Month: October 2017

The US is monitoring India’s currency – that alone could hurt the Indian economy

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

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India’s persistent buying of the U.S. dollar to keep its local currency cheap has caught the attention of the U.S. Treasury, increasing the risk that Asia’s third-largest economy could soon face the ill effects of a “currency manipulator” branding.

India came under the spotlight after an increase in the “scale and persistence” of its buying up other nations’ money, the Treasury said in an October report outlining the foreign exchange policies of the U.S.’s major trading partners.

But even without the official “currency manipulator” label, being called out by the U.S. Treasury can already limit New Delhi’s freedom in managing the rupee, analysts said. To avoid the designation, the Reserve Bank of India may be looking to reduce its foreign exchange purchases. Doing so at a time when capital inflows are still strong, however, could be costly for the economy, as its domestic currency may become expensive and hurt the country’s competitiveness.

The RBI did not respond to CNBC’s request for comment about the report.

India’s net currency purchases rose to around $42 billion, or 1.8 percent of its gross domestic product, in the 12 months from July, 2016 to June, 2017, the Treasury said. Compared to the $10 billion, or 0.4 percent of GDP, net purchases in calendar year 2016, New Delhi has been on a buying spree.

“Over the first half of 2017, there has been a notable increase in the scale and persistence of India’s net foreign exchange purchases,” the Treasury said, adding that it will be “closely monitoring India’s foreign exchange and macroeconomic policies.”

The RBI intensified the buying of foreign currencies this year after a surge in capital inflows into India’s stocks and bonds sent the rupee appreciating to its strongest in two years against the U.S. dollar. The purchases — to ensure the rupee does not rise to a level that would harm its exporters and other internationally operating firms — also saw India’s foreign reserves hitting an all-time high of $402.51 billion in September.

Those currency moves could potentially lead to India’s inclusion on the U.S. Treasury’s manipulator watchlist, and so the RBI may be looking to pull back on its defense of a cheap rupee. That would see the Indian currency jump in relative value, which would cause negative effects for wide swaths of the economy.

And, if India feels limited in its ability to buy up international currencies, that will also affect its efforts to create robust foreign reserves that would protect against economic shocks.

That’s something that New Delhi should be doing more of, according to Rajiv Biswas, APAC chief economist at IHS Markit. The country should increase its reserves “significantly further” as its current account deficit makes it particularly vulnerable in the event of a capital flight, he explained.

“Increased FX (foreign exchange) reserves help to reassure global financial markets that India is resilient to external shocks, particularly hot money outflows,” Biswas said in an email. “FX reserves are essentially like a fire insurance policy — in good times you complain about the cost, but you only fully understand their value when markets are in meltdown and a currency crisis looms.”

But the RBI’s options are limited if India wants to avoid further scrutiny by the Treasury. The report, published twice a year, is intended to flag any unfair currency practices, and lists three criteria that define an unfair practice.

The first is that a country has at least a $20 billion trade surplus with the U.S. (meaning the value of goods it exports to the U.S. exceeds the value of its American imports by that much). The second criterion is that a country has net foreign currency purchases of at least 2 percent of GDP over a 12-month period.

And the final characteristic is if a country has a current account surplus that’s at a minimum 3 percent of GDP. The current account is a measurement of goods, services and investments that go in and out of a country.

Economies that fulfill two out of the three criteria are put on a monitoring list, which increases the risks of trade sanctions from the U.S. and earning the label “currency manipulator.” Five countries are now officially being watched: China, Japan, South Korea, Germany and Switzerland.

India, however, currently meets only one of those criteria: Its trade surplus with the U.S. came in at $23 billion in the 12 months to June — higher than the $20 billion threshold. The country’s current account deficit and net foreign exchange purchases of 1.8 percent of GDP are helping it avoid being placed on the monitoring list for now.

“We reckon that the U.S. is paying more attention to India this time around as the economy is very close to meeting (the foreign exchange criterion),” Radhika Rao, economist at DBS Group Research, wrote in a note. “This reflects strong rupee appreciation in the first half of the year, which forced the central bank’s hand to intervene to keep real gains in check.”

To avoid a place on the monitoring list, India could reduce its trade surplus with the U.S., but analysts said the pressure to do so is low given that countries such as China and Japan have far larger trade surpluses with the world’s largest economy. That leaves the RBI with only one possibility: slow down its intervention in the currency markets to keep net foreign exchange purchases below the stipulated 2 percent of GDP.

That is “an important step” to take, even if it could result in the rupee appreciating in the short-term, Biswas said. But DBS’ Rao said the central bank will likely face less pressure to buy foreign currencies as much as it did before as capital inflows have slowed in recent weeks.

“Interest in the Asian emerging markets may be cooling off as flows into the region have moderated in recent weeks,” she said. “In all, we see little risks that India might be officially included in the list of economies monitored (by the U.S. Department of Treasury).”

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

Jeff Bezos is now the richest man in the world with $90 billion

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

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Jeff Bezos became the richest man in the world Friday morning, after adding nearly $7 billion to his wealth overnight.

With Amazon’s share price surging Friday morning after its earnings report, Bezos’s wealth shot up to more than $90 billion, according to calculations by CNBC and data from the Bloomberg Billionaires Index. That put Bezos past Bill Gates to become the richest man in the world.

Gates also added to his fortune Friday morning with the rise in Microsoft stock after its earnings. But his gain of around $550 million put his fortune at $88.5 billion — not enough to stay ahead of Bezos.

It will be a horse race throughout the day, however. If Microsoft goes up more, or if Amazon slips after the stock starts trading, Bezos could fall back to No. 2.

This isn’t Bezos’ first time as numero uno. He became the richest man for the first time in July – but his reign only lasted a day. On July 27, Amazon’s share price topped USD 1,050 and Bezos’ paper fortune soared past $90 billion. But after Amazon’s share price slipped, Bezos fell back to second place behind Gates.

At some point, given Amazon’s dominance in so many markets, Bezos is likely to pull further ahead in the race for the richest man. For now, however, the battle is between Microsoft and Amazon.

Just after the market’s open, Amazon shares were trading up nearly 10 percent at around USD 1,067, while Microsoft’s stock gained 9 percent to trade just under USD 86.

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

Trump is leaning toward Jay Powell for next Fed chair, but remains undecided: Source

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

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President Donald Trump is leaning toward naming Jerome “Jay” Powell as Fed chair but remains undecided, a source told CNBC.

For weeks, Powell has been considered the front-runner for the job as the president considers who will steward the central bank when Janet Yellen’s term expires in February. However, the competition has turned into a derby in which various candidates have moved to the front only to get pushed back in the wake of news developments.

Powell, a current Fed governor, has the advantage of presenting Trump with a chance to break from the Yellen Fed yet maintain many of the same policies that have kept the stock market rally intact and interest rates low.

“If Trump believes Yellen’s approach is best for keeping market levels growing, he is going to seek a Fed chair who can carry on her mantle but under the Trump brand. The best non-Yellen Yellen is Powell,” Beacon Policy Advisors said in a report Friday morning.

Powell was appointed to the Fed in 2012 to fill an unexpired term that won’t end until 2028. He has emerged as a compromise candidate as Trump considers reappointing Yellen or moving to a starker alternative like Stanford economist John Taylor, who would be expected to push for higher rates and a faster reduction in the Fed’s $4.5 trillion balance sheet.

The president has praised Yellen in recent days, but the chance to make a break from the past could prove too enticing.

“Given the president’s propensity for comparing himself against President Obama and seeking to continually undercut his legacy, choosing the Obama-appointed Yellen for another term would not give Trump the satisfaction of leaving his own mark on the Federal Reserve,” the Beacon noted added.

“Some Senate Republicans are making grumblings about Powell and his allegiance with Yellen’s decision making while at the Fed, however, Senate Republicans will not obstruct a Trump nomination of Powell.”

Trump previously has indicated he will make a choice before he leaves on his next foreign trip next Friday.

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

North Korea’s relationship with its sole ally is losing steam

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

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The decades-long strategic relationship between Beijing and Pyongyang is looking increasingly strained.

A sure sign of that decline can be seen in a Wednesday message from North Korean leader Kim Jong Un to Chinese President Xi Jinping, according to Kim Tae-hyo, political science professor at Seoul-based Sungkyunkwan University.

The dictator wished Xi “great success,” according to state media, as the latter received a second five-year term at the 19th Party Congress. But the overall tone was less cordial than previous correspondence.

When Xi was first appointed five years ago, Pyongyang sent a six-sentence-long congratulatory message that included phrases such as “strength of the mutual leadership, friendship and brotherhood,” said Sungkyunkwan University’s Kim. This time, the note was only four sentences and made no mention of brotherhood or friendship, he continued.

Traditionally reluctant to coerce Pyongyang, but under heavy pressure from Washington, the world’s second-largest economy has been increasingly clamping down on its historical ally. Beijing has banned domestic lenders from doing business with North Korean clients in addition to halting certain exports in compliance with international sanctions — recent figures, however, showed a 3.7 percent annual increase in bilateral trade during the first nine months of the year.

The Chinese are increasingly realizing the North’s nuclear program is harming Asian security, Renmin University associate professor Cheng Xiaohe told the Carnegie-Tsinghua Center for Global Policy in a recent podcast.

But tensions between Xi and Kim aren’t new.

Since Kim came to power, the bilateral relationship has entered a period of abnormal relations marked by a decline in economic ties and lack of political solidarity, Cheng said.

In fact, Beijing was actually disappointed when the 33 year-old was installed as leader of the secretive state in 2011, Sungkyunkwan University’s Kim said.

That is, Beijing did not want to see North Korea governed by a third-generation grandson, he explained. Chinese policymakers believe collective leadership would work best in the rogue state, instead of the supreme power currently enjoyed by Kim Jong Un, he continued.

The isolated ruler has purged many supporters of his father Kim Jong Il and he further consolidated political power earlier this month by promoting his younger sister to a top post.

Kim’s style of governance also differs from his father, who was interested in reaping economic concessions through international negotiations and never pointed North Korean missiles toward Washington, the South Korean professor noted. The current Kim, however, has showed no desire for diplomatic talks.

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

Cramer slammed on Twitter for being negative on a stock and he thinks it’s a bad sign for market

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

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CNBC’s Jim Cramer has been noticing some disconcerting activity on social media as earnings season continues to drive the rally.

“I want to shine a light on something I saw in my feed on Twitter, something that’s actually not a good sign … for this red-hot, scorching bull market,” the “Mad Money” host said. “It concerns me, and I want it to concern you.”

On Wednesday, Advanced Micro Devices, the computer chip maker, delivered an earnings report that missed Wall Street estimates for its profitability forecast, a key growth driver.

For years, Cramer saw the company as a sub-par competitor to Intel, but recently, AMD’s new leadership started turning things around, tying the company to the lucrative data center and gaming sectors.

But “the party ended” with the chip maker’s latest quarter, Cramer said. The success of its new product lines was questionable, and rival semiconductor maker Nvidia posed a clear challenge to AMD’s data center and gaming businesses.

As such, Cramer criticized AMD for losing steam and sending ripples of worry across a variety of tech-related market sectors. But he didn’t like the response he received.

“I went and looked at my feed today and what did I see? A very sizable number of AMD followers criticizing me for being short AMD and trying to blast it down with negatives,” Cramer said.

Cramer was less concerned about the “short” accusations; he’s contractually forbidden to short or bet against stocks, or even own stocks that are not those of his employers.

“But when I see a host of people saying that AMD’s going down because Jim Cramer’s saying negative things about it, I need to warn you about something,” he said. “This is called ‘homer’ behavior, raw home-team booster-ism that lacks any sort of objectivity or rigor and has no place in the stock market. This is how you lose money, people.”

Cramer hadn’t seen this kind of behavior in over 10 years, and it served as a sign to him that investor sentiment in the market is changing — and it’s changing for the worse.

Rooting for effort instead of performance is dangerous when it comes to stock-picking and investing, he said.

“People, listen to me: If a company misses estimates, it’s not my fault that its stock goes down,” he argued. “This is business, not personal. Managements do get it wrong. Business can be difficult. I promise you I’ll monitor Twitter for this kind of behavior for other stocks, but only if you monitor your own behavior to be sure that you, too, aren’t rooting too much for the home team and forgetting that, in this business, there is no home team. Just dollars and cents. Common sense.”

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

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

The world’s 5 fastest growing cities for tourism are all in China

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

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The world’s top 10 fastest growing tourism cities are all in Asia, according to new data from the World Travel and Tourism Council.

The Council’s latest “City Travel and Tourism Impact” report shows that Asian cities will be at the forefront of tourism growth over the next decade, and that’s especially true for those in China.

The city of Chongqing in southwest China tops the list on the latest study, with 14 percent growth per year. That’s closely followed by Guangzhou at 13.1 percent.

“The strong Chinese domestic market is behind the growth of cities such as Chongqing and Guangzhou which rely on spend from Chinese nationals for 94.5 percent and 89.1 percent of their Travel & Tourism GDP respectively,” the report said.

Shanghai also shows growth at 12.8 percent, while China’s capital city of Beijing is at 12 percent per year.

“The two-digit growth that we see here in this part of the world is very impressive,” Gloria Guevara, president and CEO of the World Travel and Tourism Council told CNBC’s “The Rundown.”

“China is good not only as a sourcing market for some other countries, but also their domestic traveling is huge,” she added.

The other cities on the top ten list are Chengdu in China (11.2 percent), Manila in the Philippines (10.9 percent), Delhi in India (10.8 percent), Shenzhen in China (10.7 percent), Kuala Lumpur in Malaysia (10.1 percent) and Jakarta in Indonesia (10 percent).

The study covers a total of 65 cities, chosen for being among the top ranked for arrivals, and spending by visitors. Twenty-one of those cities are in Asia Pacific.

Solid fundamentals

About 138 million inbound trips were made into China in 2016, a 3.5 percent rise over the same period of the previous year, according to the China National Tourism Administration.

“The Chinese tourism sector is experiencing an amazing boom,” Jim Qian, group global partner and senior vice president at Chinese conglomerate Fosun, told CNBC’s “Street Signs.”

“The number of middle class population in China has increased tremendously. In 2002, the middle class population percentage was 4 percent. Since then, it’s increased to 31 percent,” he added.

China is also home to some of the world’s largest travel and tourism cities. Shanghai has the largest tourism and travel GDP contribution in the world, at $30.2 billion. It also accounts for 11 percent of China’s total travel and tourism GDP contribution.

“The dominance of the Chinese market is clear — both in terms of future growth and overall size and as a main source market for destinations in the wider Asia Pacific region,” the report said.

The report also found other pockets of growth in Asia, such as Singapore.

Singapore’s travel and tourism doubled over the past 10 years to a total of $12.4 billion in 2016, the report said, noting that the industry supports 164,000 jobs in the island nation.

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

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

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

Dow soars 168 points to record close on earnings beats by Caterpillar, 3M

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

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The Dow Jones industrial average rose sharply on Tuesday on the back of strong quarterly results from 3M and Caterpillar.

The 30-stock index closed 167.80 points higher at 23,441.76, hitting intraday and closing record highs. JPMorgan Chase shares rose 1.6 percent to break above $100 for the first time.

The S&P 500 gained 0.2 percent to finish at 2,569.13, with financials rising to their highest level in 10 years. Corning and 3M were the best performers on the index. The Nasdaq composite advanced 0.2 percent to end at 6,598.43.

“This is very much earnings-driven,” said Michael Shaoul, chairman and CEO of Marketfield Asset Management. “The economically sensitive sectors of the S&P 500 have seen some strong earnings and that’s what we needed.”

Caterpillar reported earnings per share of $1.95 on revenue of $11.413 billion. Analysts polled by Reuters expected a profit of $1.27 per share on sales of $10.649 billion. Caterpillar shares rose 5 percent.

3M shares rose 5.9 percent after the company posted earnings per share of $2.33 on sales of $8.172 billion. Analysts polled by Reuters expected a profit of $2.21 per share on revenue of $7.927 billion.

United Technologies, another Dow component, also reported better-than-expected results; its stock rose as much as 1.98 percent before closing 0.9 percent lower.

General Motors, Eli Lilly and Polaris Industries also rose after reporting earnings.

After the bell, AT&T, Capital One, Chipotle Mexican Grill, Discover Financial, Juniper Networks and many more are set to report earnings.

“It’s all about earnings right now. Can they justify valuations? That’s the key question right now more so than in recent memory,” said Phil Blancato, CEO of Ladenburg Thalmann Asset Management.

This is the busiest week of the earnings season, with about a third of the S&P 500 expected to have reported by Friday.

U.S. stocks closed lower in the previous session, with the Dow and S&P 500 breaking six-day winning streaks.

On Tuesday, President Donald Trump tweeted after the Dow hit a record: “Stock Market just hit another record high! Jobs looking very good.”

Wall Street was also hopeful that tax reform could pick up steam in Washington.

Last week, the Senate passed a budget proposal that allowed Republicans to move closer to eventually passing tax reform — a measure that was approved by a vote of 51-49. The GOP is now reportedly moving quickly to try and get tax reform before the end of the year.

Bloomberg reported Monday that House and Senate leaders laid out a schedule for drafting and releasing tax reform legislation in the next few weeks.

Elsewhere, Politico reported that an administration-backed group met on Monday to plan out a multi-million dollar tax reform campaign.

CNBC reported on Tuesday that House Republicans will unveil a tax bill on Nov. 1.

The prospects of getting tax reform by year’s end provide “an upbeat path for the stock market bulls to continue charging ahead,” said Ed Yardeni, president and chief investment strategist at Yardeni Research, in a note. “If it turns into a stampede, then the resulting meltup could set the stage for a correction when tax reform is actually enacted.”

In economic news, the flash U.S. Composite PMI rose to 55.7 in October, hitting a nine-month high. That release was accompanied by the Richmond Fed survey of manufacturing activity, which showed a slowdown in manufacturing activity in October.

Overseas, European stocks fell slightly, while markets in Asia finished on a relatively mixed note.

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 central bank chief raises new worry in China: Mortgage-driven household debt

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

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China’s central bank chief just warned about a potential bubble in China: Rising household debt.

“Regarding household debt levels, China doesn’t rank that high on a global scale, but the pace of growth has picked up in the last few years,” People’s Bank of China governor Zhou Xiaochuan said Thursday. He didn’t expect any action should be taken immediately but said the debt levels should be monitored for quality and a steady pace of growth.

His comments from the sidelines of the 19th National Communist Party Congress notably contrasted with the overall positive tone on China’s economy from party officials.

The bigger worry about China has been high levels of corporate and local government debt. The Chinese government has spoken about the need to limit that growth, and most analysts expect authorities will gradually rein it in. But this year, household debt has arisen as another area of concern about financial leverage in China.

“China’s household debt has been rising at an ‘alarming’ pace over the past two years,” Citi analyst Li-Gang Liu said in an Oct. 10 note. The report pointed out that outstanding household debt in China has doubled from 29.6 percent of gross domestic product at 16 trillion yuan ($2.41 trillion) in 2012 to 44.3 percent of GDP at 33 trillion yuan last year.

Mortgage loans for buying property are the largest driver of that household debt growth, Liu said. Property prices, especially in major Chinese cities, have shot higher as “the returns on property investment were much higher than interest rates on savings and loans.”

During a key address at the twice-a-decade party congress on Wednesday in Beijing, Chinese President Xi Jinping reiterated that “houses are for living in, not for speculation,” according to global media reports.

“While the comment isn’t new, to reiterate it at such an important meeting is highly unusual,” Larry Hu, head of greater China economics at Macquarie, said in a Thursday note. Hu does not expect the Chinese government to relax its restrictions on property purchases in the next 12 months.

In order to prevent speculation from sending property prices even higher, local Chinese governments have implemented policies to restrict purchases such as limiting the number of apartment units someone can own and how soon they can resell them.

Soon-to-retire central bank governor Zhou also made headlines Thursday when he said in the same question-and-answer session that excessive optimism could lead to a “so-called Minsky Moment,” or a drop in asset prices.

The Minsky Moment, named after economist Hyman Minsky, describes the time when a market suddenly collapses after an extended period of speculation or unsustainable gains. On Thursday after Zhou’s remarks, Hong Kong’s Hang Seng index fell nearly 2 percent, Dow futures tumbled more than 100 points ahead of the open, and Treasury yields fell.

“This is what Zhou says now, but where was this recognition along the way?” said Leland Miller, head of a private survey of Chinese businesses called the China Beige Book. “On his watch, China created the largest credit bubble in human history. It’s a little late to distance from it now.”

The IMF pointed out in its Global Financial Stability Report earlier this month that Chinese banking sector assets are now 310 percent of GDP, up from 240 percent at the end of 2012 and nearly three times the emerging market average.

“Debt in China is our No. 1 risk in the whole world,” said Paul Christopher, head global market strategist at Wells Fargo Investment Institute. But rather than worrying about financial disruption from China, “I would worry more about the prospect of slowing China demand.”

Worldwide, stocks have rallied partly on stronger economic growth in a “global synchronized recovery.” Stabilization in the world’s second-largest economy, China, has played a major role in that more optimistic outlook. The International Monetary Fund increased its outlook for Chinese gross domestic product by 0.1 percent to 6.8 percent this year — exactly in line with what China reported for the third quarter last week.

But property purchase curbs and Chinese household debt could spill over into the Chinese consumer growth story.

In a report last Monday about how increasingly wealthy Chinese will boost demand for high-end products, Sanford C. Bernstein analysts said the property market has been the “single largest driver” of the increase in Chinese wealth. They estimate the property market has increased in value by about $12 trillion since 2010, while overall private wealth among Chinese households has increased from $10 trillion in 2010 to $34 trillion.

“As one example, since 2010 the owner of an average 90-square-meter apartment in Shenzhen has experienced a capital gain of almost US$500,000 (nearly a quadrupling in value),” senior equity research analyst Euan McLeish and a team of analysts wrote. “That kind of appreciation in personal assets changes behavior.”

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

Dow snaps 6-day winning streak as GE posts biggest drop in 6 years

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

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U.S. stocks fell from record levels on Monday as a decline in General Electric shares weighed on investor sentiment. Wall Street was also gearing up for the busiest week of the earnings season.

The Dow Jones industrial average closed 54.67 points lower at 23,273.96, as General Electric shares fell 6.3 percent, marking their biggest one-day decline since August 2011.

The company reported earnings on Friday which fell short of analysts’ expectations as profits were undermined by restructuring and weak performance at its oil and gas businesses. Analysts also panicked on Monday over the possibility GE may have to cut its dividend.

Morgan Stanley analyst Nigel Coe lowered his rating on GE to underweight from equal weight and cut his price target to $22 from $25.

“The reduction to our target price is driven by a substantial cut to earnings expectations,” Coe said in a note to clients. “We also see a higher probability of a dividend cut that we do not view as priced in. We believe investors need to take action to protect against the possibility of near term underperformance in the event of a dividend cut in November and this is clearly an additional factor in our rating change.”

The S&P 500 declined 0.4 percent to close at 2,564.98, with industrials and telecommunications lagging. Hasbro was the second-worst-performing stock in the S&P 500, falling 8.6 percent after the company warned of weaker holiday-season sales due to the bankruptcy of its largest customers, Toys ‘R’ Us.

The Nasdaq composite finished 0.6 percent lower at 6,586.83, as shares of Amazon, Facebook, and Alphabet all fell. The tech-heavy index, along with the Dow and S&P 500, hit intraday records earlier in the session.

Investors also braced themselves for the busiest week of the earnings season.

About a third of the S&P 500 will have reported quarterly earnings when the week is over. Companies reporting this week include Dow components 3M, Caterpillar and Boeing. Also reporting this week are Amazon, Alphabet, NBCUniversal-parent Comcast and Twitter.

“It’s a big week for earnings. We’ve got a lot of bellwether names reporting,” said Randy Frederick, vice president of trading and derivatives at Charles Schwab. “That’s going to be one of the main drivers for the market this week.”

Earnings season has gotten off to a good start. With 17 percent of the S&P 500 having reported as of Monday morning, 73 percent have beaten on both the top and bottom lines, according to Thomson Reuters I/B/E/S.

“We’ve seen a trend of improving reports and I think we’re going to see that continue,” said Maris Ogg, president at Tower Bridge Advisors.

Stocks were coming off a perfect week. The three major indexes posted record closing highs every day last week, marking the 18th time in history that has happened, according to Howard Silverblatt, senior Index analyst at S&P Dow Jones Indices.

The Dow closed above 23,000 for the first time ever on Wednesday.

The move to new highs coincides with the strong earnings reports and increased possibilities of tax reform moving forward in the U.S.

The Senate approved a $4 trillion budget measure last week, enabling reconciliation, which enables the GOP to pass a tax bill with a simple 51-vote majority in the Senate. A framework GOP officials released late last month said the proposal would double the standard deduction and scrap provisions like the estate tax and alternative minimum tax.

“The next hurdle that needs to be overcome is the differences that exist between the Budget Resolution passed by the Senate and the different version passed by the House,” Tom Block, Washington policy strategist at Fundstrat, said in a note.”To accelerate the process, and help insure passage, the White House, Senate tax writers and House tax staffs have all been working together to come out with a joint bill that the President will support and sign, and that the House and Senate can pass expeditiously.”

“Bottom line: It is my view that before Thanksgiving, Congress and the White House will unveil their unified tax package and that while a year-end date may be overly ambitious, I believe a bill will pass by the end of 1Q18.”

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 largely rise as dollar climbs against the yen after Abe election win

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

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Asian stocks were mostly higher on Monday as the dollar spiked to more than three-month highs against the yen following a snap election in Japan on Sunday.

Japanese Prime Minister Shinzo Abe’s ruling coalition secured a two-thirds “super majority” after winning 312 out of 465 seats available at Sunday’s election, Reuters said, citing local media. Abe’s solid win at the polls points to a continuation of fiscal and hyper-easy monetary policies under his Abenomics program.

Those developments were cheered by investors, with Japanese equities popping at the open. The Nikkei 225 surged 1.06 percent, with exporters notching gains on the softer Japanese currency: Nissan rose 1.34 percent, Mitsubishi Motor was up 2.12 percent and Sony rose 1.13 percent. The broader Topix was up 0.79 percent.

Ahead of Sunday’s election, the Nikkei 225 had closed higher for 14 straight sessions, partially boosted by optimism that Abe’s ruling coalition would win.

Following the news, the dollar also spiked to trade at 113.86 yen at 9:50 a.m. HK/SIN. The greenback went as high as 114.09 earlier — its highest levels in more than three months.

While the election result had been largely expected, the strong mandate resulting from Abe’s convincing victory “made all the difference for markets,” Jingyi Pan, a market strategist at IG, said in a note.

Across the Korean Strait, the Kospi erased early gains to slip 0.11 percent. Gains in blue-chip tech names were offset by declines seen in manufacturing and retail plays.

Down Under, the S&P/ASX 200 rose 0.11 percent. The telecommunications services rose 1.59 percent, leading gains on the broader index.

Meanwhile, Hong Kong’s Hang Seng Index declined 0.53 percent in early trade. Mainland markets traded a touch above the flat line: The Shanghai Composite was higher by 0.03 percent and the Shenzhen Composite was up 0.156 percent.

Markets in Thailand and New Zealand are closed today for public holidays.

Stateside, stocks closed higher on Friday after the U.S. Senate passed a budget measure late on Thursday. The move unlocked reconciliation, which enables Republicans to pass a tax bill with a simple 51-vote majority in the Senate.

The Dow Jones industrial average tacked on 0.71 percent, or 165.59 points, to close at a record 23,328.63. Other major indexes touched record highs during the session.

The dollar index stood at 93.809 at 9:49 a.m. HK/SIN, compared to levels around the 93.6 handle seen on Friday.

Ahead, investors are likely to keep an eye on the race for the position of Federal Reserve chair. President Donald Trump indicated in a Fox News interview aired over the weekend that Stanford University economist John Taylor and Federal Reserve Governor Jerome Powell remained among the candidates he was considering. He also said he would make his decision shortly.

Back in in Asia, China’s 19th Party Congress remained in focus as markets awaited signs on the future leadership line-up of the country, which will be officially unveiled later this week.

Also in China, average home prices in September rose 6.3 percent compared to one year ago, according to Reuters. That figure was below the 8.3 percent increase seen in August.

In corporate news, Singapore-listed Noble Group said it would be disposing of its capital stock of Noble Americas Corporation, the company’s global oil liquids business, for roughly $582 million. Noble shares were down 2.63 percent in early trade.

In currencies, the euro was in focus following an ongoing political crisis in Spain. The common currency traded at $1.1765 at 9:57 a.m. HK/SIN after falling as low as $1.1750 in the session.

On the energy front, U.S. crude futures were up 0.5 percent at $52.10 a barrel. Brent crude futures were 0.29 percent higher at $57.92.

Here’s the economic calendar for Monday (all times HK/SIN):

1:00 p.m.: Singapore September inflation rate
4:00 p.m.: Taiwan September industrial production, retail sales and unemployment
4:30 p.m.: Hong Kong September inflation

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