Month: April 2017

Goldman Sachs chief economist says Fed’s move ‘makes sense’ ahead of likely Yellen exit

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

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Plans by the US Federal Reserve to pare back its balance sheet should not be seen as a surprise with a reshuffle at the central bank likely in 2018, Goldman Sachs’ chief economist has told CNBC Thursday.

“I think it makes some sense. Personally I don’t think it’s really urgent for them to start reducing the balance sheet, but assuming that you want to do this at some point in the next year or two, I think it does make some sense to get started before the leadership transition at the Fed,” Jan Hatzius said.

The minutes of the Fed’s latest policy meeting Wednesday showed the central bank aims to reduce the $4.5 trillion in bonds on its balance sheet at some point this year.

“There will likely be a new Fed chair after early 2018, when Janet Yellen’s term comes to an end and having already established a bit of a baseline path for how the balance sheet is going to be adjusted probably makes sense at that point to reduce the uncertainty that you otherwise get in that period,” he added.

Reducing the balance sheet would have an impact on the markets given its sheer size. According to Janet Yellen, such a move would work as a rate hike.

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

Caixin services PMI for China in March at 52.2, below expected 53.2 level

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

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Activity in China’s service sector expanded at its weakest pace in six months in March, hurt by slower growth in new orders and intensifying cost pressures, a private survey showed, painting a less rosy picture of a sector that Beijing is counting on to maintain economic momentum.

The Caixin/Markit services purchasing managers’ index (PMI) for March fell to 52.2 from February’s 52.6, but remained above the 50-level that separates expansion from contraction.

The survey of largely medium- and small-sized firms showed activity at its lowest since September 2016.

The result contrasted with official surveys showing services PMI growth for March accelerating at the fastest pace in almost three years, and manufacturing activity unexpectedly expanding at the quickest rate in nearly 5 years last month.

In Thursday’s private services survey subdued business demand pulled down the headline PMI index. There are concerns China’s real estate sector – a big growth-driver for sectors from construction to banking – could become a drag on the broader economy as they were hit with fresh waves of housing policy curbs in mid-March.

The new business sub-component slipped 1.1 percentage points to 52.2 in March, the weakest demand for China’s service providers since September 2016.

“Weaker increases in new business have clouded the economic outlook, and investors should watch closely for signs of a turning point in the second quarter,” Zhengsheng Zhong, Director of Macroeconomic Analysis at CEBM Group said in a note.

Lukewarm growth may also suggest consumers in the world’s second-largest economy are cutting back on spending, highlighted by disappointing revenue reports at some of the nation’s top consumer firms.

Retail sales growth was well below expectations in the first two months of the year as auto sales dipped.

Cost pressures also rose sharply as input prices soared to their highest point in more than four years, although firms were able to pass on part of the costs to customers with a modest increase in prices charged.

A number of companies linked rising cost to higher salary payments, the survey said.

While the overall readings in the private survey were far from alarming, the underlying results backed analysts’ cautious view on the outlook for the economy.

In particular, economists believe the construction rally, largely driven by a furious property boom since last year, may have peaked. Indeed, official data on Friday showed new construction orders dropped to the lowest since August 2016.

On top of the stepped-up curbs on the property sector, Beijing has also started to tighten policy settings to temper risks from a rapid build-up in debt.

Caixin’s composite manufacturing and services PMI, also released on Thursday, reinforced the patchy growth underpinned by weaker demand in March, with the index falling to 52.1 from the previous month’s 52.6.

“The Chinese economy continued to expand in March, but growth in both manufacturing and services slowed,” CEBM Group’s Zhong said, referring to the private survey.

Both the Caixin services and composite readings showed service providers and manufacturers continued to add jobs last month, but the pace was moderating.

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

Chinese want to make sure Xi dodges ’embarrassments’ with the impulsive Donald Trump

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

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When Chinese President Xi Jinping and President Donald Trump convene in Palm Beach, Florida, this week, don’t expect any intimate, behind-the-scenes moments.

While there’s no shortage of weighty issues to occupy the two leaders during their first-ever meeting April 6-7, public attention has shifted more toward diplomatic etiquette — such as Trump’s handshake. And Xi’s handlers are expected to restrict the number of public appearances in order to avoid potential snags and safeguard against Trump’s impulsive nature, strategists said.

The former reality television star’s body language has been closely analyzed after he held Prime Minister Shinzo Abe’s hand for around 19 seconds, causing the Japanese leader to grit his teeth and roll his eyes. He also appeared to refuse German Chancellor Angela Merkel’s hand during her visit to the Oval office last month.

To prevent any situation that could slight Xi, the Chinese will have made clear demands about how physical interactions should take place during the two-day visit, said Chong Ja Ian, an assistant professor at National University of Singapore.

Indeed, the mainland delegation will have studied Trump’s behavior with other leaders extensively and planned accordingly, said William Heidlage, research director at business advisory firm BowerGroupAsia. “I expect a relatively cool meeting in terms of outward appearances as Xi’s people trade in any warm and fuzzy moments in exchange for confidence that their boss will be treated with respect.”

Trump will hold talks with Xi at the Republican’s Mar-a-Lago retreat as both countries attempt to smooth a relationship that has grown more prickly since Trump took office. From openly questioning the “One China” policy to pressing Beijing on North Korea, the president has shown resistance to protocol when it comes to dealing with the world’s second-largest economy.

“The Chinese government is well aware that Trump might act unpredictably and will take steps to minimize the opportunity for any embarrassments,” said Heidlage. “The summit will be a relatively private affair, with only a few well-planned moments open to the press.”

The selection of Mar-a-Lago over the White House paves the way for an informal meeting for the duo to get to know each other — reminiscent of the first meeting between Xi and former President Barack Obama at the Sunnylands estate in Palm Springs, California.

But Xi didn’t settle on Mar-a-Lago for its sprawling lawns.

“Beijing has pushed the Mar-a-Lago option over a more formal affair at the White House. This suggests that the Chinese side want to reduce the scope for protocol blunders overshadowing the event,” said Hugo Brennan, Asia analyst at Maplecroft.

The exchange of gifts, a common practice in bilateral meetings and one of particular importance in Chinese culture, will likely be another area of public scrutiny. And the symbolism behind each gift will be more important than the actual item itself, analysts said.

“Any gifts from the Chinese side will probably be something that emphasizes U.S.-China cooperation, but also Chinese resolve. Given the tone of the Trump administration, it is possible that the U.S. side will select something that underscores American strength in some way,” said Chong.

While gift-giving isn’t mandatory, it’s seen as an integral step for Trump and Xi to establish a personal rapport with each other.

“Expect personal gifts designed to please the man, rather than abstract offerings seeking to make a political statement a la Obama’s bench,” said Brennan, referring to the custom-designed park bench that the former president offered Xi in 2013.

When Abe arrived in Palm Beach for a similar summit in February, Trump paid for his Mar-a-Lago stay as a gift. But that won’t be happening this time around since Xi will be residing at the nearby Eau Palm Beach Resort and Spa instead.

“Having Xi not stay at Mar-a-Lago is indicative of China’s desire not to be seen to be subject to U.S. demands, so any gift-giving is likely to follow a similar tone,” Chong noted.

There’s one more key difference between Abe’s and Xi’s stay.

Trump and the Japanese prime minister spent around four hours hitting the links at Trump National Golf Club, with the president saying golf was a better way to get to know someone than having lunch.

But golf diplomacy won’t work with Xi, who has shut down golf courses in his home country and banned members of the ruling Communist Party from the sport as part of an anti-graft crackdown.

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

11 killed, 45 injured in suspected suicide bombing on Russian metro train

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

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A blast in a St Petersburg train carriage on Monday that killed 11 people and injured 45 was carried out by a suspected suicide bomber with ties to radical Islamists, Russia’s Interfax news agency cited a law enforcement source as saying.

Russian President Vladimir Putin, who was in the city when the blast struck, visited the scene of the explosion late on Monday night and laid a bunch of red flowers at a makeshift shrine to the victims.

Witnesses said they saw passengers who were bloodied and burned spilling out of the train, whose door was buckled by the force of the explosion, and lying on a platform while smoke filled the station.

Russia has in the past experienced bomb attacks carried out by Islamist rebels from Russia’s North Caucasus region. The rebellion there has been largely crushed, but Russia’s military intervention in Syria has now made it a potential target for Islamic State attacks, security experts say.

There was no immediate claim of responsibility. Officials said they were treating the blast as an act of terrorism, but there was no official confirmation of any link to Islamist radicals.

Earlier, Russian media had broadcast closed circuit television footage of a bearded man they said was being sought by police as a suspect. But Interfax reported that the man had come forward and been eliminated from inquiries.

The news agency, quoting an unnamed law enforcement source, said that human remains examined at the scene suggested that the blast had been carried out by a suicide bomber. It said the police had identified a suspect with links to radical Islamist groups banned in Russia.

If it is confirmed that the bomb was carried out by radical Islamists, the Kremlin is likely to argue the attack underlines the importance of its campaign in Syria, where it is backing President Bashar al-Assad in a fight against Islamist militants.

But some sections of Russian society may see the metro bombing as proof that Putin’s decision to intervene in Syria has again made Russian civilians into targets.

Two years ago, the Islamic State group said it brought down a plane carrying Russian tourists home from a Red Sea resort. All 224 people on board the flight were killed.

Bloody faces

Soon after the blast happened at 2:40 p.m., ambulances and fire engines descended on the concrete-and-glass Sennaya Ploshchad station. One helicopter hovered overhead and then landed on a broad avenue to take away an injured passenger.

“I saw a lot of smoke, a crowd making its way to the escalators, people with blood and other people’s insides on their clothes, bloody faces,” St Petersburg resident Leonid Chaika, who said he was at the station where the blast happened, told Reuters by phone. “Many were crying.”

The National Anti-Terrorist Committee said an explosive device had been found at another station, hidden in a fire extinguisher, but had been defused.

The blast raised security fears beyond Russian frontiers. France, which has itself suffered a series of attacks, announced additional security measures in Paris.

Video from the scene showed injured people lying bleeding on a platform, some being treated by emergency services and fellow passengers. Others ran away from the platform amid clouds of smoke, some screaming or holding their hands to their faces.

A huge hole was blasted in the side of a carriage and the door blown off, with metal wreckage strewn across the platform. Passengers were seen hammering at the windows of one closed carriage after the train had pulled into the station.

Russian TV said many had suffered lacerations from glass shards and metal, the force of the explosion amplified by the confines of the carriage and the tunnel.

Anna Sventik, a St Petersburg resident, was traveling on a metro train that passed through the same station moments after the blast.

“Our train slowed down a bit, and one woman started having hysterics when she saw the people lying on the platform, blackened, in some places with no clothes, burned,” she told Reuters. “It was very scary.”

All stations closed

Officials had earlier on Monday put the death toll from the explosion at 10 people, but the National Anti-Terrorist Committee, a state agency, later said 11 people were killed and 45 were being treated for their injuries in hospital.

Authorities closed all St. Petersburg metro stations. The Moscow metro said it was taking unspecified additional security measures in case of an attack there.

Russia has been on particular alert against Russian-speaking rebels returning from Syria, where they have fought alongside Islamic State, and wary of any attempts to resume attacks that dogged the country several years ago.

At least 38 people were killed in 2010 when two female suicide bombers detonated bombs on packed Moscow metro trains.

Over 330 people, half of them children, were killed in 2004 when police stormed a school in southern Russia after a hostage taking by Islamist militants. In 2002, 120 hostages were killed when police stormed a Moscow theater to end another hostage-taking.

Putin, as prime minister, launched a 1999 campaign to crush a separatist government in the Muslim southern region of Chechnya, and as president has continued a hard line in suppressing rebellion.

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

New details on Amazon’s move to shutter the company it bought for $545 million

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

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Amazon’s explanation last week that it was closing Quidsi because the unit was unprofitable didn’t sound much like Jeff Bezos. The Amazon founder is famous for operating retail businesses at such slim margins that rivals can’t compete.

Quidsi employees had another reason to be surprised.

As recently as late 2016, at Quidsi’s quarterly all-hands meeting in Jersey City, New Jersey, executives from Amazon headquarters in Seattle spoke to the unit’s 250-plus workers and affirmed the parent company’s commitment to Quidsi’s business, according to multiple people who were in attendance. (Recode previously reported on some details of this meeting.)

One of the executives to present was John Boumphrey, Amazon’s vice president who oversees baby products, and the direct boss of Quidsi CEO Emilie Arel Scott, said the sources, who asked not to be named because the meeting was confidential.

Yet last Wednesday, with the first quarter coming to a close, employees were informed that Amazon was shutting Quidsi down and laying off hundreds of workers, ostensibly because the division was unable to make a profit. The diapers, toiletries, beauty products and pet care items sold by the various Quidsi brands would all be available on Amazon.com, the company said.

Not everyone was shocked. Earlier in March, Quidsi’s finance chief, Randy Greben, left to become CFO of clothing company Ann Taylor, though as of Monday morning he was still listed as the No. 2 executive on Quidsi’s leadership page. One person who spoke to CNBC.com said Greben’s departure was a “huge red flag.”

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

Rand tumbles after S&P downgrades South Africa to ‘junk’

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

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South Africa’s rand fell more than 2 percent on Monday to its weakest in almost three months after S&P Global Ratings cut the country’s credit score to sub-investment grade with a negative outlook after last week’s dismissal of the South African finance minister.

Stocks were higher on the day, led by gold shares, as demand for the safe-haven asset rose globally in response to worries U.S. President Donald Trump will use trade to pressure China in security talks.

At 1640 GMT, the rand traded at 13.6800 per dollar, 1.92 percent weaker from its New York close on Friday but up from the day’s low of 13.7500, a level last reached on Jan. 16.

The increased likelihood of further credit downgrades by Moody’s and Fitch is set to put pressure on the rand this week, analysts said.

“Any chance of avoiding this result evaporated last week when President Jacob Zuma sacked his respected finance minister,” John Ashbourne, an analyst at Capital Economics, said in a note.

“Officials from several agencies had stressed the need to maintain the current team at the treasury.”

S&P cut the credit rating to BB+ from BBB- and assigned a negative outlook, citing fiscal policy risk following Pravin Gordhan’s sacking as finance minister.

Before President Zuma’s last Thursday to fire Gordhan, the rand was the best-performing emerging market currency year-to-date. It has now shed 11.5 percent since last Monday’s best of 12.3125 per dollar.

Bonds weakened in response to the downgrade, with the yield on the benchmark bond due in 2026 adding 14.5 basis points to 9.125 percent. Yields on South Africa’s sovereign dollar bonds rose across the curve..

Some traders, however, are betting the rand will recoup losses if Zuma is pushed out of office as anger grows over the controversial sacking inside the ruling African National Congress.

“The narrative is just so overwhelmingly negative against Zuma. The pushback has been so strong that it actually gives one a sense of confidence, and I think a lot of people are trading on this,” said ETM Analytics director and economist George Glynos.

Gold stocks benefited from the weaker rand, lifting the broader All-share index 0.77 percent to 52,457 points. The Top-40 index gained 0.87 percent to 45,561 points, while leading the gainers, Sibanye Gold surged 7.07 percent to 30.73 rand. AngloGold Ashanti rose 4.16 percent to 149.21 rand and Harmony Gold strengthened 3.53 percent to 34.01 rand.

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

Google paid its self-driving car boss $120 million — and then he left for Uber

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

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Embattled engineer Anthony Levandowski collected USD 120 million from Google, despite involvement with at least one start-up that would ultimately compete with the company, according to new legal filings.

Levandowski was already trying to staff up his competing start-up, Otto, while he worked at Google — but he waited until he got his payout to make the details of Otto public, a lawsuit said.

Levandowski is at the nexus of a battle between what is now Alphabet’s self-driving car company, Waymo, and ride-hailing start-up Uber. Waymo alleges that Levandowski stole thousands of documents and trade secrets for Otto, which went on to be rapidly acquired by Uber.

New court documents allege that Levandowski’s conflicts of interest may have been much deeper. Not only did Levandowski try to poach Google employees, the lawsuit said, but he may have been involved in competing side businesses called Odin Wave and Tyto Lidar.

Levandowski denied having ownership interested in Odin Wave when questioned in mid-2013, the lawsuit said, and also helped Google do due diligence for a potential acquisition of Tyto — a company that Otto later acquired.

“Throughout this process, Levandowski never disclosed a relationship with Tyto and its employees,” the lawsuit said. “Google now believes that Levandowski in fact had a relationship with Tyto and its employees that conflicted with Levandowski’s duties to Google.”

Levandowski hasn’t been the only engineer to get hefty sums from Waymo. In the suit, Google said it has had to provide incentives” to convince numerous other employees not to follow Levandowski to Uber. Uber and Waymo did not immediately respond to requests for comment.

Bloomberg has previously reported that high paychecks prompted attrition at Google’s car project. Bloomberg also reported that Levandowski had a long history of side projects during his time at Google, many sanctioned by founders Larry Page and Sergey Brin.

“Anthony is a rogue force of nature,” former Google self-driving car executive told Bloomberg. “Each phase of his Google career he had a separate company doing exactly the same work.”

Levandowski has invoked his Fifth Amendment right to avoid self-incrimination in the lawsuit, according to a transcript obtained by The New York Times. Lawyers for Levandowski could no immediately be reached.

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