Month: December 2017

Nikkei leads move higher in Asia markets; China trade data due

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

Listen to the Article (6 Minutes)

Asian markets edged up in early Friday trade after U.S. markets finished higher on Thursday as investors stateside awaited developments regarding tax reform. Markets also awaited the release of trade data out of China for clues about the health of its economy.

Markets on the move

The Nikkei 225 advanced 1.12 percent, rebounding after recording a near 2 percent fall in the middle of the week. Also providing support for the increase was the softer yen, which traded above the 113 level to the dollar. Automakers, tech names and trading houses recorded gains.

Of note, Japan’s third-quarter GDP was revised upward to 2.5 percent from the preliminary estimate of 1.4 percent, Reuters reported. On a quarterly basis, the economy grew 0.6 percent from one quarter ago, compared to the 0.4 percent forecast, the wire service added. Following the release, the dollar fetched 113.28 yen at 9:41 a.m. HK/SIN, above Thursday’s close of 113.07.

The better-than-expected GDP figure “should further add to risk-taking,” OCBC Treasury Research said in a morning note, adding that recovery in risk appetite in recent sessions came from progress made in U.S. tax reform proceedings.

Across the Korean Strait, the Kospi was mostly flat as gains in heavyweight tech names offset losses seen in automakers and several manufacturing plays. Samsung Electronics and SK Hynix were up 1.14 percent and 2.11 percent, respectively. Hyundai Motor fell 2.79 percent and steelmaker Posco slid 1.95 percent.

Down Under, the S&P/ASX 200 tacked on 0.22 percent as most energy-related plays rose on the back of oil prices climbing more than 1 percent in the last session. Oil Search gained 1.11 percent and Beach Energy added 3.61 percent, but Santos traded flat. Banks recorded gains while major miners traded in negative territory.

Greater China markets went higher in early trade. Hong Kong’s Hang Seng Index rose 0.65 percent. On the mainland, the Shanghai Composite tacked on 0.17 percent and the Shenzhen Composite advanced 0.63 percent.

The lead up

Tax reform was in focus on Wall Street as investors anticipated potentially lower corporate taxes ahead. The Senate avoided a potential government shut-down when it passed a bill to extend funding for the federal government on Thursday.

A top Republican indicated on Thursday that the GOP’s final tax bill could see certain deductions being adjusted. A joint tax bill now has to be ironed out after the House and Senate earlier passed separate versions.

U.S. stocks ended higher on Thursday as tech shares notched gains, with the Dow Jones industrial average rising 70.57 points, or 0.29 percent, to close at 24,211.48.

The dollar index, which tracks the U.S. currency against a basket of six major currencies, extended overnight gains to trade at 93.839 after climbing in the three days prior.

Meanwhile, bitcoin soared above $19,000 on Thursday on the Coinbase exchange, but later tumbled some 20 percent from that level. The cryptocurrency, which started the year under $1,000, has experienced massive moves in recent days.

Currency watch

The Australian dollar drifted lower after taking a hit following the release of poorer-than-expected trade data on Thursday. At 9:46 a.m. HK/SIN, the Aussie dollar traded at $0.7500, after falling as low as $0.7498 earlier. Ahead, moves in the currency will likely be influenced by trade data out of China due later in the session.

Corporate news

LG Display said “nothing has been set in detail” regarding a deal which would see the South Korean company supply OLED panels to Apple. The panel maker added that it would make an announcement about any developments “in a month,” according to local media. LG Display shares erased early gains to trade flat.

Elsewhere, Taiwan Semiconductor Manufacturing Company said it would be investing approximately $20 billion in its latest planned plant, Reuters said. The new chip plant will reportedly be focused on 3 nanometer technology. TSMC shares were higher by 0.22 percent.

The commodities trade

Oil prices slipped after rising more than 1 percent overnight. U.S. crude futures lost 0.16 percent to trade at $56.60 per barrel. Brent crude shed 0.21 percent to trade at $62.07.

Also of note was a possible disruption in Nigeria after one of the country’s main oil unions warned it could go on strike after an alleged “mass sacking,” Reuters reported on Thursday.

What’s on tap

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

4:00 p.m.: Taiwan balance of trade
7:30 p.m.: India loan growth
China trade data is also due

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

Bitcoin tops $17,000 on one exchange, surging more than $5,000 in less than 2 days

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

Listen to the Article (6 Minutes)

Bitcoin rocketed higher Thursday, crossing the $17,000 mark in less than two days after topping $12,000 for the first time.

In trading on the Coinbase exchange, the digital currency rose above $17,000 and was last at $17,350. The price on Coinbase is often at a premium over other exchanges. Coinbase is one of the major cryptocurrency exchanges accounting for a third of bitcoin trading volume.

Bitcoin now has a market value of more than $270 billion, meaning it would rank among the 20 largest stocks in the S&P 500.

The latest swing higher came as bitcoin topped $12,000 Tuesday night in a rapid recovery from a 20 percent drop last week.

In pics: Bubble or not! Facts you might not know about bitcoin rally

The digital currency began the year below $1,000 and its gains have accelerated as investor interest grows. Chicago-based Cboe Global Markets is planning to launch bitcoin futures on Sunday, while the world’s largest futures exchange, CME, is set to launch its futures product the following week. The addition of bitcoin futures by two respected exchanges marks another step towards establishing the digital currency as a legitimate asset class.

“While we launched [in the U.S.] just a week ago, bitFlyer has already seen strong interest from institutions looking to gain exposure to bitcoin. We’re glad to have expanded to the US at this time with so much interest due to the impending Bitcoin futures launches,” bitFlyer COO Bartek Ringwelski, said in an email. The Tokyo-based digital currency exchange is the largest in the world by trading volume and announced last week it received a “BitLicense” to operate in New York.

However, many remain critical of bitcoin. JPMorgan Chase Jamie Dimon has called bitcoin a “fraud.” Digital currency investor and former Fortress hedge fund manager Michael Novogratz also said last week that cryptocurrencies like bitcoin are “going to be the biggest bubble of our lifetimes.” Novogratz also predicted last week that bitcoin could reach $40,000 by the end of next year.

Between 5 and 6 a.m. New York time, bitcoin jumped past $15,000, its latest milestone after soaring through $12,000, $13,000 and $14,000 over about the last 33 hours, according to an index on CoinDesk.

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

Greenspan: Tax overhaul will do ‘very little’ for growth; inflation is biggest danger

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

Listen to the Article (6 Minutes)

CNBC.com

The Republican-sponsored tax overhaul plan will do “very little” to spur real economic growth but could push inflation dangerously higher, former Fed Chair Alan Greenspan said Wednesday.

Greenspan said the GOP plan, endorsed by President Donald Trump, instead should focus on reducing the deficit and heading off inflation.

Under the proposal, the corporate tax rate will be slashed from 35 percent to 20 percent while individual rates also will be cut. Analyses of the plan show it could add $1 trillion to the budget deficit, though the White House maintains the tax cuts will pay for themselves through gains in gross domestic product.

“This is a terrible fiscal situation we’ve got ourselves into,” Greenspan told CNBC’s “Squawk on the Street” in a live interview. “The administration is doing tax cuts and a spending decrease, but he’s doing them in the wrong order. What we need right now is to focus totally on reducing the debt.”

The Senate has approved the plan, which is now under joint review with the House. If all goes according to schedule, the tax overhaul bill will be on Trump’s desk before Christmas.

However, critics argue that in addition to blowing a hole in the budget, the benefits are skewed toward the richest Americans. Greenspan said he worries of imbalances the plan could create.

“We’re in a stage where if nothing is changed, we’re about to go from stagnation to stagflation, with a significant rise in inflation and a wholly significant imbalance in the economy, which is very difficult to anticipate at this stage,” he said. “But the outlook is not exactly terrific.”

Stagflation refers to a condition of high inflation but low wage growth and high unemployment, a condition that prevailed in the late 1970s and early 1980s. Rising deficits are thought in some quarters to push inflation as government policies pump more money into the economy.

White House officials estimate that the tax plan, coupled with deregulation and higher infrastructure spending, will create economic growth of at least 3 percent. GDP in the second and third quarters was 3.1 percent and 3.3 percent, respectively.

Greenspan predicted that GDP gains in the fourth quarter would be “significantly slower” than in the preceding two quarters, though the assertion does not square when compared with various growth trackers. The Atlanta Fed sees Q4 at 3.2 percent, CNBC’s Rapid Update puts the number at 2.4 percent and the New York Fed forecasts 3.9 percent.

The high unemployment component of stagflation also is unlikely to prevail; current Fed forecasts have the jobless rate at 4.1 percent through 2019, the lowest since December 2000.

Asked how much he thought tax reform would contribute to growth, Greenspan said: “Very little. The tax cuts, remember, at the same increase the deficit. All the econometrics that I’ve seen over the years tell me that when you increase the deficit and you increase the demand for funds, you’re crowding out capital investment, and capital investment is the key statistic determining output per hour, that is, productivity.”

Greenspan chaired the Federal Reserve from 1987 to 2006, leaving just before the financial crisis hit.

Among other things, he is known for his 1996 warning of “irrational exuberance” in the stock market during the dot-com boom. Earlier this year, he cautioned that a bubble in the bond market was about to pop because of the persistence of “abnormally low” interest rates.

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’s financial system has three important ‘tensions,’ the IMF says

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

Listen to the Article (6 Minutes)

An almost two-year long study of the Chinese financial system by the International Monetary Fund found three major tensions that could derail the world’s second-largest economy.

Those tensions emerged as China moves away from its role as the world’s factory to a more modern, consumer-driven economy, the IMF said. The financial sector is critical in facilitating that transition, but in the process it evolved into a more complicated and debt-laden system.

“The system’s increasing complexity has sown financial stability risks,” the fund said in the 2017 China Financial Sector Stability Assessment report released on Thursday morning Asia hours.

The report was a culmination of the fund’s several visits to China between October 2015 and September 2017. The assessment is intended to identify key sources of systemic risk in the financial sector so that policies can be implemented to enhance resilience to shocks and problems that could spread across the globe.

The first tension in China’s financial system, according to the IMF, is the rapid build-up in risky credit that was partly due to the strong political pressures banks face to keep non-viable companies open, rather than letting them fail. Such struggling firms have, in recent years, taken on more debt to achieve growth targets set by the authorities.

The overall debt-to-GDP ratio in the Asian economic giant grew from around 180 percent in 2011 to 255.9 percent by the second quarter of 2017, data by the Bank for International Settlements showed. The rise coincided with a slowdown in productivity growth and pressures on asset quality in the banking system — increasing the risks faced by the Chinese economy.

The second tension identified by the IMF is that risky lending has moved away from banks to the less-regulated parts of the financial system, commonly known as the “shadow banking” sector. That adds to the complexity of the financial sector and makes it more difficult for authorities to supervise activities in the system, the IMF said.

And the third issue identified by the international organization is that there’s been a rash of “moral hazard and excessive risk-taking” because of the mindset that the government will bail out troubled state-owned enterprises and local government financing vehicles. An example is the “implicit guarantees” that financial institutions offer when selling products to retail investors. That is a situation where the financial product sold are not guaranteed, but banks almost always compensate investors for principal losses by dipping into their own capital.

The People’s Bank of China, in response to the IMF assessment, said in a statement on its website that it disagrees with some points in the report but the fund’s recommendations are “highly relevant in the context of deepening financial reforms” in the country.

One of the points the Chinese central bank said it disagrees with is the conclusion that many banks lack the ability to withstand shocks. The IMF’s stress tests found that 27 out of 33 banks studied were under-capitalized. But the PBOC said the Chinese financial system is resilient.

China takes action

The IMF report was released at a time when China is showing greater resolve to contain financial risks. Over the past year, authorities have strengthened regulatory oversight and closed loopholes in the country.

Major steps taken include the setting up of a “super financial regulator” to coordinate the oversight of the banking, securities and insurance sectors. The government has also proposed prohibiting issuers of wealth management products from offering implicit guarantees to investors.

China’s efforts have paid off, with the international investing community now recognizing the country’s lower systemic risks.

“System risks from China have faded a little bit over the last year. There are less China bears out there. Over the last year economic data has surprised on the upside, but more importantly, the quality of economic growth has improved,” said Joep Huntjens, head of Asian debt at NN Investment Partner.

The IMF said it acknowledged what China has done and welcomed President Xi Jinping’s commitment to ensuring financial stability in the country. However, some gaps remained and the fund has five main recommendations for further improvement:

The Chinese authorities should create a body to focus solely on financial stability and to improve oversight of systemic risk.

Financial supervisors should be allowed greater independence to do their jobs without the fear of being overruled. They also need more resources and better coordination across all levels to adequately supervise China’s large and complex financial system.
Banks should increase their capital to cushion against a sudden cyclical economic downturn. That is especially important at larger banks as any shocks they face can spread to the other parts of the financial system.

Banks are recommended to hold more liquid assets and lending rules should be amended to encourage “safer, and longer-term, lending.”

China should reduce the reliance on public funds to help weak financial institutions while ensuring they can fail safely.

“Supervising one of the world’s largest and most complicated systems is a challenging task. The Chinese authorities have worked hard to keep pace with growth and innovation but, as in all countries, many gaps remain,” the IMF said.

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

Indian startups beg the government for ‘preferential treatment’ as global giants eat their lunch

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

Listen to the Article (6 Minutes)

Many of India’s top tech start-ups are establishing a lobbying group to push for governmental regulations to put an end to global companies’ continued success in the country.

The group, called Indiatech, will begin its operations early next year. Chief among its agenda is to coax the government in New Delhi into passing regulations to help local companies dominate the country’s internet market, industry sources told CNBC.

The new group represents an aggressive new strategy for a local industry that has been scrambling to compete with global giants — and repeatedly come up short. If the lobbying efforts are successful, they could benefit domestic firms while squeezing out big-name companies like Amazon and Uber from the hugely promising market.

Online retailer Flipkart, Uber rival Ola and messaging app Hike are among the Indian tech companies behind the new lobbying effort. Local grocery marketplace Grofers, travel booking service MakeMyTrip, online classifieds platform Quikr and VC firms Matrix and Kalaari have also joined the organization, people familiar with the matter said.

“If one of the participating members went to the government with a proposal of this kind, it will not be taken seriously,” said one source with knowledge of the matter, who requested anonymity as he wasn’t authorized to speak to the press. “But if an industry lobby body, which represents nearly all of the local giants, makes a suggestion, it will be heard.”

Stumbling unicorns

On paper, Flipkart appears to have moved beyond its 2016 struggles to raise money: It secured $4 billion from a myriad of global investors including SoftBank, Microsoft and eBay this year — albeit at a valuation of $11.6 billion from $15 billion two years ago.

But while Flipkart was struggling to raise capital, rival Amazon doubled down on its India bet by pumping $3 billion into the local operations. The announcement bolstered Amazon’s total planned investment in the country, which it entered in 2013, to $5 billion.

The results of that strategy are clear: During the important festival of Diwali, a period traditionally crucial for retail companies in the country, Amazon India surpassed Flipkart in sales for the first time.

E-commerce isn’t the only sector seeing a showdown: Other Indian unicorns such as ride-hailer Ola and messaging app Hike are also struggling to put up a strong fight against global rivals, such as Uber and Facebook’s WhatsApp, respectively. Those firms, along with others from the U.S., China and Europe, have entered India with huge supplies of capital at their disposal.

The darlings of India’s tech startups have attempted to put up a brave front by offering lofty discounts and expanding their portfolios, but the formation of the lobbying group shows their new strategy is to seek the government’s protection from the global onslaught.

The organization would convince the government to make the “right policies, and bring to their notice the interventions and some decisions that will help us,” an executive at one of the founding members of Indiatech said. “The end goal is to help Indian companies get preferential treatment,” the executive added, requesting anonymity.

It’s worth noting that many of the start-ups seeking protectionist regulation have benefited from international investors. In fact, some of the biggest-name members in the lobbying group — Flipkart, Ola, Hike, Grofers and Quikr — share Japan’s SoftBank as an investor.

“Our intent is to work with the government to support the development of the rapidly evolving Internet ecosystem in the country and we hope the organization would facilitate this,” a SoftBank spokesperson told CNBC in a statement.

Flipkart, Hike and Grofers declined to elaborate to CNBC about the rationale behind participating in the Indiatech group.

Protectionism

Calls for the Indian government to intervene and protect local companies are part of a narrative in the making for more than a year. Notably, at a conference last December, Sachin Bansal, co-founder and executive chairman of Flipkart, suggested that the Indian government should do “what China did 15 years ago and tell the world we need your capital, but we don’t need your companies.”

Also in attendance at that conference, Bhavish Aggarwal, the CEO and founder of Ola, echoed Bansal’s suggestion: “There is a narrative of innovation that non-Indian companies espouse, but the real fight is on capital, not innovation. The markets are being distorted by capital,” he said at the time.

Their views were met with a mixed response from industry leaders, some of whom pointed out the irony that both Flipkart and Ola have raised much of their capital from foreign firms. Regardless, some say the stakes are too high for government inaction.

“If the government doesn’t wake up, it will see Silicon Valley kill off a large segment of its entrepreneurship ecosystem and challenge its leading retail and technology companies,” Vivek Wadhwa, tech entrepreneur and distinguished fellow at Carnegie Mellon University’s College of Engineering, told CNBC.

“Foreign companies will gather massive amounts of private data about every Indian citizen — even more than the Indian government has. Facebook and Google will have the tools to sway Indian public opinion and affect elections. This is dangerous for any democracy,” he added, saying he believed the government should learn from China, which he says realized very early on that if it allowed Silicon Valley giants to dominate its internet, they would hurt local companies.

Chinese companies are now rivals to Silicon Valley, and firms like Tencent and Alibaba lead the nation’s internet market. Last month, China’s Tencent hit a market capitalization of $500 billion.

Along those lines, Vijay Shekhar Sharma, founder of e-commerce and electronic payment company Paytm, recently said in a Twitter post that “India is effectively letting modern world East India Companies own its Internet.”

Alibaba-backed Paytm is facing heat from services by global companies. Its wallet application, used by over 200 million users in the country, has seen strong growth of late, but other companies are interested in moving in on the market. Google introduced Tez payments app for India in September, and it has already amassed 12 million customers, the company said. On top of that, Facebook’s WhatsApp, used by more than 200 million users in India, is said to be considering plans to integrate a payment option in its app. Paytm declined to comment for this story.

Some warn, however, that replicating an approach similar to that of China could go terribly wrong.

“It is counterproductive to look at China selectively and cherry-pick parts of protectionism we like,” said Prasanto Roy, vice president and head of the Internet, Mobile and E-commerce Council at the National Association of Software and Services Companies — an industry group set up in 1988 for India’s then-nascent software and IT industry.

“Protectionism is a double-edged sword and any attempt at raising trade barriers could hurt more than help India if there is reciprocal action. Keep in mind that the $150 billion IT industry (two-third of it software and services exports) is premised on an open, non-protectionist global marketplace,” he added.

Eyes are on the government now, but not everyone believes New Delhi would pass new laws to help local tech firms.

“The government wants investors and foreign companies to come to India and create more jobs and opportunities in the country. I don’t think the government would take any action to hurt foreign companies in any way,” said Satish Meena, an analyst at Forrester Research.

Officials at the Department of Industrial Policy & Promotion weren’t available to comment.

A market in flux

The recent arrivals of Amazon, Uber and Netflix in India and the aggressive expansions of businesses by Facebook, Microsoft and Google have changed the dynamics of the local market. Those global firms bring some services to the table that no Indian company rivals, but they’re even gaining traction in categories in which domestic firms had a first-mover advantage.

In 2015, Flipkart and Snapdeal together accounted for 75 percent of the online retail market in India, according to financial services firm Morgan Stanley. Today, however, much has changed: Flipkart and Amazon India are jockeying to be market leader, and Snapdeal, which recently ended merger talks with Flipkart to no avail, has seen its market share collapsing.

In October, Amazon India announced it had more than 44 percent of total customer share and more than 42 percent of total transactions during the festival of Diwali, citing third-party data from market research firm Kantar. Amazon credited its Prime subscription service, which it launched in India last year, for helping it bolster sales.

Similar is the fate of ride-hailing service Ola, which has been somewhat successful but only by burning capital at a fast clip to keep Uber at bay. It raised $1.1 billion this October from investors including Tencent and SoftBank at an estimated valuation of $7 billion, and it expects to raise an additional $1 billion in coming weeks.

That investment, a source familiar with the matter said, will be led by SoftBank, which plans to bet another $600 million on the company.

Ola maintains its market-leading position in the country, serving in more than 100 cities, but Uber is quickly catching up. Both the companies are trying to boost the number of rides on their platforms by subsidizing the cost of rides.

“We are growing incredibly fast, focusing on the metrics and features that matter the most: reliability, quick arrival times and the best customer service experience,” an Uber spokesperson said. Ola declined to comment.

Uber India and Amazon India, for their part, have also fiercely slammed the notion that they are not Indian companies. Amazon India is a “completely India registered entity, and as Indian as any other,” a spokesperson said. “We have consistently maintained our support for free support for capital movement. Free flow of capital is not only good for customers but also helps create jobs, develop infrastructure, aids the growth of small businesses and facilitates India’s economic development.”

Uber India said it is “led and staffed by local teams who know their cities better than anyone. We bring global expertise to India, but wouldn’t have been able to get where we are today without a local-first approach.”

Uber has invested north of $1 billion in the country, and Uber CEO Dara Khosrowshahi said at a recent conference that the company is in heavy investment mode in India.

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

Bitcoin blasts past $14,000, less than 24 hours after crossing $12,000

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

Listen to the Article (6 Minutes)

Bitcoin rocketed higher, crossing the $14,000 mark less than 24 hours after topping $12,000.

The landmark happened on the Coinbase exchange just before 6 p.m. ET, and it traded as high as $14,400 on that platform.

That said, there are often significant price differentials on different bitcoin exchanges. CoinDesk, a widely regarded industry site, didn’t show the cryptocurrency crossing the $14,000 level until about 7:30 p.m. ET according to its average of prices across leading exchanges.

In Pics: Bubble or not! Facts you might not know about bitcoin rally

The digital currency’s gains accelerated after crossing the psychologically key level on Tuesday night. Bitcoin now has a market value of more than $230 billion, meaning it would rank among the 20 largest stocks in the S&P 500.

The latest swing higher came as bitcoin topped $12,000 Tuesday night in a rapid recovery from a 20 percent drop last week.

The digital currency began the year below $1,000 and its gains have accelerated as investor interest grows. Chicago-based Cboe Global Markets is planning to launch bitcoin futures on Sunday, while the world’s largest futures exchange, CME, is set to launch its futures product the following week. The addition of bitcoin futures by two respected exchanges marks another step towards establishing the digital currency as a legitimate asset class.

“While we launched [in the U.S.] just a week ago, bitFlyer has already seen strong interest from institutions looking to gain exposure to bitcoin. We’re glad to have expanded to the US at this time with so much interest due to the impending Bitcoin futures launches,” bitFlyer COO Bartek Ringwelski, said in an email. The Tokyo-based digital currency exchange is the largest in the world by trading volume and announced last week it received a “BitLicense” to operate in New York.

However, many remain critical of bitcoin. JPMorgan Chase Jamie Dimon has called bitcoin a “fraud.” Digital currency investor and former Fortress hedge fund manager Michael Novogratz also said last week that cryptocurrencies like bitcoin are “going to be the biggest bubble of our lifetimes.” Novogratz also predicted last week that bitcoin could reach $40,000 by the end of next year.

The bitcoin offshoot, bitcoin cash, traded 2.5 percent lower near $1,465, while ethereum traded 6 percent lower near $435, according to CoinMarketCap.

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

North Korea appears ready to accelerate submarine weapons tests, adding to nuclear threat

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

Listen to the Article (6 Minutes)

There are signs that North Korea’s submarine missile program is expanding as it prepares its second test, adding to the risk that the nuclear-armed country could one day threaten the U.S. or its Asian allies with yet another powerful weapon in its arsenal.

Experts suggest North Korea having fully submersible submarines firing a nuclear ballistic missile pose a dangerous scenario because they could offer the hermit regime a better chance of survival and might be harder to detect.

It comes on the heels of North Korea on Tuesday launching a new Hwasong-15 intercontinental ballistic missile, a road-mobile weapon the state-owned KCNA media claimed could carry a “super-large heavy warhead, which is capable of striking the whole mainland of the U.S.”

The North Koreans appear to be getting more aggressive on submarine-launched ballistic missile (SLBM) development and now have several shipyards active in the offshore-weapons program. The North is not believed to have the capability today to launch multiple ballistic missiles from a submarine. However, experts say the totalitarian state is working at a feverish pace and could have this submersible as early as next year.

“If North Korea can deploy not only developmentally a submarine-launched ballistic missile that is effective and deploy it on ballistic missile submarines, it certainly complicates defense against missile attacks,” defense analyst Joseph S. Bermudez Jr., co-founder and CEO of Colorado-based imagery analysis firm KPA Associates LLC, told CNBC in an interview Friday.

In a 38 North blog post Friday, he revealed that “commercial satellite imagery from Nov. 11, 16 and 24 show that North Korea’s second submersible ballistic missile test stand barge — a platform that allows for underwater missile launches outside of submarines — located at the Nampo Navy Shipyard is being prepared to enter service.”

38 North, a project of the U.S.-Korea Institute at Johns Hopkins School of Advanced International Studies, said the “second missile test stand barge [is] almost operational.” Bermudez wrote, “Once in service, this barge will help facilitate a broader SLBM testing regime and potentially establish a SLBM capability within the West Sea fleet [of North Korea’s navy].”

Bermudez, a 38 North contractor, explained that the test stand barge and platform are used to simulate the weapons that would be inside the submarine because it’s considered too dangerous and costly to do such early testing inside a real submarine. He also said that the North Koreans know the U.S. military is watching its SLBM and submarine development so they have been doing things to mitigate the satellite surveillance capabilities, including resorting to concealment in some cases.

Still, Bermudez called the Nampo shipyard activities on the regime’s west coast “a strong indicator that Pyongyang is advancing” in its SLBM program. And he said the North Koreans will need a series of tests from the submersible barge before deploying ballistic missiles on submarines.

Last year, North Korea conducted a test of its SLBM technology near its port city of Sinpo and reportedly flew one missile at least 500 kilometers (or about 300 miles), according to South Korea’s Yonhap news agency. Sinpo, located on the country’s northeast coast, also is where the North reportedly has renovated large buildings that might be involved in the construction of a new SLBM-capable submarine.

The Sinpo-class experimental submarine that the North Koreans have today is believed to be up to about 2,000 tons and have a nautical range of about 2,800 kilometers (about 1,500 miles). Yet it features just a single launch tube and Bermudez said “no one considers that an operational capability.”

According to Bermudez, Pyongyang is apparently building a submarine that will feature multiple tubes for ballistic missiles and greater capability at sea. He estimated the new submarine “could be launched any time next year and going forward.”

To be clear, though, he said just because the submarine may launch doesn’t necessarily mean it’s fully operational. The expert explained how it typically takes a year or two after the submarine is launched that it “truly becomes operational” because it will go through a range of sea trials and necessary crew training.

Even so, having the submarine-launched ballistic missiles with nuclear capability is potentially a nightmare scenario for South Korea and Japan. That’s because the submarines could potentially avoid detection by some of the most advanced defense systems.

For example, missiles fired by North Korean submarines off the east coast of Japan could potentially dodge detection from Japan’s Patriot anti-missile system by launching from behind radar. At present, the detection is focused on missiles coming from land-based missiles in North Korea.

Similarly, the current THAAD anti-missile system deployed by the U.S. in South Korea is focused on identifying missile threats from the North. As a result, a submarine missile from the North Korean navy could be launched behind radar and perhaps evade existing defense systems.

“Up to now we’ve only had to worry about them coming from north to south or from west to east in the case of Japan and the United States,” said Bermudez. “If they deploy a ballistic missile submarine with operational missiles, it can come from almost any direction around the peninsula.”

Experts say U.S. bases in the Western Pacific, including Guam, also are potentially at risk if North Korea deploys submarines with SLBM weapons. At this point, though, it’s not believed that the North Korean submarines have a range to reach the United States mainland.

That said, if the North’s submarines could reach closer to the U.S. West Coast they would not need an intercontinental ballistic missile to threaten major American cities, says Loren Thompson, a defense industry consultant and chief operating officer of the Lexington Institute, a Virginia-based public-policy think tank.

“The biggest problem the U.S. faces in dealing with a North Korean nuclear launch is that you can’t stop it if you don’t know where it’s coming from,” Thompson said. “That is why the North Koreans are building mobile missile launchers on land and why they’re trying to develop the ability to launch from under the seas.”

At the end of the day, Thompson said what the North Koreans want is something the United States has in its nuclear arsenal — “a survivable retaliatory capability. If it’s at sea, they might be very well obtain it.”

But he said technological hurdles in developing a submarine with multiple ballistic missiles is rather challenging. That may be one reason North Korean hackers last year reportedly stole blueprints from Daewoo Shipbuilding, a large South Korean maker of submarines.

“You can’t just launch the missile,” Thompson said. “The exhaust will destroy the submarine. You have to push it into the air with gas, like compressed oxygen, and then ignite it once it’s in the air. That is just more more complicated than launching from a land base.”

North Korea’s largest submarines at present include the so-called Romeo-class submersibles that are based on an old design from the Soviet Union. The 1,800-ton vessels are considered relatively easy to detect using anti-submarine warfare technology available to the U.S. and its Asian allies.

In fact, North Korean leader Kim Jong Un has been featured in state-run media taking tours and riding on board the green-painted Romeo-class submarines operated by the North’s navy. Some estimates are the North has around 20 of the Romeo-class submarines.

The North Koreans also are known to have some 50 smaller submarines that are harder to detect and can sink ships with torpedoes. One of those submarines was believed to be responsible for sinking the South Korean Cheonan navy ship in 2010, resulting in the deaths of 46 sailors.

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 trades lower, but Dow futures spike more than 200 points after Senate passes tax plan

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

Listen to the Article (6 Minutes)

Asia markets traded most lower on Monday morning, following a decline in US stocks on Friday after a shock from a since-corrected report about the investigation into possible collusion between then-candidate Donald Trump and Russia.

Dow Jones industrial average futures, meanwhile, rose 212 points to 24,450 at 9:43 a.m. HK/SIN.

In Australia, the ASX 200 was down 0.18 percent as the heavily-weighted financial subindex fell 0.88 percent. The country’s so-called Big Four banks saw losses in the morning session.

Shares of ANZ were down 0.98 percent, Commonwealth Bank declined 0.83 percent, Westpac fell by 1.55 percent and the National Australia Bank was lower by 0.78 percent.

Japan’s Nikkei 225 declined 0.27 percent in morning trade while the Topix index traded down 0.1 percent. Across the Korean Strait, the Kospi stood out and traded up 0.13 percent.

Chinese mainland markets were also lower in early trade. The Shanghai composite fell 0.28 percent and the Shenzhen composite was down 0.23 percent.

In Hong Kong, the Hang Seng index declined 0.3 percent.

ABC News reported on Friday that Michael Flynn, the former White House national security advisor, would testify that he was directed to make contact with Russians during the presidential campaign in 2016. Flynn pleaded guilty to lying to the FBI about his post-election contacts with Russia’s ambassador to the US.

That report hit the markets hard, but ABC later corrected the story to say its source had clarified that Trump gave Flynn the directive “shortly after the election” to discuss strategies for fighting the Islamic State extremist group.

The news “provides a reminder of the cloud hanging over the Trump administration,” Shane Oliver, head of investment strategy and chief economist at AMP Capital, wrote in a weekend note. He added that could cause “bouts of volatility next year and just adds to the likelihood that the GOP will lose control of the House in the November 2018 mid-term elections.”

“However, we remain of the view that it does not change prospects for tax reform (it’s already nearly there) and in fact just highlights the pressure on Congress to get it done,” Oliver noted.

In the early hours of Saturday morning, Senate Republicans narrowly passed a bill to overhaul the US tax system. The GOP still needs to overcome significant disagreements for the House and Senate to craft a joint bill and send it to Trump’s desk. Republicans hope to reach a deal by Christmas.

While the tax bill narrowly passing may have been a “political relief” for the Trump administration, it does not “eradicate fiscal uncertainty,” according to Vishnu Varathan from Mizuho Bank.

“Fact is, a possible US government shutdown looms heading into 8th Dec and, in all likelihood, the backstop to avert a shutdown may be by the skin of the teeth as well,” he wrote in a Monday morning note. “And this could keep long-end yield upside in check if caution trumps exuberance.”

In the currency market, the dollar rose from an overnight low of 92.881 to trade at 93.086 against a basket of currencies at 9:50 a.m. HK/SIN.

Among other currency majors, the Japanese yen fetched 112.67 to the dollar, weakening from an earlier low of 112.39. Despite the relative weakness in the yen, major exporters remained under pressure: Toyota was down 0.26 percent, Sony reversed early losses to trade up 0.64 percent and Mitsubishi Electric was down 0.54 percent. Nissan shares rose 0.32 percent.

Typically, a weaker yen is a positive for Japanese exporters since it increases their overseas revenue when converted back into local currency.

The Australian dollar weakened against the greenback to trade at USD 0.7603 from a previous high of USD 0.7613, and the euro was at USD 1.1874.

Elsewhere, oil prices were also lower. US crude was down 0.74 percent at USD 57.93 and global benchmark Brent fell 0.61 percent at USD 63.34 a barrel.

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

CME to launch bitcoin futures in 3 weeks after green light from regulator; bitcoin jumps

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

Listen to the Article (6 Minutes)

CME announced on Friday its new bitcoin futures contract will be available for trading on December 18.

The CME announcement came as the Commodity Futures Trading Commission said it will allow the world’s largest futures exchange and its competitor, the Cboe Futures Exchange, to launch bitcoin contracts. A Cantor Exchange also self-certified a new contract for bitcoin binary options, the commission said.

Bitcoin traded more than 6 percent higher at $10,539, recovering partly from a 20 percent drop to $9,021.85 from a record high of $11,377.33 hit Wednesday, according to CoinDesk.

“I think it is going to enable finally the approval of bitcoin ETFs, and other digital currency ETFs, which is game changing,” Barry Silbert, founder and CEO of Digital Currency Group, said on CNBC’s “Squawk Box.”

CME’s announcement comes as other major exchanges rush to launch their own bitcoin derivatives products.

Shares of CME spiked 1.7 percent to an all-time high Friday morning. Shares of Cboe traded little changed after setting a record close Thursday.

The CFTC does not approve derivatives contracts or endorse their underlying assets.

“Commission staff held rigorous discussions with CME over the course of six weeks, CFE over the course of four months, and had numerous calls with Cantor,” a CFTC release said.

“Bitcoin, a virtual currency, is a commodity unlike any the Commission has dealt with in the past,” CFTC Chairman J. Christopher Giancarlo said in a statement. “As a result, we have had extensive discussions with the exchanges regarding the proposed contracts, and CME, CFE and Cantor have agreed to significant enhancements to protect customers and maintain orderly markets.”

In a separate release Friday, Cboe said it has filed a product certification with the Commodity Futures Trading Commission to offer bitcoin futures trading. The certification is subject to regulatory review and a launch date “will be announced shortly,” according to a release.

A Cboe spokesperson initially told CNBC the bitcoin futures launch is expected “probably before the end of the year,” but later clarified, saying the exchange couldn’t be that specific. “We are operationally ready and we will be announcing a launch date shortly,” the spokesperson said in new statement.

Nasdaq plans to launch bitcoin futures as early as the second quarter of 2018, exchange officials told CNBC Thursday. Nasdaq would base its price off of 50 bitcoin sources from around the world, while CBOE is currently using one and the CME is using four, a Nasdaq spokesperson said.

Nasdaq shares traded mildly higher after closing at a record Thursday.

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