westpac Bank.

Read more: China’s reforms: 5 key ones you should know

The comments were made by Zhou Xiaochuan, head of the People’s Bank of China, in a guidebook explaining reforms outlined last week following a Communist Party meeting, but Rennie told CNBC they did not necessarily translate into hopes for immediate action.

“Yes we get a clear sense that the PBOC is going to remove or reduce the very frequent intervention into this market, but they don’t tell us when it’s going to happen,” he added.

The PBOC comments are the latest in a series of rhetoric from Chinese central bankers indicating that plans to fully float the yuan are being sped up. In May, a letter from a senior researcher at the PBOC said the yuan would be fully floated by 2015-2016.

Read more: Default fears put dollar’s reserve status at risk

Currently, the yuan is only allowed to trade within a range of around 1 percent either side of a daily-fixed mid-point.

And in another encouraging move, a day after Zhou Xiaochuan’s comments, the PBOC fixed the yuan’s mid-point versus the dollar at 6.1305, its highest level since the landmark revaluation in 2005, an indication that the central bank is comfortable with its strength. The yuan has strengthened 2.21 percent against the dollar year to date.

Simon Derrick, chief currency strategist at BNY Mellon, told CNBC Asia’s Squawk Box on Tuesday he was convinced the opening up of the yuan remained a “big story,” but said it was careful not to get carried away.

“At the moment it is no more than words but we did get intimations out at least back in May…so I do think we are getting a sense of the timeline as to when this is going to happen,” he said.

“[But] what we going for here is a managed flow of some kind. I think we’ll have a reasonably wide trading band and I think it’s going to look a little like the ruble rather than anything else… It won’t be a free floating currency in the way we recognize it,” said Derrick, referring to Russia’s domestic currency, which is freely traded to a certain extent but is still subject to intervention.

Read more: Here’s What China Is Secretly Planning for the Yuan

Westpac`s Rennie told CNBC he remained bullish on the yuan, boosted by the country`s extensive reform plans and more positive economic data in recent months.

“Long China and short Taiwan are the trades that make sense, [but] we wouldn`t be looking for a rapid move lower in dollar-yuan right now though,” he added.

China has announced a number of currency swap deals this year, one with the euro zone in October and the UK in June, also helping to boost sentiment.

Meanwhile in September, the yuan was ranked one of the world`s top ten most frequently traded currencies for the first time ever, in a Bank of International Settlements survey; it ranked ninth.

Other factors putting downward pressure on the dollar also contributed to yuan strength recently. The Federal Reserve’s vice-chair Janet Yellen last week confirmed her intentions to keep monetary policy easy for some time, which has led to some dollar selling.

– By CNBC`s Katie Holliday: Follow her on Twitter @hollidaykatie

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

Are the cracks in the euro starting to show?

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

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The resilient euro may have bounced back from this month’s interest rate cut from the European Central Bank (ECB), but recovering from talk that the ECB is mulling negative deposit rates could be much harder, analysts say.

A report on Wednesday from Bloomberg news cited two unnamed sources as saying the central bank was considering lowering its deposit rate, one of its two main lending rates, to below zero.

Read more: The euro could disappear in 10 years: BlackRock CEO

That knocked the euro down about 0.7 percent against the dollar, its steepest loss so far this month. And the single currency was still nursing its losses on Thursday as it hovered at USD 1.3426 in Asia trade.

“The euro really took a dip on reports that the ECB was considering negative rates for commercial lenders,” John Doyle, director of markets at Tempus, told CNBC Asia’s “Squawk Box.”

“This is something we don’t think the ECB realistically has on the table at the moment, but in this headline-driven market that we’re in these days, the headline was enough to trigger a 0.7 percent fall in the euro,” he added.

A cut in deposit rates would probably put off banks from parking their cash with the ECB, but could encourage them to lend instead, analysts said.

The ECB cut its main interest rate by 25 basis points to 0.25 percent earlier this month and while the surprise decision initially knocked the euro, the currency recovered from that blow pretty quickly.

Read more: ECB was ‘very pragmatic’ to cut rates: UBS CEO

Even after its overnight losses the euro is more than five percent above than where it traded in July at around USD 1.27, although it is almost 3 percent off a two-year peak hit a month ago.

Not so tough?

Analysts said that even if the ECB left its monetary policy steady in the months ahead, the outlook for euro was not great.

“Some cracks in the euro’s surface have already been appearing in recent weeks: 1) flow signals from the euro zone balance of payments have been less positive than we expected, 2) the price performance of euro zone stock markets is no longer leading, 3) euro zone growth expectations are no longer grinding higher,” Jens Nordvig, managing director and global head of FX strategy at Nomura, said in a note.

The euro zone moved out of recession in the second quarter, with economic growth rising 0.3 percent from the first quarter of the year. Still, analysts say the economic growth outlook remains tepid.

The European Commission expects the euro zone’s gross domestic product (GDP) to shrink by 0.4 percent this year. Earlier this month it revised down its forecasts for GDP growth next year to 1.1 percent from an earlier forecast of 1.2 percent growth.

Euro zone unemployment will remain near its record high for the next two years amid subdued economic growth, the European Commission said.

Read more: EU Commission cuts euro zone growth forecasts for 2014

“All told, the euro’s bull-run since April may be running out of steam,” said Nomura’s Nordvig.

Kathy Lien, managing director at BK Asset Management, agreed that the euro was poised for weakness even if the talk of negative interest rates did not materialize into action from the central bank.

“US rates are headed higher and it should therefore only be a matter of time before the dollar gains upside momentum versus the euro,” she said in a note.

—By CNBC.Com’s Dhara Ranasinghe; Follow her on Twitter @DharaCNBC

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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

Can emerging markets offer inflation protection?

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

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As the world’s main central banks try to battle the threat of stagnant growth and falling prices by implementing inflationary measures, one option for yield available to investors is emerging market bond plays.

However, while some analysts point to the gains to be made in the trade, others warn that the market for emerging market inflation-linked bonds, often called ‘linkers’, is too limited to be worth betting on.

Ben Bernanke, the current Federal Reserve Chairman, warned last week that inflation must be prevented from declining too far from the central bank’s 2 percent goal.

Read more: Could QE spur deflation, not inflation?

Meanwhile, in the euro zone, October inflation data surprised on the downside, falling to a nearly four-year low of 0.7 percent from a year earlier, boosting deflation fears and spurring a surprise rate cut by the European Central Bank to a fresh record low of 0.25 percent.

Read more: Is the euro zone at risk of Japan style deflation?

Japan has battled persistent deflation and anemic growth for nearly two decades, with the Bank of Japan this year launching a massive easing program in an effort to spur its economy out of stagnation.

Governments typically issue inflation-linked bonds, which link capital appreciation to inflation if held to maturity, to reduce borrowing costs, as buyers pay a premium for protection, especially when inflation expectations are too high; issuing the bonds also adds credibility to government and central bank efforts to keep inflation low.

But when deflation is the fear, creating inflation isn’t necessarily seen as a negative.

Watch: The Threat of Deflation

“It is absolutely axiomatic for the big three central bankers of the world now that they are going to fight tooth and nail to avoid deflation and they’ve made it that more urgent by the amount of debt that’s been issued,” said Nicolas Rohatyn, CEO of Rohatyn Group, which has more than $7 billion under management, at the AVCJ Asian Private Equity & Venture Forum in Hong Kong last week.

“If deflation was a problem before, with what it did to borrowers, it’s a much bigger problem now. I think if there is one unifying theme for central bankers – US, Europe, Japan – it’s create inflation, ” he said.

“They have a lot of tools to create it. I don’t think one should bet against them,” he said.

Read more: In Fed and out, many now think inflation helps

Instead, he advises that investors should play the inflation theme via emerging market linkers issued in countries’ local currencies.

“There are not that many instruments that have some liquidity, that have some coupon, that are not totally speculative in nature that allow you to participate in that intelligently. I think this is the best asset class for that particular view,” he said.

As inflation returns, thanks to the central banks’ efforts, investing in the bonds may also offer currency gains, Rohatyn said. He expects inflation will cause emerging market currencies to appreciate against their developed market counterparts.

Read more: Fed will get its inflation; here’s who will pay

But others say the risk involved in playing emerging markets’ inflation-linked bonds is too great.

Will Oswald, global head of fixed income, commodity and currency research at Standard Chartered warns that the amount of money in the market and the small number of the bonds available make it too risky a bet.

“Within Asia, it’s not a market that exists in any sort of meaningful size whatsoever,” making it difficult to get a diversified emerging market exposure, he said, noting issuance is primarily in Brazil, Mexico, Turkey, Poland and South Africa.

“The ability to exit could also be constrained” by the markets’ limited liquidity, he said.

Oswald doesn’t expect a large jump in interest rates to emerge from the easing measures in developed market central banks, saying rates are more likely to normalize due to a pick-up in economic growth.

Read more: Here’s a ‘TIP’: Time to get ready for inflation

In addition, in many emerging markets, the risk may be deflation, not inflation, once central banks begin unwinding their monetary stimulus as it may spur fund outflows, he noted.

“I don’t think it’s a compelling opportunity,” Oswald said.

So far, the market appears to agree, with US-listed international inflation-linked bond funds underperforming their nominal rate peers.

For example, Pimco’s Global Advantage Inflation-Linked Bond Strategy Fund (symbol: ILB) , which contains both developed and emerging market bonds, is down more than 10 percent year-to-date, while the iShares International Inflation-Linked Bond ETF (symbol ITIP) is off more than 8 percent year-to-date. By way of comparison, SPDR Barclays International Treasury Bond ETF (symbol BWX) is only down around 3 percent so far this year. Inflation-protected bond funds saw outflows of $4.8 billion in October, according to data from Lipper.

Indeed, local-currency emerging market bond funds have seen sharp outflows this year, with around $8.93 billion flowing out of the segment through November 13, according to data from Jefferies.

— By CNBC’s Leslie Shaffer. Follow her on Twitter: @LeslieShaffer1

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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

What to make of the Fed minutes: El-Erian

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

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The minutes released Wednesday by the Federal Reserve are a must-read for those interested in the complexity of modern central banking — if only for the striking contrast between the milquetoast discussion of the economy and the many policy and market complexities.

There is little that is new or noteworthy in the sections on economic developments and prospects. The bottom line is also a repeat of what has characterised many post-global financial crisis minutes: a more muted immediate economic outlook (growth and inflation) coupled with somewhat greater optimism for the longer term — all on a baseline characterised by the usual references to “modest,” “moderate” and “cautious.”

By continuing the practice of compensating for a somewhat softer short-term outlook with upward adjustments thereafter, the FOMC is sidestepping an issue that has now entered the mainstream lexicon with a bang because of recent remarks by Larry Summers and Paul Krugman. It’s what’s being called ‘secular stagnation’ and what Pimco in 2009 labeled the ‘new normal’—namely, a prolonged period of low growth and persistently slow job creation.

The minutes’ rather subdued economic discussion contrasts with the large number of open policy (and therefore market) questions.

Read more: Fickle Fed: Taper could arrive in ‘coming months’

From the interaction between the two main tools (asset purchases and forward policy guidance) to the consideration of new ones (lowering IOER), and from how and when to taper to the best way to communicate with markets, the minutes paint a truly complicated policy mosaic.

Further, it is one that is still in the making and whose ultimate shape—and therefore impact — is subject to considerable uncertainty.

The complexity also extends to the specification of the intermediate policy targets that are so crucial for fine-tuning the policy response and thus delivering desired outcomes. Specifically, Fed officials posed the legitimate question of whether the commonly followed unemployment rate overstates the improvement in the labor market and, probably more controversial, whether it makes sense to add an inflation floor.

Finally, the minutes suggest that this is a Fed that is contemplating not only what could go right if it continues on the current policy path but also what could go badly wrong.

For this reason, officials “considered scenarios under which it might, at some stage, be appropriate to begin to wind down the program before an unambiguous further improvement in the economic outlook was apparent.” Why? Because of “concerns about the efficacy or costs of further asset prices.”

Such complexity can paralyze market participants at a time when the Fed in particular and central banks in general continue to play an important role in asset price determination. Yet some aspects are less ambiguous.

Read more: Good news: Bubble concern is at a five-year high

Taken in their entirety, the minutes provide further support for a consequential hypothesis: As part of a forthcoming policy evolution, the Fed wishes to encourage markets to delink their assessment of the two main policy tools—thereby enabling Fed officials to strengthen forward policy guidance, reduce (very gradually and carefully) heavy reliance on balance sheet operations and avoid a repeat of the May-June disruptions to the functioning of markets.

Fed officials may even be tempted into cutting IOER as a way to help manage this tricky and uncertain policy pivot.

Read more: Yellen must promote strong recovery

This is the reason why Pimco stresses greater differentiation in portfolio positioning.

We have been favoring the front end of interest rate curves while shying away from the long end — a point that my colleague, Bill Gross, has stressed repeatedly in his writings and tweets. It is also why, given current price levels, we feel that risk assets are becoming consequentially more dependent on a proper recovery in fundamentals and not just continued policy support.

And it is why we believe that greater attention should be devoted to recent disparities in performance among and within some major asset classes.

—By Mohamed El-Erian

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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 Australia at a tipping point, literally?

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

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Australia is gearing up to move into a tipping culture much like the one that exists in the US, a University of Melbourne PhD student has concluded.

Faculty of Arts PhD candidate John Frank Burgess has conducted an extensive study into the origins, drivers and social consequence of tipping in the US and Australia over the past two years by observing bar patrons in both countries.

Read More: Should American restaurants abolish tipping?

He found that as Australia moves further away from a tightly regulated workforce, tipping is going to become much more prevalent.

“[Australians] are still opposed to it on a moral point of view, but all of a sudden it’s starting to become a lot more acceptable,” said Burgess.

Watch This: Restaurant tipping outdated?

According to his research, a tipping culture first emerged in the US in the early 1900’s when a deregulated labor market allowed employers to push wages down, forcing waiters and bartenders to supplement their pay packets with tips. Now, in the US tips are considered almost mandatory from a social obligation standpoint.

Australia’s more tightly regulated workforce has so far prevented a strong culture of tipping from emerging. However, as the country continues upon its path to a deregulated labor-market, Australians are starting to feel more obliged to tip.

“Australia’s relatively well regulated labor market has so far protected workers from the need to chase tips,” he added. “But if we continue down a path of labor market deregulation, then sooner or later tipping will become normalized,” he added.

Read more: ‘Coffices’ take off as the work place goes mobile

Burgess’ thesis, titled ‘Exchange in American and Australian Public Bars: Tipping as a Social Fact’ also explored the reasons why people feel compelled to tip in general.

They included a sense of social obligation, to underscore personal relationships, to display financial standing, as a conversation starter or simply to get rid of loose change.

Through his research, Burgess found that a tipping in the US had led to stronger relationships between bartenders and patrons.

“In the US it’s because of the tipping relationship [that] each party becomes concerned with the experience each other has, all of a sudden they get to know each other, and this happens quite quickly. It really requires a lot of emotional engagement to be a bartender in the US,” he said.

Read more: Aussie gets boost after Fed shocker, but will it last?

“People in Australia need to decide what kind of country they want to live in,” said Burgess. “If it’s one where it’s guided by free market principals, then that’s fine. But one of the consequences of that is a shift of power towards employers, and another consequence will be tipping.”

—By CNBC’s Katie Holliday: Follow her on Twitter @hollidaykatie

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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

New jobs laws take bite out of Singapore food outlets

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

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Singapore’s restrictions on importing foreign labor have made it tough for the city-state’s retailers and food outlets to find workers, limiting expansion plans and damping retail rents.

“Almost everyone is facing labor problems,” said Alan Cheong, senior director for Singapore at real-estate service provider Savills, citing feedback from the company’s retail team.

The Singapore government, which has faced public opposition to the country’s liberal immigration policies, has announced a slew of measures this year to limit the influx of foreign workers to ease pressures on the public transportation system and housing cost increases.

Foreigners – which make up almost 40 percent of Singapore’s population of 5.4 million – are an important source of cheap employment, particularly for the country’s manufacturing, construction and services sectors.

Read more: Wage-cost worries creep up in Singapore

“It’s holding back the expansion plans of tenants and as a result of that, the demand for space was lacking in the third quarter. That caused rents to be a bit soft,” Cheong said.

Savills noted rents for the third quarter in the prime Orchard Road shopping belt slipped 1.5 percent from the second quarter, while the vacancy rate rose to 7.7 percent from 7.3 percent a quarter earlier. The company attributes the developments to the foreign labor restrictions stymieing retailers’ expansion plans.

Read more: What keeps Singapore executives up at night

Aside from the higher vacancy rate, Singapore’s supply of retail space is also rising, with two new malls set to open in Orchard Road area before the year wraps up.

“It should have been relatively easy to fill up the space,” Cheong said. “[But] if you don’t have the labor, you have trouble justifying how to take up the space.”

The decline in rents isn’t helping businesses much. “Rents are falling, but labor costs are rising,” he said, adding that businesses haven’t been able to pass costs to the consumer amid somewhat anemic retail sales. “Retail margins are still being continually squeezed.”

Labor crunch

Retailers are complaining about the difficulty of finding workers.

“You just have to constantly advertise and put feelers out,” said Jeremy Taylor, managing director of Cash Converters Singapore, which buys and re-sells second-hand items. “Every now and again, we lose a person because someone is paying them a lot higher.”

While the government can be generous with grants to improve productivity, such as by upgrading computer systems, “there’s only so much you can do in retail, because a lot of it is about face-to-face with the customer,” he said.

In part to counter the worker shortage, Cash Converters is looking to expand its e-commerce options. “The actual cost of running a bricks-and-mortar unit is steadily going up,” he said.

Read more: Still easiest to do business in Singapore, Hong Kong

While the effect of the labor shortage isn’t huge yet, “it will affect the rate of growth going forward,” said Dr. Chua Yang Liang, head of research for Singapore at Jones Lang LaSalle, a real-estate services firm.

Chua said food and beverage outlets are especially hard-hit. “They advertise, but they can’t find locals to hire.”

This comes as the year heads toward the “13th month” period – a time when employees are due to receive a year-end bonus if they remain with their current employer – when hiring typically slows down, Chua added.

“Most manpower are more reluctant to move during this period,” Chua said.

Harder to get that sandwich?

“Many restaurants or coffee shops and so on have not expanded,” said Satish Bakhda, head of operations at Rikvin, an employment agency. “A lot of them have used the productivity pool (of government grants) to automate a lot of their process,” he noted, citing moves such as the use of iPads in restaurants to take orders.

“But some businesses just can’t survive. They need people. When you need a waiter, you need a waiter.”

He said wages have gone up “tremendously,” sometimes as much as 30-40 percent.

Bakhda noted one of the reasons businesses in the segment prefer to hire foreign workers is that the employment-pass process helps to keep them from jumping to other jobs.

“The situation is improving now because the wages have gone up. There are more Singaporeans willing to do those jobs, which they were not willing to do earlier. For those companies willing to pay, they are able to get not 100 percent, but enough to do the job,” he said, but added, “for those not willing to pay, they’re still struggling.”

—By CNBC.Com’s Leslie Shaffer; Follow her on Twitter@LeslieShaffer1

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

Superbear Marc Faber sees opportunities

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

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European equities are poised to outperform US stocks and emerging markets, Boom Gloom & Doom Report editor Marc Faber said Tuesday.

“At the present time, I think that Europe has had a very good move from the lows. It outperformed the US, and I would be a little bit careful to buy stocks indiscriminately at the present time because everything has moved up significantly. There’s a lot of bullish sentiment,” he said.

“But in general, I like selected European companies because their business is international and their exposure to Europe is not all that large. Maybe 40 to 50 percent of their total sales are in Europe, and the rest is overseas.

Read more: ‘Some pockets of value left’ in stocks: Kate Moore

On CNBC’s “Fast Money,” Faber said that he owned stock in telecom companies, utilities and blue-chip companies in Switzerland. He also disclosed that he was holding on to 10-year Treasurys and adding to his gold positions.

Known as a market bear, Faber also said bubbles are forming in some areas.

Read more: Dennis Gartman likes ‘simple things’: Coal, steel, copper

“I see a bubble in everything that relates to the financial sector,” he said. “We have a bubble in bonds. We have a bubble in low-quality bonds. We have a bubble in equities. If you look at the financial sector as a percentage of the global economy, it’s very large. We have a huge debt bubble, and it’s only getting bigger. It’s not getting any smaller.

“Everything that is in the financial sector is the bubble, and it’s been pumped up by central banks.”

Faber also called “a colossal bubble” in the high-end sector, adding, “Think diamonds and the prestige art and luxury.”

While the luxury sector has been strong, costs have also been going up and competition has increased, Faber said. “The outlook is relatively favorable, but tastes may change.”

Faber said that the nomination of Janet Yellen to head the Federal Reserve could lead to an even bigger bubble.

Read more: Bull markets don’t stop at ‘cheap’: Josh Brown

“With all this collection of dovish professors at the Fed, that actually the asset-purchased programs could be increased — not tapered, increased,” he said. “There’s no great value in equities with very few exceptions, but it can become even more overvalued.”

The Nasdaq was overvalued in the summer of 1999 but continued climbing until March 2000, Faber noted.

“The fact that the market goes up doesn’t necessarily make it good value,” he said.

Faber said that he saw value in mining companies, particularly precious metals.

— By CNBC’s Bruno J. Navarro. Follow him on Twitter @Bruno_J_Navarro.

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Why Asian property investors may fear US taper

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

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Asia-Pacific’s booming property markets are reliant on ultra-loose US monetary policy — and prices could plummet by up to 50 percent when the Federal Reserve starts tapering off its asset purchases, a senior economist warned CNBC.

CNBC Explains: Tapering

“The Asian housing market has become increasingly dependent on U.S. funding. So if there is one property market in the world where you find dependence on what happens next in the Federal Reserve it is a market like Hong Kong,” said Steen Jakobsen, the chief economist and chief investment officer at Saxo Bank, who had just completed a week-long trip to Singapore, Indonesia and Hong Kong.

Speculation has continued for months as to when the Fed might start scaling back its massive USD 85 billion-a-month bond-buying program, designed to aid the country’s recovery since the subprime mortgage and global financial crises. European and Asian markets, as well as Wall Street, have tended to turn lower on any hints of pending tapering, such as when New York Fed President William Dudley expressed optimistic about the US recovery on Monday.

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But despite the global downturn, countries such as Hong Kong and Singapore have seen sky-high property price rises, with Singaporean property prices souring around 60 percent in the past three years. This is despite multiple efforts by Singapore’s government to cool the market, including limiting mortgage sizes to a 60 percent debt-servicing ratio of borrowers’ monthly income.

China also unveiled measures to stabilize its property market on Friday, on the same day that government data showed prices for new homes in the country rose at a record pace in October. Prices rose 9.6 percent from a year earlier, according to Reuters calculations based on data from China’s National Bureau of Statistics, compared to 9.1 percent in the previous month.

Read more: China’s new home prices rise at record pace

Jakobsen likened the Asian housing bubble to that experienced by the U.S. prior to the sub-prime crisis, and said that a similar collapse loomed for Asia when the Fed started tapering — which he forecast would be “very soon”.

“The reason why money flows into real estate is that people are increasingly speculating that it will go ever higher, not dissimilar to what we saw in the early part of the crisis in the US, and then all through the 2000s. I think we are repeating the same mistakes,” he said.

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