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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
‘BIG LOSS’: This year might see the last generation of Huawei’s Kirin chips, as their production would stop next month because they are made using US technology Chinese tech giant Huawei Technologies Co (華為) is running out of processor chips to make smartphones due to US sanctions and would be forced to stop production of its own most advanced chips, a company executive has said, in a sign of growing damage to Huawei’s business from US pressure. Huawei, one of the biggest producers of smartphones and network equipment, is at the center of US-Chinese tension over technology and security. Washington last year cut off Huawei’s access to US components and technology, and those penalties were tightened in May, when the White House barred vendors worldwide from using US
CORPORATE SCANDAL: Cathay Life has invested NT$13.3 billion in Bank Mayapada since 2015, but the latest loss of NT$8.8 billion has completely written off its investment Cathay Life Insurance Co (國泰人壽) yesterday said it would recognize an investment loss of NT$8.8 billion (US$298.1 million) in Indonesia’s Bank Mayapada Internasional Tbk PT due to concerns about the lender’s operations amid a corporate scandal. The company said it would revise its earnings result for June, from a net profit of NT$6.52 billion to a net loss of NT$520 million, its first monthly loss over the past 17 months. After booking an investment loss of NT$5.2 billion in Bank Mayapada earlier this year, Cathay Life has so far recognized total investment losses of NT$14 billion in the lender, executive vice president
Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) yesterday reported that revenue last month expanded 25 percent annually, but fell 12.8 percent month-on-month to NT$105.96 billion (US$3.59 billion). In the first seven months of this year, the chipmaker’s revenue surged 33.6 percent to NT$727.26 billion, compared with NT$544.46 billion a year earlier. TSMC has said it aims to grow its revenue by more than 20 percent this year. The company has since May 15 stopped taking new orders from Huawei Technologies Co (華為), its second-biggest customer after Apple Inc, due to the US’ restrictions on exports containing US technologies. TSMC has no plans to
The US stock market has been on a tear, yet the country’s economy is in the dumps. So why do so many people believe — undoubtedly incorrectly — that the stock market has decoupled from reality? The economy many people experience, while bleak, is local, personal and, for the most part, either not publicly traded or plays only a small part in the stock market’s moves. To explain why these personal experiences have so little effect on equity markets, we must look more closely at the market role of the weakest industry sectors. The surprising conclusion: The most visible and economically vulnerable