Month: December 2013

Why India’s state elections matter

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

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India will announce the results of key state elections this weekend, in an important litmus test for the country’s two major parties ahead of next year’s general elections.

Exit polls indicate the main opposition Bharatiya Janata Party (BJP), led by Narendra Modi, performed strongly in the elections held in Chattisgarh, Madhya Pradesh, Rajasthan and Delhi. The official results of the elections, which were held between 11 November and 4 December, are due on 8 December.

 “Results from exit poll surveys may differ from the official results, but the overall trend of BJP performing well seems consistent across exit polls,” Nomura strategists wrote in a report on Thursday.

“From an economic perspective, the exit polls, as well as the final state election results, should impact sentiment positively,” they added.

BJP is perceived as more business-friendly and willing to implement reforms compared with the ruling Congress party, which has been tainted by poor economic performance and slow pace of legislative changes.

(Read more: Has Wal-Mart killed India’s FDI dream?)

 The Congress party has led coalition governments at a national level in India since 2004, however its support base has been eroded in the recent years due to a string of corruption scandals and rising food prices, among other issues.

Delhi, which has traditionally seen a low voter turnout during state elections, witnessed the highest ever turnout, with the youth coming out in large numbers to cast their ballot for change.

Signs that the BJP is gaining traction have been welcome development by investors, with the rupee strengthening to a five-week high against the dollar, and Indian stocks rising to a one-month high this week.

“We’ve become pretty constructive on India and the rupee. I think the appointment of Rajan as the new RBI [Reserve Bank of India] governor was very significant. [And] you throw in the elections next year. For us it’s a good story,” Jonathan Webb, head of FX strategy at Jefferies Bache told CNBC’s Capital Connection.

(Read more: Four major emerging nations face crucial elections)

 Overall, Asia’s third largest economy has been struggling to gain momentum, with growth languishing below 5 percent for the fourth consecutive quarter in the July-September period – a far cry from the 8-9 percent growth rates seen just a few years ago.

Modi, the prime ministerial candidate of the BJP who is currently serving as the chief minister of Gujarat, has been applauded for his investor-friendly policies that have led the state to double-digit economic growth.

(Read more: India to stick with austerity despite looming election)

According to Morgan Stanley, the upcoming general elections are arguably the most important in over two decades.

“Elections have probably not been more crucial from an economic standpoint, except perhaps for 1991. We think the coming general elections hold greater importance than usual,” said Ridham Desai, managing director at Morgan Stanley.

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

Ladies, presenting the world’s top billionaire bachelors

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

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Microsoft co-founder, Paul Allen, has won the title of the world`s wealthiest bachelor, with an estimated personal fortune of USD 15.3 billion, according to a ranking by Wealth-X – a global wealth intelligence provider.

60-year-old Allen, who is a business tycoon, investor and philanthropist, owns two sports teams -the Seattle Seahawks, an American football team and the Portland Trail Blazers, a basketball team. He has never been married and resides on Seattle`s Mercer Island.

In November, he reportedly snapped up an eight-bedroom mansion in the Silicon Valley town of Atherton for USD 27 million, joining other billionaire residents in the neighborhood, including Google chairman Eric Schmidt, Hewlett-Packard chief Meg Whitman and brokerage magnate Charles Schwab.

Fashion magnate Giorgio Armani was ranked in second place, with personal net wealth of nearly USD 11 billion. The 79-year-old`s business empire includes a high-fashion clothing line, watches and hotels – including The Armani Hotel at the Burj Khalifa in Dubai, in the world`s tallest building.

“Against the backdrop of a proliferation of matchmaking TV shows and online services, meeting the right person is harder than ever. Add to that the compounding difficulty of super wealth and navigating the right soul mate and discerning right intentions becomes even more challenging,” said David S Friedman, president at Wealth-X.

Mikhail Prokhorov, 48-year-old Russian industrialist, politician, and owner of the Brooklyn Nets basketball team came in third place, with a net worth of USD 9.3 billion

Meanwhile, Xavier Niel, 46, known as France`s “internet king” for creating WorldNet – the country`s first internet service provider – in 1993, claimed fourth place, with an estimated personal fortune of USD 8 billion.

Youngest billionaire bachelors

While, bachelors above the age of 60 comprised almost half of the top-10 ranking, two eligible billionaire singles in their 30s made the list.

Texas-based Scott Duncan, 31, one of the four children of Dan Duncan – formerly the richest man in Houston who died in 2010 – ranked seventh, with a personal fortune of USD 5.3 billion. Duncan is heir to the family fortune built by his father`s energy-pipeline business.

And, in ninth place is Colombian-American Alejandro Santo Domingo Davila, 36. He is the eldest son from the second marriage of Julio Mario Santo Domingo Pumarejo – one of Latin America`s richest and most influential men – and has an estimated net worth of USD 3.9 billion.

The Harvard-educated billionaire serves on the boards of many of the companies controlled by the Santo Domingo Group – one of Colombia`s biggest conglomerates that owns more than 100 businesses.

-By CNBC`s Ansuya Harjani; Follow her on Twitter: @Ansuya_H

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

Froth in US stocks, tech, bitcoin: Global CFO Council

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

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Despite optimism over the state of the global economy, chief financial officers from around the globe are becoming increasingly wary of asset valuations with some stating that they have held back on deals because of froth in markets.

More than 92 percent of respondents believe that US stock valuations are high, according to a CNBC survey of 26 chief financial officers (CFO) from Europe and Asia who make up the CNBC CFO Council. Half of those CFOs who said their company was looking at acquisitions, admitted that they had completed the deal regardless of these valuations. About a third said valuations had been a deterrent.

The technology sector was a particular area of valuation concern, with more than 83 percent of those surveyed seeing valuations in the technology sector as being high, with over 8 percent believing that they are extremely high. Twitter’s current price of around USD 40 since its initial public offering in November is also overvalued, according to 86 percent of respondents.

But despite this market froth, the CFOs remain convinced that the Nasdaq Composite is not in a bubble. The index has risen 33 percent so far this year with a current price-to-earnings ratio of 19.87. In late November, big-cap technology stocks helped the Nasdaq to finish above 4,000 points for the first time since the dot-com bubble burst in 2000. Almost two-thirds, 62 percent, of the CFO survey’s respondents believe the Nasdaq is not in a bubble, compared with 38 percent who believe it is.

CNBC’s survey showed finance chiefs have similar overvaluation concerns when it comes to virtual currencies. Bitcoin allows users to exchange online credits for goods and services. There’s no central bank that issues them and they can be created online by using a computer to complete difficult tasks, a process known as mining. The price of bitcoin has topped USD 1,000 recently and whilst many advocates tout it as an alternative to fiat currency, our CFOs aren’t as certain.

Over 85 percent of CFOs that responded see it as a “purely speculative” tool for investors trying to cash in, whereas around 14 percent considered it a “legitimate currency”. Nearly 64 percent replied that they thought the digital currency was currently in an economic bubble.

The US Federal Reserve expanded its balance sheet soon after the global financial crash of 2008. It has since embarked on two more quantitative easing programs and is currently pumping an open-ended USD 85 billion-a-month into the US economy. Meanwhile, the Bank of Japan and the Bank of England have both followed the Fed with asset purchases and low interest rates have been prevalent across the globe in an effort to combat deflation.

With this increased liquidity, stocks have been one of the main beneficiaries. The S&P 500 is nearly 26 percent higher year-to-date and logged its longest weekly winning streak since 2004 on Friday.

Nomura strategist Bob Janjuah told CNBC on Tuesday that bond-buying by the Fed has essentially benefited the “owners of capital” and “people that can take leverage at the Fed window”, failing to trickle down to the real economy.

Marc Faber, editor and publisher of The Gloom, Boom & Doom Report, told CNBC on Friday he believes a “massive speculative bubble” has encroached on everything from stocks and bonds to alternative currency bitcoin and farmland. He attributed the vast bubble to “symptoms of excess liquidity.”

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

Caution: A good US jobs report could sink stocks

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

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November`s employment report could be good news for the economy but bad news for stocks.

Economists expect to see about 180,000 jobs added in November, off from October`s 204,000 level, and the unemployment rate a 10th lower at 7.2 percent.

Traders, however, are discussing higher whisper numbers well above 200,000, and that has been weighing on stocks and sending bond yields higher on speculation a strong number would speed up the timetable on the Fed `s wind-down of its quantitative easing program.

A better report would raise the odds the Fed would decide to taper its bond buying program when it meets in December, Fed watchers say. But they still mostly believe tapering of the $85 billion a month program in January or March is more likely. November`s employment report is being released at 8:30 a.m. EST Friday.

Charles Schwab`s Randy Frederick expects to see a 200,000 plus number and that could create knee-jerk selling in stocks. “I still think there`s little chance for the Fed tapering on (Dec.) 18th,” said Frederick, managing director of active trading and derivatives. “I do think even if they decided to taper, we wouldn`t have a 10 percent pullback. I think it would be more like 4 to 5 percent.”

(Read more: Wall Street: The day of reckoning nears )

If nonfarm payrolls are in line with expectations or slightly lower, that would be the best scenario for stocks, he said. However, there could also be some profit-taking, and if the number is very weak, it would startle the market, and the selling would be more about concern for the economy. QE has become a security blanket for stocks, which have been helped by lower longer term yields.

CRT Capital surveyed bond market participants Thursday and found a very low 11 percent expect a December Fed tapering, but the odds are greatest if the jobs number is 258,000 or better. If that happens, they expect 10-year notes to sell off, and yields move toward a 3 percent target, as stocks lose about 2 to 3 percent.

But if the nonfarm payrolls are below 210,000, a December tapering is off the table, and bonds and stocks will rally. The respondents saw 10-year yields returning to the 2.7 to 2.75 percent area and stocks recovering about 1 percent.

Traders became emboldened in their expectation for a higher number after the ADP private sector jobs report showed 215,000 jobs, its best level in a year. Traders also were watching the improvement in jobless claims Thursday, with the four-week average now at 322,250, the lowest level since 2007.

(Read more: Cramer: The reason why this stock keeps rising )

Mark Zandi, chief economist at Moody`s Analytics, expects to see 200,000 total nonfarm payrolls. He said there are two technical factors that could impact that number.

An unusually high number of companies answered the survey last month, perhaps because there was an extra week to respond due to the government shutdown. But that could reverse this month.

Zandi also said when Thanksgiving comes late in November, as it did this year, there has been a weaker November jobs number. “Whatever is going on mechanically in those years, every single year October was strong and November weak,” he said.

He does not expect the Fed to wind down its bond buying yet. “I think that 200,000 is an unwritten threshold for them. I think if we`re consistently north of 200,000 that would be a green light for them to begin tapering,” Zandi said. “They`ll probably need a couple, three more months to come to the conclusion that this kind of job growth was here to stay and that would probably take them to the March meeting.”

(Read more: How `on-call` hours are hurting part-time workers )

Zandi said the increase in small business hiring in the ADP report gave him some encouragement that the job market is getting stronger. “It`s a good sign. If health-care reform is having an impact, it`s not showing up clearly in the data. It could be this is a script that`s still being written. The employer mandate was delayed by a year,” he said, adding that the hiring could be related to the construction cycle.

The last time the monthly job gain at companies with fewer than 50 employees was stronger than the 102,000 gain in November was January 2013 when small companies added 106,000 workers. Small business is a major engine for job growth, with companies with 50 or fewer workers accounting for 51 percent of all jobs. But those companies have accounted for just 43 percent of job growth since job growth resumed in March 2010, he said.

Zandi said jobs will not be the only factor the Fed watches. It will be interested in retail sales as a gauge of the consumer. “As long as we get a 4 to 5 percent holiday sales season, that will be enough for them,” he said.

Barclays chief U.S. economist Dean Maki also expects to see 200,000 nonfarm payrolls , and he expects the unemployment rate to fall 0.2 percent to 7.1 percent.

“It`s going to be especially interesting to see what the Fed does if we get a 250,000 number, stronger than what we`re looking for , and a drop in the unemployment rate,” Maki said. “We`re not expecting a December taper mainly because Vice Chair [Janet] Yellen , in her confirmation hearing, said that the FOMC wanted to see GDP growth pick up in a way that would suggest strong payroll gains would continue, and 1.5 percent growth in Q4 doesn`t look like the signal,” he said.

Maki cut his outlook for fourth quarter GDP to 1.5 percent from 2 percent Thursday because of the high impact of inventories on third quarter GDP growth, revised to 3.6 percent from 2.8 percent.

While stocks could have an initial negative reaction, strategists do not foresee a break down in the market, and many strategists see an up year for 2014.

(Read more: Gangbuster! US growth surges, joblessness plunges )

“The bond market knows there`s some sort of tapering coming,” said Peter Boockvar, chief market strategist at Lindsey Group. “Still a small tapering is meaningless in the context of the printing they are doing.”

Boockvar said a small taper would be about $10 billion, and even if the Fed does slow the program it will still have trillions of assets on its balance sheet.

The Fed has also vowed to keep short term interest rates low for a long time, and it is not now expected to start hiking until 2015.

Treasury yields on the long end, however, have risen, with the 10-year reaching 2.86 percent Thursday and traders seeing a path to 3 percent when the Fed signals it is ready to slow its purchases of Treasurys and mortgage-backed securities.

-By CNBC`s Patti Domm. Follow here on Twitter @pattidomm.

Copyright 2011 cnbc.com

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

3 Mins Read

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

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

Why we’re not keen on US stocks: Credit Suisse

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

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US equities face an ironic headwind that will lead them to underperform their global peers next year — signs of an economic recovery, Credit Suisse said.

US growth prospects are upbeat, the bank said in a note. It forecasts 2014 growth of 2.6 percent in gross domestic product (GDP), with the possibility of surprising on the upside from factors including a possible pick up in government spending, a housing recovery and a potential rise in corporate spending.

These growth forecasts are precisely why it has an underweight call on US stocks.

“The US equity market is a defensive market,” due to the country`s high level of corporate and macro policy flexibility, including the relative ease with which companies can lay off workers in a downturn, Credit Suisse said. For that reason, “the US tends to underperform when global growth accelerates.”

Non-financial US stocks are trading at a 47 percent premium to global markets on a price-to-book basis, a near-12-year high and well above the historical average of around 30 percent, the bank said.

“This suggests the US  market is still trading on a relative `safe haven` premium. We expect this premium to be priced out of US  equities as macro uncertainty continues to fall,” it said.

Bond yields are also set to rise as the Federal Reserve is expected to begin tapering its purchases of assets as growth improves, another factor typically heralding underperformance by US  stocks, Credit Suisse says. As rates rise, the US  dollar is likely to strengthen and the bank estimates that every 10 percent rise in the trade-weighted dollar takes 4 percent off US  corporate earnings.

It raises its end-2014 target on the SandP 500 to 1960 from 1900, suggesting an around 10 percent rise from current levels.

Credit Suisse is well aware it`s making a non-consensus call, noting that sell-side analysts` net buy calls on the US  are at a 10-year high.

UBS recently increased its allocation to US  stocks, citing expectations US  corporate earnings will rise by 8 percent in 2014, driven by solid domestic demand.

In addition, Morgan Stanley is keeping an overweight call on US  stocks, setting a target of 2014 for the SandP 500 index for the end of 2014.

“Our logic has been more driven by the lack of a bear case than the strength of the base case,” it said in a note. “With a 2 percent dividend yield, a 3 percent net buyback, and mid-single-digit earning growth, calling for a big down market is akin to calling for a double-digit market multiple contraction. We don`t think that`s likely,” it said.

To be sure, Credit Suisse isn`t alone in its pessimistic view on US  stocks. Goldman Sachs is neutral on the market on a three-month horizon, going to underweight on a 12-month horizon.

“Longer term the return potential for the US  market is dampened by limited room for valuation and margin expansion given the strong recovery we have seen already,” Goldman said in a note. Its end-2014 SandP 500 target is at 1900.

– By CNBC`s Leslie Shaffer. Follow her on Twitter: @LeslieShaffer1

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

Lecture hall or laptop? Students go online

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

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Thanks to revolutions in technology and high-speed internet connections, the way we are learning is changing. The traditional method of passing on knowledge – either in a packed lecture hall or dusty classroom – is rapidly being overtaken.

Today, a student with an internet connection in Buenos Aires or Lagos can log on, interact with, and learn from an academic in New York City or London.

“If you were a doctor a hundred years ago and you go back [to the present] now, you can’t be a doctor,” Wim Elfrink, Executive Vice President, Industry Solutions and Chief Globalisation Officer of Cisco Systems, told CNBC’s Innovation Cities. “But if you were a teacher a 100 years ago, and you go back now to the classroom, you can still be a teacher. Education hasn’t really embraced yet what technology can enable.”

The New York Academy of Sciences has teamed up with Cisco to establish the Global STEM (science, technology, engineering and math) Alliance. Using Cisco’s TelePresence technology – an immersive audio visual conferencing system – the partnership is designed to enable the dissemination of scientific knowledge and academic resources throughout the world.

(Read more: How the business of bionics is changing lives)

“Education used to be thought of as a teacher sort of opening up a kid’s brain and pouring in the knowledge,” Dr Meghan Groome, Executive Director of Education and Public Programs at the New York Academy of Sciences, said. “Now, if you have a mobile phone and a wireless network, you can basically build whatever type of education you want for yourself.”

“It’s very simple to connect you in with a Nobel Laureate, or a high schooler who’s on a really great, award winning robotics team,” Groome added.

Staff at Boston University are looking to use this kind of technology to create immersive, stimulating learning experiences.

(Read more: Apps that make your home smarter)

“We’re engaging our students in teams, using virtual, video technology, to ensure that we have conversation that goes beyond person to person,” Ken Freeman, Professor and Dean of Boston University School of Management, told CNBC. “We engage everyone in the classroom in the discussion.”

The demand for online learning is rapidly increasing. Coursera, an education company founded by academics at Stanford, is helping to broaden access to learning. It offers free online courses taught by academics at leading global institutions such as Yale, Princeton and Edinburgh.

Today, over 5 million students from 190 countries are studying Coursera courses which cover everything from astronomy to philosophy. If they complete their course successfully, they are awarded a certificate.

(Read more: Basque Country reaches out to the elderly)

As learning moves from the lecture hall to the laptop, the potential for even more children to gain the benefits of education is becoming greater.

“In five years,” Cisco’s Elfrink says, “we can give 100% of kids in the world the right to education.”

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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

Christmas taper talk picking up steam

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

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Even with spotty economic data, the unofficial odds are rising that the Fed will announce plans at its December meeting to taper its bond-buying program.

But a number of Fed watchers still believe it’s more likely the Fed will take action to cut the USD 85 billion a month in asset purchases in January or March. Bond yields have been rising on the possibility, and stocks have floundered this week.

Wednesday’s stronger-than-expected ADP report showed that private sector hiring rose in November at the highest rate in a year. That, in turn, gave rise to speculation that the government jobs report on Friday will also be better than expected. ADP said 215,000 new jobs had been added to private sector payrolls, well above the 170,000 expected.

Economists look for 180,000 nonfarm payrolls in November and an unemployment rate of 7.2 percent, according to Reuters. That compares with October’s surprise gain of 204,000 jobs and bump in the unemployment rate to 7.3 percent.

“The more that strong data comes in the probability goes up [for Fed tapering], but it’s unlikely it will go above 50 percent” for December, said Pimco strategist Tony Crescenzi. “The Fed has not paved the way yet. It hasn’t prepared markets, so it will probably take a bit more time. Stronger data rolling in are fresh, and the Fed doesn’t react to short-term spates of data. It reacts to cumulative data. It doesn’t alter the chances for December, but it does keep in place January and February, and reinforces the probability that have been assigned to those months.”

Mesirow Financial economist Diane Swonk said she sees about a 45 percent chance that the Fed will act in December.

“I think what financial markets have really underestimated is how much the Fed would like to pivot,” Swonk said. “The question is are financial markets ready for it or not.” She said the Fed has an opportunity to use its December meeting statement to clarify its message on wind down the quantitative easing program, while also emphasizing that it plans to keep short-term rates near zero for a long time.

Read more: Yes, you should buy this dip: Trader

“The bloodshed is not going to be what it was. Markets have been through this dance before. The markets need to focus on how good is this retail season. The economy is still not that great,” Swonk said, adding that many carry trades were unwound during the summer.

Markets had been primed for the Fed to announce a pullback in bond purchases in September, but it held off and said it was concerned about the economy and possible fiscal headwinds. But now that the jobs numbers appear to be on positive trajectory and the risks of another fiscal disruption have decreased, traders expect to see the Fed move within the next few months. But the actual timing is a mystery, and street expectations have shifted.

Ahead of the September meeting, bond yields rose, with the 10-year briefly touching 3 percent. Yields have been rising this week, as some data surprised positively, and the 10-year reached 2.85 percent Wednesday, the highest level since Sept. 18. The ISM manufacturing survey Monday was stronger than expected. However, the survey Wednesday showed a surprise slowdown in services sector activity and employment expanding at a lower rate.

Bespoke’s Economic Indicator Diffusion Index shows that more economic indicators are coming in ahead of estimates than there had been in recent weeks, but the index is still weighed down by more misses and hasn’t been positive since Sept. 12.

Read more: US economic data: confusing, but focus on jobs

Traders will be focused on Thursday’s data, which include weekly jobless claims and third-quarter GDP at 8:30 a.m. ET. GDP is expected to be up 3.2 percent, after a first reading showed it gained 2.8 percent. Factory orders are at 10 a.m., and chain stores report on November sales during the morning.

Swonk expects third-quarter growth to come in at about 3.3 percent but said the Fed will look past the headline number.

“The current quarter looks around 1 percent,” she said. “They’re looking at the fact that it was driven by inventories and not the right way to get there. … We slowed down over the summer on demand and that’s what the Fed cares the most about. It’s a complex decision they’ve got to make.”

Stocks Wednesday were mixed with the Dow and S&P 500 lower, and Nasdaq less than a point higher at 4,038. Reports about a budget deal in Washington propped up stocks midday, but they sunk later. The Dow finished off its lows at 15,889, down 24. The S&P was down 2 at 1,792.

A budget deal in Washington would slightly tip the odds in favor of earlier tapering, since traders still see budget feuding as a point of concern for the Fed. The continuing resolution to fund the government runs out Jan. 15 and budget conferees are hoping to have a proposal by the end of next week.

David Ader, chief Treasury strategist at CRT Capital, said a big jobs number on Friday could get the Fed to act in December.

“I’m leaning toward 200,000-plus nonfarm payrolls,” he said. “I’d say the odds are 75 percent for an announcement of a tapering to begin in January. I think it would be very modest. I think the Fed is concerned about it.”

If the employment report hits the consensus number and comes in at about 180,000, Ader said, it would be ambiguous and not clear what the Fed would do.

Read more: Don’t worry about 2014 tapering: Pro

Swonk said the Fed is concerned about the impact its withdrawal would have on the mortgage market, but also about continuing the program for too long as the Treasury issues fewer bonds and the Fed buys up the available mortgages.

She expects to see about 160,000 nonfarm payrolls for November.

“If they get 250,000, slam dunk, they are going to do tapering,” Swonk said. “If we get 200,000, there’s a 55 percent chance they don’t” move in December.

—By CNBC’s Patti Domm. Follow here on Twitter@pattidomm

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

Forget the Christmas party, employees want cash instead

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

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Companies planning to splash out on Christmas parties for their hard-working staff shouldn’t bother, according to new research, as most employees would prefer the cash instead.

Some 71 percent of workers in the UK would rather have the money their employer spends per-head than a party, research by life and pension group Metlife found. And perhaps surprisingly, even 65 percent of younger workers, aged between 18-24, would opt for a pay-out over an end-of-year bash.

Read more: Black Friday shoppers beware—the 12 scams of Christmas

This reluctance to party might be down to the fact that many workers are forced to take time off over the Christmas season, Metlife said.

A third of employees based in the UK said they have to take holiday over Christmas and New Year because their organization closes, with that number rising to 50 percent in the case of small and medium sized enterprises (SMEs), according to a poll conducted by Consumer Intelligence.

“Christmas parties can be great for morale and rewarding staff for their hard work throughout the year but it does seem as if most staff would rather just have the money,” said Tom Gaynor, employee benefits director at MetLife UK

Read more: After cheap gifts this Christmas? Here’s where to go…

“In any case, bonuses or cash payments have to be taxed, while employers can spend up to £150 ($245) a head on Christmas parties without employees having to pay tax. Workers probably are better off enjoying the party.”

Nearly six out of British 10 workers will enjoy a Christmas party this year, the research found, with employees based in London the most likely to have a festive do.

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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

‘Universal’ frustration with India reforms: Hero CEO

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

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Indians are frustrated by the slow pace of government reforms aimed at reigniting the country`s previously stellar growth, said the head of India`s Hero MotoCorp, the world`s largest motorcycle manufacturer.

India`s growth has disappointed for several quarters, with growth decelerating from above-9 percent in 2010 to as low as 4.4 percent in the second quarter 2013 – lagging far behind economic rival China , which has maintained growth rates above 7 percent this year.

Last Friday, official numbers showed India`s economy grew by 4.8 percent in the third quarter year-on-year.

“The frustration with the pace of reforms is somewhat universal. It is not just with me alone. It is upsetting when you can see that things need to be done, and don`t get done,” said Sunil Kant Munjal, the Indian chief executive of New Delhi-based Hero MotoCorp.

In particular, efforts to reignite the Indian economy have been hampered by low investment and bureaucratic bars to launching and sustaining much-needed infrastructure projects.

The slow pace of reforms has also been cited by analysts as one reason why Indian assets were particularly hard hit by the turmoil that swept through emerging markets earlier this year amid worries about a scaling back of US monetary stimulus.

Against that backdrop the rupee hit a record low against the US dollar in August.

“It would take significant structural reforms to elevate Indian growth back to the 8 or 9 percent level and that there is no sign that is going to happen any time soon. One of the big problems is the inability to get large investment projects off the ground,” said Mark Williams, the chief Asia economist at Capital Economics, after the latest growth numbers were published.

“Across the country, projects have stalled or haven`t got approval to even start. So something has to be done to clear that backlog,” he said.

Investors in India have also been deterred by concerns about its fractured political landscape, particularly in the run-up to its national election in May 2014.

Munjal said that the current government, led by the center-left Indian National Congress, had increased the pace of reforms over the last year, but that this would likely fall-off as the election neared.

“To be fair to the government, while they were slow for a number of years, in the last year or so they have picked up the pace a bit more… I expect the focus on industry and the economy to tail-off as the election comes nearer,” he said.

-By CNBC`s Katy Barnato

Copyright 2011 cnbc.com

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Will strong US jobs data hasten the taper?

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

Listen to the Article (6 Minutes)

ADP’s private sector payrolls report will be watched Wednesday as the warm-up act for Friday’s important government jobs report.

ADP kicks off what is a heavy calendar of data, which could add to volatility Wednesday. There are 173,000 private sector jobs expected, up from ADP’s report of 130,000 for October.

Stocks sold off Tuesday, with the Dow and S&P 500 lower for a third session, amid speculation that stronger data will encourage the Fed to pare back its bond-buying program sooner than expected. The Dow was off 94, at 15,914, and the S&P 500 was down 5, at 1,795. The 10-year Treasury was at 2.78 percent in afternoon trading, off its earlier highs.

The ADP report, at 8:15 a.m. ET, will be followed by international trade data at 8:30 a.m. New home sales and ISM nonmanufacturing data are at 10 a.m. The Fed’s Beige book on the economy is released at 2 p.m.

Read more: Nervous investors need to embrace the selloff

The ADP number is not viewed as an accurate reflection of the government’s monthly report but as a guide.

“It’s had an average miss of 41,000,” said John Briggs, head of cross-asset strategy at RBS. But, he added, economists’ consensus estimate has missed the monthly nonfarm payroll number by slightly more.

While always important, the government jobs report is even more sensitive for markets this month as it is the last big key piece of data the Fed will have before it meets Dec. 17 and 18. While most Fed watchers expect no action to taper bond purchases at that meeting, the odds increase if the nonfarm payrolls are stronger than expected.

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According to Reuters, the November jobs report is expected to show a rise of 180,000 nonfarm payrolls and a slightly lower unemployment rate of 7.2 percent. October’s 204,000 jobs was a surprise, as were the revisions to August and September reports.

Read more: Insiders favor selling as market hits new highs

“I think markets are going to be on the defensive into the number,” Briggs said. “Expectations are only calling about 30 percent for a December taper. The risk is that [the jobs report] moves it. Generally a little bit higher yields make sense to me.”

He expects the bond market to stay choppy ahead of the Fed meeting.

“Risk appetites are low,” Briggs said. “It’s been a tough year for many fixed-income investors.”

One fixed-income market that’s had its share of selling is municipal bonds. The Detroit bankruptcy and other troubled credits, such as Puerto Rico, have roiled the market. It had a muted reaction to a federal judge’s ruling Tuesday, formally declaring Detroit bankrupt.

Read more: Detroit eligible for bankruptcy protection: Judge

 Muni experts say the credit concerns and expectations for Fed’s taper have combined to drive outflows from bond funds.

Read more: Gross: Fed will keep rates low until at least 2016

“I see it as credit positive in a perverse way,” said John Donovan of Drexel Hamilton. “Today is maybe the first step in saying cities and municipalities can go into Chapter 9 bankruptcy and can use a restructuring process to take care of their problems.”

It also cleared the way for governments in Michigan to cut pensions if necessary, he added.

Municipal bonds have traded better recently. Donovan said the MMD ratio, which reflects the yield of the 10-year high-grade muni versus the 10-year Treasury, reached 110 percent in September.

“That was due to mutual fund outflows, as a result of both credits” and concerns about tapering, he said

That ratio is now a more normal 96 percent—still cheap historically.

Blake Anderson, muni strategist at Mesirow Financial, said the way the media covers stories like the Detroit bankruptcy also influences market psychology, but the Fed is a big factor.

“The taper fears have tempered the public’s appetite for long-duration bonds, and the credit story just adds anxiety,” he said.

What else to watch

There is an OPEC meeting in Vienna on Wednesday, which is not expected to result in any change in production, though some members would like to see cutbacks.

Oil prices rose Tuesday after reports of the January opening of TransCanada’s Keystone Gulf Coast pipeline, which will move crude from Cushing, Okla., to Port Arthur, Texas. West Texas Intermediate climbed 2.4 percent, to $96.04 a barrel.

Crude supplies in Cushing are at their highest level since July, or 40.6 million barrels as of Nov. 22. In addition to the OPEC meeting, EIA oil and gasoline inventory data come out at 10:30 a.m. ET.

—By CNBC’s Patti Domm. Follow here on Twitter@pattidomm

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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