IMF
Lagarde examines US tax cut
IMF managing director Christine Lagarde said on Friday the US President Donald Trump administration’s US$1.5 trillion tax cut could prompt other nations to follow suit, fueling a “race to the bottom” that risks hemming in public spending. The effects of the package passed by Congress in December last year are likely to include increased consumption and “hopefully the payment of higher wages,” Lagarde said on a panel at the Munich Security Conference in Germany. It also will fuel inflation, she said.
REAL ESTATE
US housing starts up 9.7%
Groundbreakings on new US homes jumped 9.7 percent last month to the highest level since October 2016, welcome news for a housing market struggling with a shortage of homes for sale. The US Commerce Department said on Friday housing starts came in at an annual pace of 1.33 million last month, up from 1.21 million the previous month and 1.24 million a year earlier. Meanwhile, building permits, an indicator of future construction, rose 7.4 percent last month, it said.
SOVEREIGN DEBT
Fitch upgrades Greece
Fitch Ratings on Friday upgraded Greece’s sovereign debt grade, citing budget surpluses, greater political stability and the growing economy. The agency raised the debt rating one notch to “B” from “B-,” leaving the country in the “highly speculative” category, but with a positive outlook. The decision followed a similar move last month by S&P Global Ratings, which said the economy’s improving fiscal situation was coinciding with growing employment.
RETAIL
UK consumers cautious
UK retail sales barely grew last month, more evidence consumers are reluctant to splash out amid a squeeze from rising prices. Sales increased 0.1 percent from the previous month, far below the 0.5 percent gain forecast by economists in a Bloomberg survey. From a year earlier, sales rose 1.6 percent, the weakest for a January in four years, the Office for National Statistics said on Friday. One of the bright spots was sales of sporting equipment, reflecting the traditional New Year enthusiasm for workouts and a pickup in gym membership. Food sales fell 0.4 percent on the month.
JAPAN
Kuroda tapped for new term
Bank of Japan Governor Haruhiko Kuroda was nominated on Friday to serve a second five-year term as the head of the central bank. The proposal on Friday to a parliamentary committee was expected to gain approval before Kuroda’s term expires at the end of March. The challenge for Kuroda, many in Japan believe, will be in finding ways to ease out of the Bank of Japan’s current stimulus regime without disrupting markets given its outsized holdings of Japanese government bonds.
STOCKS
MSCI warns on India move
A move by Indian exchanges to stop all licensing deals with their foreign counterparts is anti-competitive and could jeopardize the country’s standing in indices tracked by global funds worth trillions of dollars, MSCI Inc said. “If the changes are put into effect, the result will be disruptive and harmful to international institutional investors in Indian equities,” MSCI said in a statement on Thursday. It said it is monitoring the situation and warned India’s market classification could change unless the “restrictive measures” are removed.
MASS MEDIA
Delrahim rejects speculation
The head of the US Justice Department’s antitrust division, who is suing to block AT&T Inc’s proposed takeover of Time Warner Inc, said on Friday he did not discuss the proposed merger with US President Donald Trump, whose criticism of the entertainment company’s CNN has sparked speculation that he influenced the decision to seek to block the deal. US antitrust chief Makan Delrahim denied further comments on the case to reporters after speaking at a conference in Paris.
FOREIGN EXCHANGE
US fines, bans trader Little
Former Barclays PLC trader Peter Little, a member of “the Cartel” chatroom where bank traders allegedly manipulated foreign-exchange rates, is being fined US$487,500 by the US Federal Reserve and permanently banned from US banking. Little, who led the Barclays FX spot desk in New York, used electronic chatrooms to manipulate currency pricing benchmarks and failed to properly supervise subordinate traders, the Fed said in a statement on Friday.
BEVERAGES
Coca-Cola swings to loss
Coca-Cola Co swung to a fourth-quarter loss after being hit with a US$3.6 billion tax charge tied to a sweeping overhaul of the US’ tax laws. The Atlanta company on Friday reported a loss of US$2.75 billion, or US$0.65 per share. Earnings, adjusted for one-time gains and costs like the tax hit, came to US$0.39 per share, which was a US$0.01 better than analysts had expected. Revenue fell 20 percent to US$7.51 billion, also topping Wall Street projections for revenue of US$7.36 billion.
ENERGY
Crude recovery boosts Eni
Italian oil and gas company Eni SpA said on Friday the recovery in global crude prices along with record production helped it swing back into profit of of 3.4 billion euros (US$4.3 billion) last year, compared with a loss of 1.46 billion euros in 2016. In the fourth quarter of last year alone, the company recorded a net profit of 2.1 billion euros, six times the level of last year and more than three times the amount expected by analysts. The rise in crude prices helped swell sales by 20 percent to 66.92 billion euros, Eni said.
TOYS
FAO Schwarz eyes China
FAO Schwarz is setting its sights on China as part of an expansion begun late last year. The toy retailer said on Thursday it will open locations in Beijing and Shanghai this year through a collaboration with China’s largest toy distributor, Kidsland Group (凱知樂). Kidsland is to also open 30 smaller FAO Schwarz stores and shops in 200 department stores across China over the next five years, in addition to launching a chain of FAO Schwarz-branded airport shops in the US and Canada.
TOURISM
Caribbean weathers storms
A record 30 million people visited the Caribbean last year, despite two devastating hurricanes that hit a region still struggling to recover, regional tourism officials said on Thursday. Visitors spent a record total of US$37 billion, up nearly 3 percent compared with the previous year, according to Ryan Skeete, acting research director for the Barbados-based Caribbean Tourism Organization. The majority of visitors came from the US, and there was a surge of travelers from Canada and Europe.
DECOUPLING? In a sign of deeper US-China technology decoupling, Apple has held initial talks about using Baidu’s generative AI technology in its iPhones, the Wall Street Journal said China has introduced guidelines to phase out US microprocessors from Intel Corp and Advanced Micro Devices Inc (AMD) from government PCs and servers, the Financial Times reported yesterday. The procurement guidance also seeks to sideline Microsoft Corp’s Windows operating system and foreign-made database software in favor of domestic options, the report said. Chinese officials have begun following the guidelines, which were unveiled in December last year, the report said. They order government agencies above the township level to include criteria requiring “safe and reliable” processors and operating systems when making purchases, the newspaper said. The US has been aiming to boost domestic semiconductor
Nvidia Corp earned its US$2.2 trillion market cap by producing artificial intelligence (AI) chips that have become the lifeblood powering the new era of generative AI developers from start-ups to Microsoft Corp, OpenAI and Google parent Alphabet Inc. Almost as important to its hardware is the company’s nearly 20 years’ worth of computer code, which helps make competition with the company nearly impossible. More than 4 million global developers rely on Nvidia’s CUDA software platform to build AI and other apps. Now a coalition of tech companies that includes Qualcomm Inc, Google and Intel Corp plans to loosen Nvidia’s chokehold by going
ENERGY IMPACT: The electricity rate hike is expected to add about NT$4 billion to TSMC’s electricity bill a year and cut its annual earnings per share by about NT$0.154 Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) has left its long-term gross margin target unchanged despite the government deciding on Friday to raise electricity rates. One of the heaviest power consuming manufacturers in Taiwan, TSMC said it always respects the government’s energy policy and would continue to operate its fabs by making efforts in energy conservation. The chipmaker said it has left a long-term goal of more than 53 percent in gross margin unchanged. The Ministry of Economic Affairs concluded a power rate evaluation meeting on Friday, announcing electricity tariffs would go up by 11 percent on average to about NT$3.4518 per kilowatt-hour (kWh)
OPENING ADDRESS: The CEO is to give a speech on the future of high-performance computing and artificial intelligence at the trade show’s opening on June 3, TAITRA said Advanced Micro Devices Inc (AMD) chairperson and chief executive officer Lisa Su (蘇姿丰) is to deliver the opening keynote speech at Computex Taipei this year, the event’s organizer said in a statement yesterday. Su is to give a speech on the future of high-performance computing (HPC) in the artificial intelligence (AI) era to open Computex, one of the world’s largest computer and technology trade events, at 9:30am on June 3, the Taiwan External Trade Development Council (TAITRA) said. Su is to explore how AMD and the company’s strategic technology partners are pushing the limits of AI and HPC, from data centers to