Month: February 2015

With an eye on Greece, investors focus on the Fed

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

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Interest rates will regain central attention on Wednesday as USD economic data and the release of the FOMC meeting minutes shed further light on when tightening might occur.

“I think the biggest thing is the minutes of the Fed meeting,” said Randy Frederick, managing director of trading and derivatives at Charles Schwab. He said the “safest thing is to stay away from (the Greece situation).”

Another important data point released on Wednesday is industrial production for January at 9:15 a.m.. Analysts polled by Reuters expect the key capacity utilization rate, which measures slack in a firm, to edge up slightly from December to 79.9 percent.

“Industrial production is critical because you’ve had some disappointing economic numbers over the last week or so as the result of the dollar’s strength,” said Jack Ablin, chief investment officer at BMO Private Bank.

Aside from the strong monthly jobs report nearly two weeks ago, last week’s economic data was mostly disappointing, with misses in both retail sales and jobless claims. To be sure, some analysts pointed out that the overall trend is still positive.

Read MoreHedge funds hate stocks, but that’s bullish

The Producer Price Index report at 8:30 a.m. will shed light on inflation, the second key ingredient that the Fed watches besides employment when determining a rate hike.

Kim Forrest, senior equity analyst at Fort Pitt Capital, said she is looking for signs of price declines in the data.

“See if deflation starts leaking out of oil into other areas,” she said, noting that excessive decline in prices could force the Fed to begin QE again.

Lack of a resolution between Greece and the euro zone on Monday initially disappointed USD stocks on Tuesday, although analysts pointed out that stocks were not declining as much as expected.

Read MoreIs the market indifferent to possible Greece exit?

Ablin said that “more and more investors are recognizing the fact that if Greece does leave the euro zone … this isn’t the end of the world.”

Stocks later turned positive on afternoon reports that the country intends to ask for a loan extension on Wednesday.

The S&P 500 rose to a new intraday high and closing up at its second record for the year of 2,100.34. The Dow Jones industrial average closed up at 18,047.58 and the Nasdaq closed up at 4,899.27.

The USD 10-year note yield also rose sharply on Tuesday following the reports, jumping from just above 2 percent to as high as 2.15 percent

The reallocation of assets from bonds into equities demonstrates that the “safe haven trade is put to the sidelines,” said Peter Cardillo, chief market economist at Rockwell Global Capital.

“Obviously today’s (morning) pullback was a non-event,” he said. “Time will take the S&P up to 2,121 before we see some resistance.”

Schwab’s Frederick also cautioned that the recent rally might be temporary.

Renewed disruption in oil, Greece and Ukraine could “affect the markets adversely,” he said in a note.

“Technical indicators, including the Open Interest Put/Call Ratio for Equity options sitting at a 15-year high, also show some very troubling signs that the current uptrend may be very short-lived,” he said. “The preponderance of evidence suggests that investors should maintain their hedges and remain very cautious this week.”

“I think the 10-year is trading off the strong dollar and what the Fed may or may not do,” said Marc Chaikin, CEO of Chaikin Analytics. It has a “big impact on utility stocks. That yield has tended to go up with the price of crude.”

Oil continued to stabilize, with WTI crude settling up 75 cents to USD53.53 a barrel on Tuesday.

Chaikin said he is also watching earnings from engineering firm Fluor and exploration and production company Marathon Oil after the bell to see how cheap oil has affected them.

We may “see some spillover into energy stocks,” he said.

In housing trends, mortgage applications are due at 7 a.m. and housing starts at 8:30 a.m.

Read MoreHere’s what top hedge funds are buying and selling

Companies reporting before the bell include Actavis, Duke Energy, Garmin, Hyatt and Yandex. Fidelity National Financial and Marriott are among the firms posting results after the bell.

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

Asia enjoys CNY rally; Nikkei at 8-year high

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

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Asian markets enjoyed a higher open on Wednesday, with Tokyo shares at a fresh eight-year high, following a positive lead from Wall Street overnight.

However, trading volumes will likely be light ahead of the Lunar New Year holiday, with markets in China, Taiwan,South Korea and Vietnam shuttered. Singapore and Malaysia will be open for a half day.

Overnight, US stocks finished at highs, supported by encouraging reports out of Europe. Greece intends to ask for an extension of its loan agreement with the euro zone on Wednesday, a source in Brussels said, distinguishing this from the country’s full bailout program.

The Dow Jones Industrial Average and S&P 500 both closed up 0.2 percent, with the latter hitting its second record close for the year. The tech-heavy Nasdaq added 0.1 percent.

Nikkei rises 1 percent

Japan’s Nikkei 225 index hit a fresh 8-year high in a broad-based rally, supported by the yen weakening to 119.1 against the dollar, compared with Tuesday’s close of 118.4. Japanese shares had tapped an eight-year high of 18,004.77 – its highest since July 2007 – on Monday, but drifted lower in Tuesday’s session due to a stronger currency.

Exporter stocks got a boost, with Sony and Mitsubishi Electric leading gains among blue-chips, rising more than 2 percent each. The former is due to deliver a new roadmap plan later this afternoon. Electronics players Nikon and Panasonic jumped 2.6 and 2.9 percent, respectively.

Meanwhile, the Bank of Japan (BOJ) is set to announce its policy decision later in the session. “Going forward, I think the BOJ needs to announce some additional measures, either buying more JGBs, ETFs, J-Reits or asset-backed securities. The BOJ will likely announce these measures, but the timing is uncertain with falling oil prices and a LDP presidential election in September,” Daisuke Nomoto, senior portfolio manager at Columbia Management Investment Advisers, told CNBC’s “The Rundown.”

ASX adds 0.7 percent

Australia’s benchmark S&P ASX 200 index edged up to a seven-year high, thanks to a 47 percent surge in Toll Holdings. Shares of the country’s largest freight and logistics firm got a boost after accepting a USD 5.1 billion takeover offer from Japan Post Holdings early Wednesday.

A slew of company earnings continued to sway markets. Oil and gas producer Woodside Petroleum bounced 3.4 percent as its full-year profit jumped 38 percent. Gold miner Evolution Mining reversed losses to elevate 0.8 percent following a 22 percent rise in first-half profit.

However, steep losses in Insurance Group Australia and Primary Health Care capped gains. IAG tanked 8.8 percent after announcing a 10 percent fall in first-half profit as competition in the industry intensified, while the medical center operator slumped more than 5 percent after delivering a modest 6.2 percent increase in first-half profit.

Rest of Asia up

Singapore’s key Straits Times index gained 0.5 percent. In focus are shares of commodity trader Noble Group, which gained nearly 1 percent, recouping some losses after decelerating more than 10 percent for the past two days following a critical report by Iceberg Research.

Shipping liner Neptune Orient Lines (NOL) bolstered 4.6 percent on news that it is selling its logistics business, APL Logistics, to Kintetsu World Express for USD 1.2 billion in cash.

Meanwhile, Malaysia’s FTSE Burse Malaysia KLCI reversed early losses to inch up 0.1 percent and Hong Kong’s Hang Seng index opened up 0.2 percent.

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

3 Mins Read

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

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

Ukraine GDP tanks 15% as fighting drags on

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

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As the supposed cease-fire in Ukraine fails to end the bloodshed in the east of the country, fresh data on Tuesday showed the extent of the pain being felt within the country’s economy.

The country – ravaged by conflict between government troops and pro-Russian separatists  posted a fall in gross domestic product (GDP) of 15.2 percent year-on-year in the fourth quarter of 2014, according to the State Statistics Service of Ukraine on Tuesday morning. The figures also showed a 3.8 percent fall from the previous quarter amid the political upheaval in Kiev.

The data were the worst for several years and are significantly down from the 5.3 percent contraction (year-on-year) recorded in the third quarter. They also come alongside some dismal trade balance data, which highlighted weak domestic demand in the country.

Timothy Ash, head of emerging markets at Standard Bank, said the figures were a sad indictment of the international community.

“Despite all the rhetoric that they would not allow Ukraine to fail, they failed to support Ukraine in its hour of need,” he said in a note on Tuesday.

“Western credit disbursements were a fraction of what was promised, but at the same time the Ukrainians were advised to pay external debt payments in full, and to clear gas debts to Russia.”Ukraine’s trade deficit – when imports exceed exports – narrowed sharply in 2014 to USD 468.3 million, according to media on Monday, as demand waned.

This was significantly down from 2013’s USD 13.5 billion and was due to a collapse in imports and a sharp depreciation of Ukraine’s hryvnia currency.Ukraine was thrown into turmoil at the start of last year, after protests between anti-government and pro-EU demonstrators led to a change of leadership.

Tensions on the streets of Kiev turned into military conflicts on the eastern border, with Moscow accused of aiding pro-Kremlin rebels in the region. Moscow continues to deny the involvement of Russian troops in the conflict.

‘Billionaire investor George Soros is one notable voice that has called on European officials to urgently boost their efforts to support the Ukrainian economy. In January, he argued that strengthening Ukraine’s economy was more important to the euro zone than the ongoing political uncertainty in member countries like Greece.

As the supposed cease-fire in Ukraine fails to end the bloodshed in the east of the country, fresh data on Tuesday showed the extent of the pain being felt within the country’s economy.

The country – ravaged by conflict between government troops and pro-Russian separatists – posted a fall in gross domestic product (GDP) of 15.2 percent year-on-year in the fourth quarter of 2014, according to the State Statistics Service of Ukraine on Tuesday morning. The figures also showed a 3.8 percent fall from the previous quarter amid the political upheaval in Kiev.

The data were the worst for several years and are significantly down from the 5.3 percent contraction (year-on-year) recorded in the third quarter. They also come alongside some dismal trade balance data, which highlighted weak domestic demand in the country.

Timothy Ash, head of emerging markets at Standard Bank, said the figures were a sad indictment of the international community.

“Despite all the rhetoric that they would not allow Ukraine to fail, they failed to support Ukraine in its hour of need,” he said in a note on Tuesday.

“Western credit disbursements were a fraction of what was promised, but at the same time the Ukrainians were advised to pay external debt payments in full, and to clear gas debts to Russia.”

Ukraine’s trade deficit – when imports exceed exports – narrowed sharply in 2014 to USD 468.3 million, according to Media on Monday, as demand waned. This was significantly down from 2013’s USD 13.5 billion and was due to a collapse in imports and a sharp depreciation of Ukraine’s hryvnia currency.

Ukraine was thrown into turmoil at the start of last year, after protests between anti-government and pro-EU demonstrators led to a change of leadership. Tensions on the streets of Kiev turned into military conflicts on the eastern border, with Moscow accused of aiding pro-Kremlin rebels in the region. Moscow continues to deny the involvement of Russian troops in the conflict.

Billionaire investor George Soros is one notable voice that has called on European officials to urgently boost their efforts to support the Ukrainian economy. In January, he argued that strengthening Ukraine’s economy was more important to the euro zone than the ongoing political uncertainty in member countries like Greece.

The International Monetary Fund (IMF) has introduced a new Extended Fund Facility for Ukraine, in addition to its existing aid package for the country. It has also received financial help from the US, the European Union and the World Bank.

However, Ukraine appears to need more money to stay afloat, according to Ash, amid rampant inflation and the near-halting of economic activity in regions where there is still military conflict.

“Beyond the IMF, official creditors in general need to cut out the cheap talk of supporting Ukraine, and preventing its financial meltdown – accept that they failed already and to figure out how they actually rebuild from here,” he said.

“Arguably if the West is set on not arming Ukraine then it really needs to do more to financially support the country in its hour of need. Talk is cheap, and actions speak much louder than words.”

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

Oil may fall again but buy energy stocks?

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

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Oil`s recovery may be short-lived, but some analysts believe now is the time to get back into energy stocks.

“Stop trying to pick the bottom in oil and recognize that today is actually an opportunity to create a position in oil,” Gaurav Sodhi, resources analyst at research service Intelligent Investor, told CNBC.

“The impact of the oil price has been well and truly priced into every major oil producer around the world. Oil service companies have been hammered,” Sodhi said. “Equity valuations already infer current oil prices. There`s a small chance prices may fall further but I`d say that there`s a very good chance that in five years` time we`re going to see prices at USD 80 or higher.”

Brent oil prices have managed to rally over USD 61 a barrel, the highest since December, off the lows under USD 49 touched last month, but they remain sharply down from their level over USD 115 a barrel in mid-June of last year.

Even though he`s positive on oil stocks, Sodhi isn`t necessarily positive on oil in the near-term. “There`s been an awful lot of oil in storage and at some point this is going to have to be unwound. So we could be awhile from the bottom. That doesn`t scare me at all,” he said.

He`s upgraded Australia`s Origin and Santos, taking their high debt piles as a positive as they will benefit relatively more once oil prices rise. He`s also positive on mining giant BHP  as it adjusts its oil investments.

Sodhi isn`t alone in seeing opportunity in oil equities. Goldman Sachs has closed its underweight position in Asian energy stocks.

“They are now pricing in our expectations of long-dated oil prices,” Goldman said in a note Friday. Regional oil plays are implying a long-dated Brent oil price of USD 65-USD 70 a barrel, in line with the bank`s USD 70 a barrel forecast and the generic 24-month futures contract pricing of USD 70, it said.

The sector stocks are also trading at reasonable valuations, with the enterprise value-to-Ebitda (earnings before interest, taxes, depreciation and amortization) ratio coming in below the 10-year average, it said.

To be sure, Intelligent Investor`s Sodhi notes that the entire oil sector isn`t an investor playground. Amid a glut of oil inventory, tanker prices and lease rates have doubled over the past 18 months, he noted.

“There are listed companies that control the tankers –that make tankers and lease them. Some of those, [such as] Frontline, have doubled in the last few months. I think that game has been well and truly played,” he said.

The New York-listed shares of Frontline, which operates a Very Large Crude Carrier (VLCC) fleet, closed at around USD 2.96 on Friday after spiking as high as USD 5.05 in January, up from lows around USD 1.21 in November of last year.

-By CNBC.Com`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

Greece balks at bailout: What’s next?

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

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With Greece `s new government and euro zone finance ministers poles apart as bailout talks stalled late Monday, it`s come down to who blinks first, analysts said.

” Europe `s going to back down. They`re going to give more concessions to Greece,” Destination Wealth CEO Michael Yoshikami told CNBC. “In the end, there`s going to be a new agreement, not just an extension, but a renegotiation.”

While its economy is just a small percentage of the eurozone`s gross domestic product (GDP), “Greece is too big to fail,” Yoshikami said, adding that`s why the market reaction has been muted.

After talks reached a stalemate, the euro faced heavy selling, dropping from over USD 1.14 on Monday to a low of around USD 1.1320 in early trade Tuesday, before bobbing back above to USD 1.1339.

Is Greece cornered?

If there`s no deal, Greece may “stand on its own feet” for a few weeks after the current program expires, Societe Generale  said in a note Tuesday. “After that, the Greek government will need external financing or will default,” it said.

The country faces around 5.4 billion euros worth of bond redemptions and interest payments to the IMF and 1 billion euros in bond coupon payments in June, it noted.

“Whether or not the Greek government will stick to its guns is difficult to predict, but they seem increasingly cornered,” Societe Generale said.

No Plan B

Greece and Eurozone finance ministers have been locked in talks since the country`s newly elected anti-austerity government pledged to exit its 240 billion euro bailout package.

But the Eurogroup talks in Brussels broke down early morning Asia time Tuesday, after the Greek government rejected a proposal that it request an extension to its existing international bailout package. Greece wants a temporary bridge loan while it renegotiates its debt burden.

“We want an honorable settlement,” the Finance Minister of Greece Yanis Varoufakis told the press after the talks broke down. “It`s not a bluff, because it`s the only option we have. It`s Plan A, there is no Plan B.”

Not everyone thinks an eventual deal will be in the offing.

The absence of any common ground between the two camps “suggest that even a short-term deal has not been reached at Monday`s Eurogroup finance ministers` meeting, adding to risks that Greece may exit the euro-zone,” said Capital Economics` Senior European Economist Jennifer McKewon in a note.

Others also see Grexit risks.

“Without a new program, the Greek government will eventually default while the ECB would most likely cut the Greek banks off from Eurosystem liquidity, triggering their collapse, increased private sector defaults and ultimately Grexit,” Societe Generale said. “We are not there yet, but time is running shorter by the minute.”

What next?

The deadline on the credit extension is Friday, but before that the European Central Bank will re-assess on Wednesday the Greek Emergency Liquidity Assistance.

The facility was extended earlier this month and has “helped offset concerns over the deposit flight from the Greek banking system. Any decision to cut-off ELA support will be negative for the markets and Greek financial system at large,” DBS Group said in a note Tuesday.

“They`re going to try to do everything they can to stop that because it is going to have a contagion effect and it`s going to move forward,” said Destination Wealth`s Yoshikami.

“If Greece`s banks collapse, what`s going to happen to Italy`s banks, what`s going to happen to Spain`s banks, what`s going to happen to Portugal`s banks,” he said. “I just don`t think they want to go down that road.”

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

Goldman sees revolutionary shift in Japan Inc

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

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Japanese corporates are notorious for hoarding cash, but there`s a revolutionary shift underway, with shareholder returns set to reach their highest level ever this fiscal year, according to Goldman Sachs.

“Faced with growing pressure to improve capital efficiency, Japanese companies have become increasingly conscious of corporate governance and the need to deliver higher returns to shareholders as their earnings have recovered,” Goldman Sachs wrote in a note published over the weekend.

Annual dividends are forecast to reach a record high of 9 trillion yen (USD 76 billion) in the fiscal year ending March 31, up from 8 trillion yen last year. Japanese companies have announced share buybacks totaling 2.5 trillion yen between April and December 2014, up 116 percent on year.

A corporate sector that is more proactive about shareholder returns is “quite revolutionary in Japan`s context,” Kathy Matsui, managing director and chief Japan strategist at Goldman Sachs, said in an interview with CNBC on Monday.

The government, under Prime Minister Shinzo Abe, has taken it upon itself to drive a shift in corporate behavior.

Corporate governance reform is a part of the so-called “third arrow” of Abenomics – Abe`s three-pronged strategy to revive the economy – alongside other a host of structural reforms including increasing labor market flexibility and opening up the agricultural sector to foreign competition.

In January 2014, the JPX-Nikkei 400, dubbed the “shame index,” was launched by the Japan Exchange Group and Nikkei, receiving endorsement from the Government Pension Investment Fund (GPIF) soon after.

The index, reportedly the brainchild of the ruling Liberal Democratic Party, is unique in that stock selection criteria emphasize high return on equity (ROE) and good governance. The GPIF, which manages around USD 1.1 trillion, has adopted the index as a benchmark for some of its domestic equity portfolios.

In February 2014, the Japanese Stewardship Code – new government guidelines on shareholders` involvement in the firms- was introduced. The new guidelines are designed to encourage shareholders to challenge executives on issues such as low dividend payouts and a lack of independent directors.

Later this year, a new “corporate governance code” will be rolled out to establish best practices for governance behavior. A key focus area of will be the role of board of directors.

“One of the most overlooked areas of PM Abe`s reform agenda remains corporate governance,” Goldman said.

Encouragingly, firms are beginning to respond to calls for better governance with concrete actions, the bank said, citing firms like Aoyama Trading and Marui Group, which announced share repurchases in the past month, driving their stock prices higher as a result.

Shares of Aoyama Trading soared 17 percent the day after the apparel retailing company announced a buyback on January 28, while department store operator Marui Group shares gained 16 percent after a buyback on February 10.

“We expect a continued focus on such moves for the remainder of FY2014 as the corporate governance code announcement fuels interest in returns to shareholders as a component of governance,” the Goldman said.

Progress on corporate governance is one aspect driving Goldman`s bullish outlook on Japan stocks this year.

Higher ROE, supportive valuations and increased buying by domestic investors against a backdrop of accommodative monetary and fiscal policy are other factors it expects will trigger further gains.

While macro events may dominate headlines, equity investors should focus on micro corporate sector developments, the bank said.

Gross domestic product (GDP) data published on Monday showed Japan emerged from a recession in the fourth quarter although the growth figures came in much weaker than expected.

GDP grew an annualized 2.2 percent, helped by a rebound in exports, but the figure missed a Reuters poll expecting a 3.7 percent gain.

The bank, however, remained upbeat on its outlook for the market. Mitsui has a year-end target of 20,000 for the Nikkei 225 and 1,650 for the Topix – representing and upside of 11 and 13 percent, respectively, from current levels.

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

3 Mins Read

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

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

Apple car is ‘exactly’ what investors want

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

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Apple`s entry into the automobile market may finally silence the company`s critics, analysts told CNBC, amid rumors that the Cupertino giant is creating an electric car.

“When one looks at Apple`s stock, people criticize the company for having a phenomenally successful franchise of the iPhone. The question for investors has always been if Apple can give us a larger addressable end market going forward,” said David Garrity, principal at GVA Research, on Monday.

The global automotive sector is exactly the kind of bigger market investors are looking for, he added, since it provides “multiples in terms of revenues and possible profit potential.”

Several media outlets including The Wall Street Journal and the Financial Times reported last week Apple was working to create an electric car that may be driverless although the tech giant has yet to confirm the reports. The news comes amid concerns that the company`s stock price is too inflated, having recently hit an all-time record high above USD 127. Apple made history last week when its market capitalization rose above USD 700 billion, higher than Switzerland`s entire gross domestic product.

An entry into the car market fits in perfectly with Apple`s long-term strategy and underpins share price gains, argued Ray Wong, principal analyst and founder of Constellation Research.

“This [a car] is the next phase in Apple`s move towards building out the rest of its digital lifestyle. One of the things Apple is focused on is continuity of the experience. Rumors of the car business are Apple at its core: finding new markets for its operating systems. They`ve done it with music, phones, home and healthcare and now, possibly cars.”

Wong is expecting the stock to pop 2 percent when U.S. markets resume trade on Tuesday as a result of the rumors. Wall Street was closed on Monday for the Presidents` Day holiday.

Apple`s successful experience in consumer design and interaction, seen by record iPhone sales, makes it a valuable asset to the automotive industry, GVA Research noted.

“We do have to think of automobiles as being the ultimate mobile device given their electronics content and their interface,” Garrity said. “Apple potentially has a great deal of value to offer in this area.”

He added that the company`s USD 180 billion cash pile – one of the biggest among corporates – is expected to give it a leg-up on competition in the electric car market following reports that other tech firms like Sony are also reportedly entering the industry.

If the reports turn out to be true, the tech giant`s focus will be on expanding its iOs operating system, said Cyrus Daruwala, managing director at IDC Financial Insights.

“By exploring the car, Apple is showing they can enter the industrial market and move up the value chain from consumers to big enterprise. It`s a proof of concept, this shows they can be an enterprise operating system too.”

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

Millennial entrepreneurs and student debt: It’s complicated

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

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Despite tech savvy and higher levels of education than prior generations, mounting student debt levels are beginning to drag down younger Americans’ start-up ambitions, according to a new report.

“Saddled with student loan debt, millennials can’t afford to be entrepreneurs,” according to 2015 state of entrepreneurship report from the Kauffman Foundation, a nonprofit devoted to studying entrepreneurship.

Start-up rates among Americans ages 20 to 34 peaked at 35 percent in 1996 and has since declined to 23 percent in 2013, according to Kauffman.

In addition to the annual summary, Kauffman’s monthly readings on entrepreneurial activity show a decline among millennials. Young adults launched about 40,000 fewer new businesses a month in 2013 compared to 1996.

The Kauffman report is among a growing pool of sometimes conflicting data about the future of millennials and start-up activity. While Silicon Valley is hot with start-ups, battling it out for top talent, Kauffman’s report offers some skepticism about young adults and their impact on business creation.

For example, a separate report by Babson College on global entrepreneurship, found that more young people ages 25 to 34 are starting businesses. The report, released this month, found that 18 percent of young Americans were starting new businesses last year, higher than 15 percent in 2013. In contrast to other studies, Babson researchers monitor individuals starting companies while they’re still employed, which may account for some of the discrepancy.

Read More: Millennials are bullish on entrepreneurship

The Kauffman report also raises questions about the ripple effects of younger workers. For example, despite expressing strong interest in start-ups, millennials have created fewer businesses since they entered the workforce in the early 2000s. The nonprofit also says its unclear if the explosion of college start-up programs—a growing cottage industry on campuses—will actually translate to business creation.

Given shifts among younger workers, the concern now is whether entrepreneurship rates in total (including older workers) will continue to recover from the recession lows or plateau to a kind of “new normal” of lower entrepreneurship activity.

Start-ups despite student debt

To be clear, Kauffman’s annual summary excluded specific figures or percentages on the impact of, for example, student debt levels or college start-up programs on entrepreneurship rates. The report instead raises some skepticism about millennials and start-up rates.

The correlation between student debt and entrepreneurship is intriguing, of course. But this area of research has only begun among experts at Kauffman and other organizations.

The relationship between debt and entrepreneurship is “complicated,” says Dane Stangler, vice president of research and policy at Kauffman. “On the one hand it makes sense that if you are coming out of college or grad school with a load of student debt, starting a company is not among your most viable priorities,” Stangler said. “On the other hand, we didn’t expect hoards of 22-year-olds to start companies. They do get to more entrepreneurial-inclined ages [late 30s and early 40s] they will have better control of their finances.”

Other experts say the long-term impact of student debt on start-up creation remains to be seen.

“There are certainly young people who would like to start companies, have student debt and feel that because of that they can’t,” says Sandy Baum, a senior fellow at the Urban Institute. “On an individual basis that is probably true. But would a high percentage of people, who have student debt, not become entrepreneurs because of that? That seems unlikely,” she said.

 Just ask 31-year-old Zachary Schwitzky.

Despite having USD12,000 in undergraduate debt from Seton Hall University, Schwitzky, then 29, launched Newlio, a New York City-based market research company. The start-up creates customer surveys for big clients including McDonald’s and Hilton.

His debt may be a nuisance, but it also motivates him. “Starting my own company without any financial obligations can make it easier to not put the work in,” Schwitzky says. “I have something to fuel the fire.”

His company has raised USD1.8 million in two private funding rounds, and is about six months away from being profitable, Schwitzky says.

Read More: Millennial wage gains: Too little, too late?

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

Ukraine military: Rebel shelling continues after ceasefire

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

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Ukraine’s military said on Sunday pro-Russian rebels had shelled Ukrainian positions ten times since a ceasefire came into effect at midnight, but that the truce was in general being observed.

The ceasefire, negotiated in four-power talks on Thursday, foresees the creation of a neutral buffer zone and withdrawal of heavy weapons responsible for many of the 5,000 deaths in a conflict that has caused the worst crisis in Russia-West relations since the Cold War a generation ago.

“As of the morning of February 15, there have been ten shelling attacks on our positions by rebels – mainly in the area of Debaltseve,” spokesman Anatoly Stelmach said by telephone.

At around 0700 GMT a Reuters witness in east Ukraine heard the sound of heavy artillery fire coming from the direction of Debaltseve, a key transport hub where government forces have been hard pressed by encircling separatists.

Read More Guns fall silent in Ukraine’s Donetsk as Poroshenko orders ceasefire

Another military spokesman, Vladyslav Seleznyov, said the ceasefire was being observed in general. “Shelling (by rebels) has been not regular and (has been) localized,” he said.
Separatist news service DAN quoted a senior rebel commander as saying rebels had opened fire in defense, after Ukrainian forces had violated the ceasefire around Debaltseve. “Units were forced to open fire in response,” Eduard Basurin was quoted as saying.

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Japan crawls out of recession, but GDP misses

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

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Japan’s economy crawled out of recession in the fourth quarter of 2014, data on Monday showed, although the growth figures came in much weaker than expected.

Gross domestic product grew an annualized 2.2 percent, helped by a rebound in exports, but the figure missed a Reuters poll expecting a 3.7 percent gain. Quarter on quarter growth was 0.6 percent, lower than the 0.9 percent consensus.

Japan’s economy slipped into technical recession in the third quarter after shrinking 1.9 percent and following a revised 7.1 percent contraction in the second quarter.

The economy got clobbered when consumers stopped spending following a rise in the nation-wide consumption tax to 8 percent that took effect last April, forcing the government to postpone a second sales tax initially due this October.

Investors seemed to be taking the news in stride. The benchmark Nikkei rose to an 8-year high in early trading on Monday, preferring to focus on the strong finish on Wall Street on Friday. Dollar-yen, meanwhile, was trading at 118.65, little changed from Friday.

“The fact that we came in softer than expected isn’t a huge surprise but we’re out of a technical recession,” said Paul Gruenwald, chief economist for Asia Pacific at Standard and Poor’s Ratings Services. “Numbers are soft but headed in the right direction.”

Exports grew 0.2 percent in the quarter, a sign the weak yen was finally driving up external demand.

Private consumption, which makes up about 60 percent of the economy, rose 0.3 percent in the final quarter, less than a median market forecast for a 0.7 percent increase.

Business spending grew just 0.1 percent after two quarters of declines, also falling short of expectations for a 1 percent increase.

“The recovery is still weak, particularly the domestic components. There was almost no growth in capital expenditure and private consumption also remains weak,” IHS Global Insight principal economist Harumi Taguchi. “However, the numbers are within are expectation – we still expect the economy to grow by 1-2 percent this year.”

Taguchi adds that the economy faces several risks going forward, especially come April 2017, when the sales tax is due to go up another 2 percentage points to 10 percent. “The biggest risk is the next consumption tax hike – there is a possibility it could trigger another contraction,” she said.

The focus now shifts to the Bank of Japan (BOJ), which is due to release its latest monetary policy decision on Wednesday, after a two-day meeting. The central bank surprised markets in October by expanding its massive quantitative easing program, swelling Japan’s monetary base by around 80 trillion yen ($682 billion) each year, up from 60-70 trillion yen previously.

“They (The BOJ) got to stick to 80 trillion,” said Gruenwald. “One thing that the Fed has taught us is to be consistent. Now that BOJ has an open-ended commitment to QE, they got to stay the course.”

“Going into 2015, we want to see consumption growth pick up. We want to see firms start to invest and nominal GDP growth pick up as well,” he added.

— Reuters contributed to this report.

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