Month: May 2016

It’s the end of Goldman Sachs as we know it

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

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Goldman Sachs is spreading its wings after years of attempting to retreat from Wall Street’s limelight in the wake of the global financial crisis.

That means exporting the bank’s brand into new markets, making deals and striking partnerships, and probably using competitors’ weaknesses against them. Now, its next challenge comes not from the traditional businesses upon which the bank has built its reputation, but Goldman Sachs’ quiet push into consumer businesses long occupied by its Wall Street competitors.

“For Goldman Sachs, the question is: What will they become when they grow up,” said CLSA banks analyst Mike Mayo.

It’s also a matter of how the bank grows up. While Goldman is going digital, it is not expected the bank will make any big deals in a financial technology sector that has generated outsized valuations recently. The bank already acquired online wealth manager Honest Dollar in March. The build-out of its online lending program, for now dubbed “Mosaic,” is an internal priority for the bank.

For Goldman Sachs, which has already placed various early-stage investments into fintech companies, partnerships may be more common than mergers and acquisitions.

Two sources said Goldman had selectively spoken with companies, including online lenders, about expanding its network of partnerships among fintech start-ups. The bank declined to comment regarding digital plans. But, last week, Goldman announced plans to sell investments developed by online investment platform Motif.

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 markets weak; Nikkei down 0.8%, Kospi down 0.3%

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

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Asian markets opened lower on Tuesday, taking cues from a soft finish in US stocks, as investors await further cues from the US Federal Reserve.

Australia’s S&P/ASX 200 was flat in early trade, with most major banks and miners gaining. Shares of Rio Tinto advanced 1.09 percent, while BHP Billiton added 0.71 percent and the Commonwealth Bank of Australia was up 0.36 percent.

Japanese stocks came under pressure on the back of fresh strength in the yen against the dollar, with the benchmark Nikkei 225 down 0.77 percent in early trade. Across the Korean Strait, the Kospi was off by 0.33 percent.

“The talk on the trading floors this morning centers on the limited moves in markets, although some will welcome this, notably the Fed who have had a hand in creating these conditions,” said Chris Weston, chief market strategist at spreadbetter IG in a morning note.

Weston added that the relatively soft finish from both the Dow and the S&P 500 was an indication of the lack of immediate catalysts in markets.

In the currency market, the Japanese yen strengthened, with the dollar-yen pair at 109.24 as of 8:27 a.m. HK/SIN on Tuesday, compared with levels a tad above 110 in the Asia session Monday.

“The yen moved higher against all of the major [currencies], despite significantly weaker economic data,” said Kathy Lien, managing director of foreign exchange strategy at BK Asset Management in a note.

Data released by the Japanese finance ministry showed exports in the country for April dropped 10.1 percent on-year in April, while imports dropped 23 percent on-year.

Lien said the disappointing data should have driven on the dollar/yen pair up, on the premise that “fresh monetary and/or fiscal stimulus will be necessary.” But the pair fell following warnings against intervening in the currency market from the US.

“Technically, Japan doesn’t need anyone’s approval for currency intervention, but if they were reluctant to step into the market when dollar/yen dropped to 106, they are definitely not considering the idea at 109,” said Lien.

Down Under, the Reserve Bank of Australia governor, Glenn Stevens, is due to speak at the Trans-Tasman Business Circle boardroom briefing, which is likely to be his last official speech as governor.

The Australian dollar traded at USD 0.7212, and Weston said the Aussie needed to close “below key support at USD 0.7210 for USD 0.7000 to come into play.”

Stateside, the Dow Jones industrial average finished down 0.05 percent, the S&P 500 was down 0.21 percent and the Nasdaq composite ended 0.08 percent lower.

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

3 Mins Read

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

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

US to completely lift Vietnam lethal arms embargo

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

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US President Barack Obama announced on Monday that Washington will fully lift an embargo on sales of lethal arms to Vietnam, underlining warming relations between the former foes amid rising tensions with Beijing over the South China Sea.

At a lavish state luncheon in Hanoi, Vietnamese President Tran Dai Quang toasted Obama’s first visit to the country as the arrival of a warm spring after a cold winter.

Obama, the third US president to visit Vietnam since ties were restored in 1995, has made a strategic ‘rebalance’ towards Asia-Pacific a centrepiece of his foreign policy.

Vietnam, where the United States was at war until 1975, has become a critical part of that strategy amid concerns about China’s growing military might and its sovereignty claims in the South China Sea.

The decision to lift the arms trade ban, which followed intense debate within the Obama administration, suggested that US concerns about China’s assertiveness outweighed arguments that Vietnam had not done enough to improve its human rights record and that Washington would lose leverage for reforms.

Obama told a joint news conference with Quang that disputes in the South china Sea should be resolved peacefully and not by whoever “throws their weight around”, but insisted that the arms embargo move was not linked to China.

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

3 Mins Read

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

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

China has conducted a ‘war’, not trade, with steel: Experts

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

Listen to the Article (6 Minutes)

Despite China signaling moves to cut its excess steel production capacity, industry chiefs say the country has declared a metals “war” that has had a “devastating” impact for the rest of the world’s industry.

Overcapacity in the steel industry has been a thorn in the side of the sector in recent years, pushing prices down and making it harder for some steel companies to survive.

China’s low-cost metal producers have been widely cited as the main culprit for the glut. In particular, the world’s second largest economy has been accused of “dumping” cheap steel on to global markets, due to a slowdown in domestic demand, in a bid to gain market share. However Beijing has denied any wrongdoing and has said that its costs are lower than other producers.

Lourenço Gonçalves, chairman, president and chief executive of mining and natural resources company Cliffs Natural Resources, told CNBC on Thursday that China had been acting unfairly.

“China (has not been unfairly targeted). They are the perpetrator, they are the problem and they had a chance to discuss this within the OECD (Organization for Economic Co-operation and Development) and they elected not to participate…China has been walking away from a negotiated deal,” he told CNBC on the sidelines of the Platts Global Metals Awards.

It’s war, not trade

Other countries, including India, Italy, South Korea and Taiwan, have also been cited as contributing to the global steel glut. Gonçalves said that each country had its own set of subsidies and problems that “create the massive problem of dumping steel in the international market.”

Similarly to the oil industry, however, despite a slump in demand, some producers have been slow to cut production in a bid to support prices and in 2015, the OECD forecast that global nominal steelmaking capacity is projected to increase to 2.36 billion tons by 2017, up from 2.16 billion tons in 2013.

In addition, it said that non-OECD economies (such as China) are expected to lead the capacity expansion in the global steel industry, with their share of world capacity expected to increase to 71.4 percent by 2017.

There aren’t signs that global steel production is slowing in the immediate term.

While world crude steel production was 385.7 million tons (Mt) in the first three months of 2016, down 3.6 percent compared to the same period in 2015, according to the World Steel Association, China’s crude steel production for March 2016 was 70.7 Mt, an increase of 2.9 percent compared to March 2015. India’s crude steel production was 8.1 Mt in March 2016, up by 3.4 percent on March 2015.

“Just based on the numbers, China is by far the largest problem,” Gonçalves said, accusing China of not abiding by the rules of international trade. “You can’t call yourself competitive if your competitiveness is based on cheating the international rules of trade. Trade without fairness is not trade, it’s war.”

Devastating the industry

The US has tried to counteract the negative impact of cheap Chinese steel by upping its tariffs on imports of cold rolled steel, which is used in car production and construction, from China to 522 percent, saying that China had not cooperated in its investigations into dumping practices.

Read More: US raises duties on Chinese steel 

The UK and European Union have been urged to follow suit but, in comparison, the EU has only a tariff of 16 percent on Chinese cold rolled steel and EU countries are at odds over whether to impose higher import tariffs.

China has responded to the US’ tariff hike by saying it would continue with controversial tax rebates to steel exporters that will help to fund a restructuring of its industry and effort to cut steel production capacity by 100 million to 150 million tons by 2020.

James Bouchard, founder, chairman and chief executive of steel services group Esmark, agreed that there was “no doubt about it” that China was dumping steel and said that the impact had been “devastating” for businesses.

“Whatever the lowest price is, whatever any country quotes through their trading companies, the Chinese will just come in and make it a lower price so there doesn’t ever seem to be a bottom to the Chinese prices. They’ll always take that order and that’s had a very aggressive downward pressure on the American pricing,” he said, also speaking on the sidelines of the Platts Global Metals Awards on Thursday.

Read More: Why you shouldn’t complain about China ‘steel dumping’ and make friends instead

Leaders of the Group of Seven (G7) advanced economies are meeting in Japan next week to discuss what actions can be taken to reduce the steel glut and wider industrial overcapacity. A particular focus will be to look at curbing government subsidies for steel production. Gonçalves also called for more coordinated action on tackling the problem.

“We need to act in a coordinated fashion with other countries,” he said. “So far it’s only been the US that has been talking and acting and it’s very important that we have other countries, especially Japan, the U.K. and Germany, working with us to resolve this massive problem of overcapacity,” he said.

Although Bouchard said that action by the G7 could make a difference, he noted that excess capacity had already been “devastating.”

“When China has 150 million tons of excess capacity it’s been devastating to small manufacturers, small businesses and industrial consumption and might across the world.”

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 markets mixed; Nikkei down 1.1%, Kospi up 0.1%

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

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Asia markets trading mixed on Monday, with the Japanese benchmark index falling, as markets adjust to a slew of recent comments from the US Federal Reserve about a possible interest rate hike in June.

Australia’s S&P/ASX 200 was down 0.09 percent, wavering between positive and negative territories. Major miners were down in early trade, with shares of Fortescue off 1 percent and Rio Tinto down 0.75 percent.

The Nikkei 225 was down 1.09 percent, with stocks coming under pressure as the yen saw renewed strength against the dollar. Shares’ decline was in the wake of data released shortly before the market open showing the country’s exports continued to fall.

Across the Korean Strait, the Kospi was up 0.08 percent.

“There are several conflicting cross-currents in financial markets,” said Chris Weston, chief market strategist at spreadbetter IG, in a note Monday. “The wash-up is the Fed’s message that the world is better than you think, and the market seems to be warming to this view.”

The US central bank sent clear signals to the market on Thursday that a June interest rate hike could be on the cards. New York Fed President William Dudley said that June was definitely a live meeting, while Richmond Fed President Jeffrey Lacker echoed the sentiment for a June hike to Bloomberg Radio.

The Fed’s April meeting minutes also suggested a rate hike was imminent in June, if economic data pointed to stronger growth in the second quarter.

The dollar will be in focus this week in the build-up to the much-anticipated June Fed meeting.

“The shift in market expectations for Fed tightening and the confirmation from Fed presidents is a significant development that has shifted the market’s appetite for dollars,” Kathy Lien, managing director for foreign exchange strategy at BK Asset Management, said in a note Friday.

“The dollar lost some of its momentum towards at the end of the week and with a relatively light US calendar next week devoid of major market moving economic releases, we could see choppy trading,” Lien added.

The dollar index, which measures the greenback against a basket of currencies, pushed above the 95 level by Friday, compared with the 94 level in the first half of the week. On Monday, as of 7:47 a.m. HK/SIN, the index traded at 95.324.

On the data front, Japan’s Ministry of Finance data showed Japanese exports were down 10.1 percent on-year in April, reflecting sluggish demand from China, the emerging markets and the US The decline was mostly in line, with a Reuters poll where economists expected a 10 percent decrease for the month.

Imports for April were down 23.3 percent on-year. The trade balance was 823.47 billion yen.

The dollar/yen pair also gained on Friday, hitting the 110 handle and going as high as 110.58, compared with the 108-109 range it at traded earlier in the week.

“Many economists expected the break of this key level to be driven by weak Japanese gross domestic product numbers, but instead it was hawkish Federal Open Market Committee minutes that sent the dollar soaring,” said Lien.

Data released from the government of the world’s third-largest economy surprised markets on Wednesday, reporting an expansion in its real GDP for the January-March period at an annualized 1.7 percent. It beat a Reuters poll where respondents expected a 0.2 percent rise.

The yen strengthened after the data, with the dollar-yen pair falling as low as 109.80 from around 110.12 before the data’s release.

Export stocks were mostly lower in early trade, with shares of Toyota dropping 1.04 percent and Honda down 0.76 percent, while Nissan added 0.19 percent and Sony rose 0.38 percent.

On Saturday, the US issued a fresh warning to Japan against competitive currency devaluation.

Elsewhere, the Australian dollar traded at USD 0.7223, with Weston saying the Aussie was “supported at USD 0.7210 and consolidation is seen.”

“This is the line in the sand for traders and a daily close below here suggests adding to short positions,” he said.

US stocks closed higher Friday, with the Dow Jones industrial average up 0.38 percent, the S&P 500 adding 0.6 percent and the Nasdaq composite higher by 1.21 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

Japan’s exports decline speeds up in Apr, falling 10.1% on-year

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

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The world’s third-largest economy recorded its seventh straight month of falling exports in April, official data showed on Monday, adding to the country’s gloomy outlook.

Exports dropped 10.1 percent on-year in April, in line with estimates and worse than March’s 6.8 percent slide, clocking up the fastest pace of decline in three months. Imports, meanwhile, tanked by an annual 23 percent, worse than Reuters poll expectations for a 19 percent drop and outstripping the previous month’s 14.9 percent fall.

That left the nation with a trade surplus of 823 billion yen (USD 7.48 billion), below Reuters estimates for a 492.8 billion yen surplus.

The benchmark equity index opened in negative territory following the report, with the Nikkei down 1 percent in early trade, while the yen was little changed around 109.9 per dollar, near Friday’s three-week low of 110.59.

Economists widely blamed an appreciating currency for April’s poor performance. The yen has spiked 10 percent against the greenback since the start of the year, according to Reuters, reducing the value of repatriated earnings for export-oriented companies.

“The further strengthening of the exchange rate suggests that the drag from falling export prices should persist for now…All in all, therefore, today’s figures underline that the BoJ still has more work to do to reach its 2 percent inflation target,” said Marcel Thieliant, senior Japan economist at Capital Economics.

Officials were widely expected to intervene in currency markets to stem the currency’s appreciation but at the Group of Seven meeting in Japan at the weekend, Washington again warned Tokyo to refrain from competitive devaluation.

“He [PM Abe] is trying to talk the G7 into coordinated action, but they won’t do that so he’s pretty much stuck with an economy that is middling at best. It’s not the full economic recovery he talked about when taking office in 2012,” Ron Napier, head of Napier Investment Advisors, told CNBC’s “Squawk Box.”

“Although gross domestic product (GDP) growth for Q1 was better than expected, Abe and Kuroda know pretty well that a recession is looming especially if the yen remains strong,” echoed Natixis Asia economists warned in a recent note, referring to last week’s data that showed real GDP recording its fastest pace of annualized quarterly growth in a year.

April’s trade report also reflected soft external demand as China’s economy stumbles, analysts said, pointing to the 7.6 percent fall in Japanese exports to China, Tokyo’s biggest trading partner.

But HSBC warned against reading too much into that interpretation.

“It’s not simply weak demand that’s weighing on Asian trade, but structural, and thus far more persistent, factors. A recovery in the West, therefore, may not lift exports by as much as in previous decades. The relationship has changed,” Frederic Neumann, co-head of Asian economics research at HSBC, pointed out.

“The lack of significant trade liberalization in recent years means that the benefits of earlier such rounds have been exhausted. Also, spending in the West may have shifted away from the types of goods made in Asia, for example, smartphones, to things produced locally, like smartphone apps. All this suggests that a swift export rebound isn’t around the corner.”

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

3 Mins Read

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

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

China has conducted a ‘war’, not trade, with steel: Experts

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

Listen to the Article (6 Minutes)

Despite China signaling moves to cut its excess steel production capacity, industry chiefs say the country has declared a metals “war” that has had a “devastating” impact for the rest of the world’s industry.

Overcapacity in the steel industry has been a thorn in the side of the sector in recent years, pushing prices down and making it harder for some steel companies to survive.

China’s low-cost metal producers have been widely cited as the main culprit for the glut. In particular, the world’s second largest economy has been accused of “dumping” cheap steel on to global markets, due to a slowdown in domestic demand, in a bid to gain market share. However Beijing has denied any wrongdoing and has said that its costs are lower than other producers.

Lourenço Gonçalves, chairman, president and chief executive of mining and natural resources company Cliffs Natural Resources, told CNBC on Thursday that China had been acting unfairly.

“China (has not been unfairly targeted). They are the perpetrator, they are the problem and they had a chance to discuss this within the OECD (Organization for Economic Co-operation and Development) and they elected not to participate…China has been walking away from a negotiated deal,” he told CNBC on the sidelines of the Platts Global Metals Awards.

It’s war, not trade

Other countries, including India, Italy, South Korea and Taiwan, have also been cited as contributing to the global steel glut. Gonçalves said that each country had its own set of subsidies and problems that “create the massive problem of dumping steel in the international market.”

Similarly to the oil industry, however, despite a slump in demand, some producers have been slow to cut production in a bid to support prices and in 2015, the OECD forecast that global nominal steelmaking capacity is projected to increase to 2.36 billion tons by 2017, up from 2.16 billion tons in 2013.

In addition, it said that non-OECD economies (such as China) are expected to lead the capacity expansion in the global steel industry, with their share of world capacity expected to increase to 71.4 percent by 2017.

There aren’t signs that global steel production is slowing in the immediate term.

While world crude steel production was 385.7 million tons (Mt) in the first three months of 2016, down 3.6 percent compared to the same period in 2015, according to the World Steel Association, China’s crude steel production for March 2016 was 70.7 Mt, an increase of 2.9 percent compared to March 2015. India’s crude steel production was 8.1 Mt in March 2016, up by 3.4 percent on March 2015.

“Just based on the numbers, China is by far the largest problem,” Gonçalves said, accusing China of not abiding by the rules of international trade. “You can’t call yourself competitive if your competitiveness is based on cheating the international rules of trade. Trade without fairness is not trade, it’s war.”

Devastating the industry

The U.S. has tried to counteract the negative impact of cheap Chinese steel by upping its tariffs on imports of cold rolled steel, which is used in car production and construction, from China to 522 percent, saying that China had not cooperated in its investigations into dumping practices.

Read More: US raises duties on Chinese steel 

The UK and European Union have been urged to follow suit but, in comparison, the EU has only a tariff of 16 percent on Chinese cold rolled steel and EU countries are at odds over whether to impose higher import tariffs.

China has responded to the U.S.’ tariff hike by saying it would continue with controversial tax rebates to steel exporters that will help to fund a restructuring of its industry and effort to cut steel production capacity by 100 million to 150 million tons by 2020.

James Bouchard, founder, chairman and chief executive of steel services group Esmark, agreed that there was “no doubt about it” that China was dumping steel and said that the impact had been “devastating” for businesses.

“Whatever the lowest price is, whatever any country quotes through their trading companies, the Chinese will just come in and make it a lower price so there doesn’t ever seem to be a bottom to the Chinese prices. They’ll always take that order and that’s had a very aggressive downward pressure on the American pricing,” he said, also speaking on the sidelines of the Platts Global Metals Awards on Thursday.

Read More: Why you shouldn’t complain about China ‘steel dumping’ and make friends instead

Leaders of the Group of Seven (G7) advanced economies are meeting in Japan next week to discuss what actions can be taken to reduce the steel glut and wider industrial overcapacity. A particular focus will be to look at curbing government subsidies for steel production. Gonçalves also called for more coordinated action on tackling the problem.

“We need to act in a coordinated fashion with other countries,” he said. “So far it’s only been the U.S. that has been talking and acting and it’s very important that we have other countries, especially Japan, the U.K. and Germany, working with us to resolve this massive problem of overcapacity,” he said.

Although Bouchard said that action by the G7 could make a difference, he noted that excess capacity had already been “devastating.”

“When China has 150 million tons of excess capacity it’s been devastating to small manufacturers, small businesses and industrial consumption and might across the world.”

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

Here’s why India is wooing the Middle East

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

Listen to the Article (6 Minutes)

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

Eurogroup President confident of Greek debt deal will get done

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

Listen to the Article (6 Minutes)

Eurogroup president Jeroen Dijsselbloem said on Friday that he believed Greece and its creditors could ink a debt relief deal for the cash-strapped country at a May 24 meeting.

Euro zone finance ministers are due to meet Tuesday to discuss Athen’s progress on a strict austerity program that was agreed under its current 86 billion-euro (USD 96 billion) bailout package, as well as the possibility of granting it debt relief so the country can cope with its repayments, Reuters reported.

It’s widely estimated that Athens needs more help to cover 3.5 billion euros (USD 3.96 billion) in debt payments coming due in July as its economy buckles under the additional weight of the region’s migrant crisis.

“We’ve made progress in recent weeks addressing debt issues so I think we can get that deal,” Dijsselbloem, who is also the Netherlands’ finance minister, told CNBC on the sidelines of the Group of Seven (G7) meeting in Sendai, Japan.

According to recent reports, the International Monetary Fund (IMF) has requested that creditors grant Athens a temporary period of debt relief. Specifically, the IMF wants interest payments to euro zone creditors fixed at the current rate of 1.5 percent until 2040, The Wall Street Journal (WSJ) and The New York Times said this week.

The fund won’t consider approving a new bailout program unless it contained debt relief measures, IMF spokesperson Gary Rice told media on Thursday.

But many euro zone members are reportedly concerned that a generous haircut on debt would reduce Greece’s incentive to implement austerity reforms.

Without naming names, Dijsselbloem said that those people advocating major debt relief up-front have moderated their stance and those who have said no relief was needed have also shifted their position “a little bit,” helping to close the gap in talks.

“This year or the next, we can reduce the cost of the main loan package for the Greeks,” he said. “For the longer term, we have a number of options that we can consider in terms of debt maturity, grace periods and interest rates. My preference would be to have clear choices in measures that we are prepared to take and then see when they are needed.”

US Treasury Secretary Jack Lew reportedly told Dijsselbloem that Europe must be “flexible” regarding debt negotiations, the WSJ reported on Friday.

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

Equity markets fear the Fed: UBS

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

Listen to the Article (6 Minutes)

Equity markets could come under further pressure ahead of a US Federal Reserve rate hike, according to UBS Global Research.

In an analysis note, UBS said bond markets are increasingly reflecting the potential for growth to accelerate in the US, thereby giving the Fed more wriggle room to resume tightening.

“Over the last two weeks, two-year (bond) rates jumped from 0.7 percent to 0.9 percent roughly. Stronger growth leading rates higher and curves steeper is a key component of our views,” UBS said.

However, for the move to stick, UBS stresses that the equity markets also need to rally. However, stocks around the world, reeling from plunging commodity prices, weaker-than-expected corporate earnings results and political events, seem fearful of an earlier-than-expected hike.

UBS warns that the next hike may not trigger as much of an explosion in financial conditions, especially if the Fed is patient enough until a rebound in global growth limits dollar strength.

“Less dollar strength would support oil prices. And less oil weakness would also reduce the downside in US credit. But we are not there yet: markets are still quite pessimistic on growth outside the US, given the ongoing weakness in China-growth-sensitive asset,” the research said, adding, that if the Fed forced rate hikes, there is a risk of sell-off in risky assets which could deliver tightening equivalent to a full cycle.

Read More: Fed likely to hike in June if data improve: Minutes

The latest minutes released from the Fed show the central bank will likely raise interest rates in June if economic data points to stronger second-quarter growth as well as firming inflation and employment.

“Most participants judged that if incoming data were consistent with economic growth picking up in the second quarter, labour markets continued to strengthen, and inflation making progress toward the committee’s 2 percent objective, then it likely would be appropriate for the committee to increase the target range for the Federal funds rate in June,” according to the minutes.

While equities around the world are feeling the pressure, UK equities in particular are seeing tough times in the run-up to the country’s referendum on its membership of the European Union. In a recent survey conducted by Bank of America-Merrill Lynch, global fund managers have been avoiding UK stocks on fear that the equity sector may get badly impacted. The survey showed that fund allocations to the UK equities fell to their lowest levels since November 2008.

Investors surveyed said they considered Brexit to be their biggest “tail-risk” this summer. However, nearly 71 percent say Brexit is “unlikely” or “not at all likely.”

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