MACROECONOMICS
US trade deficit balloons
The US’ trade deficit swelled in December to the biggest in two years as a strengthening US dollar propelled a surge in imports. The gap jumped 17.1 percent to US$46.6 billion, the widest since November 2012, from a revised US$39.8 billion in November, according to Department of Commerce data issued on Thursday in Washington. Other reports showed fewer Americans than forecast filed claims for jobless benefits last week and worker productivity ebbed in the fourth quarter. When combined with gains in the US dollar that are making foreign goods cheaper, an improving job market is giving households the confidence to buy automobiles and electronics made overseas. US companies also took advantage of the plunge in oil prices to restock fuel inventories, widening the gap in petroleum trade to an eight-month high.
MAcROECONOMICS
Russian inflation hits 15%
Russian inflation topped forecasts by economists, accelerating to the fastest pace in almost seven years as the country’s worst currency crisis since 1998 ignited price growth. Consumer prices rose 15 percent last month from a year earlier, compared with 11.4 percent in December, the Federal Statistics Service in Moscow said yesterday in an e-mailed statement. That exceeded the median estimate of 15 economists in a Bloomberg survey for 13.5 percent. Prices jumped 3.9 percent from the previous month. The surprise increase, which brings inflation to the current level of the Bank of Russia’s benchmark interest rate, underscores the challenges facing Russian President Vladimir Putin as the economy teeters on the edge of a recession. “The sharp rise in inflation is unlikely to prevent the central bank from cutting rates further over the coming months,” Capital Economics Ltd economist Liza Ermolenko said by e-mail.
ELECTRONICS
RadioShack files bankruptcy
Electronics retailer Radio-Shack Corp on Thursday filed for US bankruptcy protection and said it had a deal in place to sell as many as 2,400 stores to an affiliate of hedge fund Standard General, its lender and largest shareholder. Wireless company Sprint Corp would operate as many as 1,750 of those stores under an agreement with Standard General, Sprint said separately. RadioShack’s bankruptcy, which has been expected for months, follows 11 consecutive unprofitable quarters as the company has failed to transform itself into a destination for mobile phone buyers. Sprint would occupy about one-third of each RadioShack store, selling “mobile devices across Sprint’s brand portfolio as well as RadioShack products, services and accessories,” Sprint said in its statement.
CONGLOMERATES
Siemens to cut 2% of staff
Siemens AG plans to cut about 7,800 jobs, about 2 percent of its global workforce, as CEO Joe Kaeser needs to slash costs at Europe’s biggest engineering company to revive profits. About 3,300 of the jobs will be cut at Siemens’ German operations, the Munich-based company said in a statement yesterday. Kaeser said last year he planned to slash about 1 billion euros (US$1.1 billion) in costs by creating a leaner divisional structure and simplifying regional operations. The cuts come at a time when Siemens’ healthcare and energy generation divisions, once the prized assets of the company, risk jeopardizing Kaeser’s turnaround plan. Profit at the two units fell a combined 27 percent, dragging overall first-quarter profit down 4.1 percent to 1.8 billion euros, Siemens said last month.
China has claimed a breakthrough in developing homegrown chipmaking equipment, an important step in overcoming US sanctions designed to thwart Beijing’s semiconductor goals. State-linked organizations are advised to use a new laser-based immersion lithography machine with a resolution of 65 nanometers or better, the Chinese Ministry of Industry and Information Technology (MIIT) said in an announcement this month. Although the note does not specify the supplier, the spec marks a significant step up from the previous most advanced indigenous equipment — developed by Shanghai Micro Electronics Equipment Group Co (SMEE, 上海微電子) — which stood at about 90 nanometers. MIIT’s claimed advances last
ISSUES: Gogoro has been struggling with ballooning losses and was recently embroiled in alleged subsidy fraud, using Chinese-made components instead of locally made parts Gogoro Inc (睿能創意), the nation’s biggest electric scooter maker, yesterday said that its chairman and CEO Horace Luke (陸學森) has resigned amid chronic losses and probes into the company’s alleged involvement in subsidy fraud. The board of directors nominated Reuntex Group (潤泰集團) general counsel Tamon Tseng (曾夢達) as the company’s new chairman, Gogoro said in a statement. Ruentex is Gogoro’s biggest stakeholder. Gogoro Taiwan general manager Henry Chiang (姜家煒) is to serve as acting CEO during the interim period, the statement said. Luke’s departure came as a bombshell yesterday. As a company founder, he has played a key role in pushing for the
EUROPE ON HOLD: Among a flurry of announcements, Intel said it would postpone new factories in Germany and Poland, but remains committed to its US expansion Intel Corp chief executive officer Pat Gelsinger has landed Amazon.com Inc’s Amazon Web Services (AWS) as a customer for the company’s manufacturing business, potentially bringing work to new plants under construction in the US and boosting his efforts to turn around the embattled chipmaker. Intel and AWS are to coinvest in a custom semiconductor for artificial intelligence computing — what is known as a fabric chip — in a “multiyear, multibillion-dollar framework,” Intel said in a statement on Monday. The work would rely on Intel’s 18A process, an advanced chipmaking technology. Intel shares rose more than 8 percent in late trading after the
GLOBAL ECONOMY: Policymakers have a choice of a small 25 basis-point cut or a bold cut of 50 basis points, which would help the labor market, but might reignite inflation The US Federal Reserve is gearing up to announce its first interest rate cut in more than four years on Wednesday, with policymakers expected to debate how big a move to make less than two months before the US presidential election. Senior officials at the US central bank including Fed Chairman Jerome Powell have in recent weeks indicated that a rate cut is coming this month, as inflation eases toward the bank’s long-term target of two percent, and the labor market continues to cool. The Fed, which has a dual mandate from the US Congress to act independently to ensure