FILE PHOTO: A worker is seen building an aircraft engine at Honeywell Aerospace in Phoenix, Arizona, U.S. on September 6, 2016. REUTERS/Alwyn Scott
March 19, 2019
WASHINGTON, (Reuters) – New orders for U.S.-made goods rose less than expected in January, held back by decreases in orders for computers and electronic products, in another indication of slowing manufacturing activity.
Factory goods orders edged up 0.1 percent, the Commerce Department said on Tuesday, as demand for primary metals and fabricated metal products fell. That followed an unrevised 0.1 percent gain in December.
Economists polled by Reuters had forecast factory orders rising 0.3 percent in January. Factory orders increased 3.8 percent compared to January 2018.
The release of the report was delayed by a 35-day partial shutdown of the federal government that ended on Jan. 25.
Reports last Friday showed manufacturing output fell for a second straight month in February and factory activity in New York state hit nearly a two-year low this month.
Manufacturing, which accounts for about 12 percent of the economy, is losing momentum as the stimulus from last year’s $1.5 trillion tax cut package fades. Activity is also being crimped by a trade war between the United States and China as well as by last year’s surge in the dollar and softening global economic growth, which are hurting exports.
In January, orders for machinery rose 1.5 percent after falling 0.4 percent in December. Orders for mining, oil field and gas field machinery fell 2.7 percent after tumbling 8.2 percent in December.
Orders for electrical equipment, appliances and components rebounded 1.4 percent after dropping 0.3 percent in December. Computers and electronic products orders fell 0.9 percent after decreasing 0.4 percent in December.
Orders for primary metals declined 2.0 percent and fabricated metal products orders fell 0.6 percent. Transportation equipment orders increased 1.2 percent in January, slowing from the prior month’s 3.2 percent rise.
Orders for civilian aircraft and parts increased 15.6 percent in January. Motor vehicles and parts orders gained 0.4 percent.
The Commerce Department also said January orders for non-defense capital goods excluding aircraft, which are seen as a measure of business spending plans on equipment, rose 0.8 percent as reported last week. Orders for these so-called core capital goods dropped 0.8 percent in December.
Shipments of core capital goods, which are used to calculate business equipment spending in the gross domestic product report, also increased 0.8 percent in January as previously reported. Core capital goods shipments edged up 0.1 percent in December.
(Reporting By Lucia Mutikani; Editing by Andrea Ricci)
FILE PHOTO: Turkish President Tayyip Erdogan addresses his supporters during a rally for the upcoming local elections, in Istanbul, Turkey March 12, 2019. REUTERS/Murad Sezer
March 19, 2019
ANKARA (Reuters) – President Tayyip Erdogan on Tuesday called on New Zealand to restore the death penalty for the gunman who killed 50 people at two Christchurch mosques, warning that Turkey would make the attacker pay for his act if New Zealand did not.
Australian Brenton Tarrant, 28, a suspected white supremacist, was charged with murder on Saturday after a lone gunman opened fire at the two mosques during Muslim Friday prayers.
“You heinously killed 50 of our siblings. You will pay for this. If New Zealand doesn’t make you, we know how to make you pay one way or another,” Erdogan told an election rally of thousands in northern Turkey. He did not elaborate.
He said Turkey was wrong to have abolished the death penalty 15 years ago, and added that New Zealand should make legal arrangements so that the Christchurch gunman could face capital punishment.
“If the New Zealand parliament doesn’t make this decision I will continue to argue this with them constantly. The necessary action needs to be taken,” he said.
Erdogan is seeking to drum up support for his Islamist-rooted AK Party in March 31 local elections. At weekend election rallies he showed video footage of the shootings which the gunman had broadcast on Facebook, as well as extracts from a “manifesto” posted by the attacker and later taken down.
That earned a rebuke from New Zealand Foreign Minister Winston Peters, who said he told Turkey’s foreign minister and vice president that showing the video could endanger New Zealanders abroad.
Despite Peters’ intervention, an extract from the manifesto was flashed up on a screen at Erdogan’s rally again on Tuesday, as well as brief footage of the gunman entering one of the mosques and shooting as he approached the door.
Erdogan has said the gunman issued threats against Turkey and the president himself, and wanted to drive Turks from Turkey’s northwestern, European region. Majority Muslim Turkey’s largest city, Istanbul, is split between an Asian part east of the Bosphorus, and a European half to the west.
Erdogan’s AK Party, which has dominated Turkish politics for more than 16 years, is battling for votes as the economy tips into recession after years of strong growth. Erdogan has cast the local elections as a “matter of survival” in the face of threats including Kurdish militants, Islamophobia and incidents such as the New Zealand shootings.
A senior Turkish security source said Tarrant entered Turkey twice in 2016 – for a week in March and for more than a month in September. Turkish authorities have begun investigating everything from hotel records to camera footage to try to ascertain the reason for his visits, the source said.
(Reporting by Ece Toksabay and Tuvan Gumrukcu; Editing by Dominic Evans and Nick Tattersall)
FILE PHOTO: The Reserve Bank of India (RBI) Governor Urjit Patel pauses during a news conference after a monetary policy review in Mumbai, India, December 5, 2018. REUTERS/Francis Mascarenhas
March 19, 2019
By Suvashree Choudhury
MUMBAI (Reuters) – Economists raised concerns over a sharp slowdown in Indian economy and pitched for a monetary policy boost to support growth at a meeting with the nation’s central bank chief on Tuesday, according to three participants.
Reserve Bank of India Governor Shaktikanta Das met more than a dozen economists to get their views on the economy ahead of the Monetary Policy Committee (MPC) decision due on April 4.
Most economists expect the six-member MPC to cut the repo rate by 25 basis points for the second time in a row next month to 6.00 percent, a level last seen in August 2017.
While the economists did not specify the extent of rate cut that the RBI could consider, one of them called for a 50-basis- point reduction, one of the participants said.
“Most of the participants said that monetary policy needs to do the heavy lifting to boost growth as there was no space for fiscal expansion,” another participant said.
The meeting under Das, who took charge in December, was in sharp contrast to the previous ones under former governor Urjit Patel, who was slightly reclusive and preferred to meet a small group of 5-6 economists. Das’ style has, however, been more open and communicative.
India’s economy expanded by 6.6 percent during October-December, its slowest pace in five quarters, on weak consumer demand and investments, dealing a major blow to Prime Minister Narendra Modi as he seeks a second term in office at a general election that kicks off next month.
Slowing growth has hit the federal government’s tax collections, constraining its ability to substantially boost spending ahead of elections.
However, neither Das nor any RBI official from the monetary policy department gave any indication of their thoughts or views, as is typical in such big-group meetings.
Economists and strategists spoke of several issues including drought, liquidity management, exchange rate, inflation, growth, bank credit growth, real interest rates and monetary policy transmission.
“The meeting went on for two-and-a-half hours as there were many participants,” said another economist who attended the meeting.
“But they didn’t say a single word on these topics.”
The RBI did not respond to an email seeking comment on the meeting with economists.
Some economists pointed out that food inflation could begin inching up after September if monsoon rains were not sufficient, but was unlikely to push retail inflation past the RBI’s 4 percent target.
Consumer inflation was at 2.57 percent on-year in February as food prices continued to fall for a fifth straight month.
The economists also raised concerns over a slowdown in global growth that has hurt India’s exports. India’s outbound shipments grew 2.4 percent annually in February, slower than 3.7 percent in January.
“Overall, the view was that the downside risks to growth have increased since the last policy while inflation risks have remained muted,” said a third participant.
“Not many of us clearly specified how much rate cut we wanted, but we presented the facts to make it clear to RBI that there was a need for a big boost to the economy.”
(Reporting by Suvashree Choudhury; Editing by Shreejay Sinha)
FILE PHOTO: Pumpjacks are seen against the setting sun at the Daqing oil field in Heilongjiang province, China December 7, 2018. REUTERS/Stringe
March 19, 2019
By Dmitry Zhdannikov
LONDON (Reuters) – Oil prices rose to new 2019 highs on Tuesday, supported by supply cuts from OPEC and falling output from Iran and Venezuela due to U.S. sanctions.
Brent crude oil futures were up 55 cents at $68.09 per barrel at 1145 GMT, having earlier risen to a new 2019 high of $68.16 a barrel, their highest since November 2018.
U.S. West Texas Intermediate (WTI) futures were at $59.47 per barrel, up 38 cents from their last settlement. They have also risen on Tuesday to their highest since November 2019 of $59.57 a barrel.
The Organization of the Petroleum Exporting Countries on Monday scrapped its planned meeting in April, effectively extending supply cuts that have been in place since January until its next regular meeting in June.
OPEC and a group of non-affiliated producers including Russia, known as OPEC+, cut supply in 2019 to halt a sharp price drop which began in the second-half of 2018 due to booming U.S. production and fears of a global economic slowdown.
Saudi Arabia has signaled that OPEC and its allies may continue to restrain oil output until the end of 2019.
“The OPEC+ deal has brought stability to crude prices and signs of an extension have taken crude higher,” said Alfonso Esparza, senior market analyst at futures brokerage OANDA.
Prices have been further supported by U.S. sanctions against oil exports from Iran and Venezuela, traders said.
Venezuela has suspended its oil exports to India, one of its key export destinations, the Azeri energy ministry said on Tuesday, citing Venezuela’s oil minister.
Because of the tighter supply outlook for the coming months, the Brent forward curve has gone into backwardation since the start of the year, meaning that prices for immediate delivery are more expensive than those for dispatch in the future, with May Brent prices around $1.20 per barrel more expensive than December delivery Brent.
(GRAPHIC: Brent crude oil forward curves – https://tmsnrt.rs/2FlM7YZ)
Outside OPEC, analysts are watching U.S. crude oil production, which has risen by more than 2 million barrels per day (bpd) since early 2018, to around 12 million bpd, making the United States the world’s biggest producer ahead of Russia and Saudi Arabia.
Weekly output and storage data will be published by the Energy Information Administration (EIA) on Wednesday.
Bank of America Merrill Lynch said in a note that economic “risks are skewed to the downside” and that “we forecast global demand growth of 1.2 million bpd year-on-year in 2019 and 1.15 million bpd during 2020”.
The bank said it expected “Brent and WTI to average $70 per barrel and $59 per barrel respectively in 2019, and $65 per barrel and $60 per barrel in 2020.”
(Reporting by Henning Gloystein; Editing Joseph Radford and Louise Heavens)
Contrary to the views of most economists, the Trump administration expects the U.S. economy to keep booming over the next decade on the strength of further tax cuts, reduced regulation, and improvements to the nation's infrastructure.
The annual report from President Donald Trump's Council of Economic Advisers forecasts that the economy will expand a brisk 3.2 percent this year and a still-healthy 2.8 percent a decade from now. That is much faster than the Federal Reserve's long-run forecast of 1.9 percent annual economic growth.
The administration's forecast hinges on an expectation that it will manage to implement further tax cuts, incentives for infrastructure improvements, new labor policies and scaled-back regulations — programs that are unlikely to gain favor with the Democratic-led House that would need to approve most of them.
Kevin Hassett, chairman of the White House council, insisted that the president's economic agenda would provide enough fuel to drive robust growth at a time when the majority of economists foresee a slowdown due in part to the aging U.S. population.
He said the biggest risk to growth would be if financial markets anticipate that Trump's existing policies would be reversed. Without getting into specifics, Hassett said the risk would be if markets expect that the winner of the 2020 presidential election would shift away from policies such as the tax overhaul that Trump signed into law in 2017.
"Uncertainty over the policies themselves could slow their positive impact," Hassett said.
The tax cuts added roughly $1.5 trillion to the federal debt over the next decade, not accounting for economic growth. The report suggests that the lower tax rates have increased business investment in ways that will make the economy more productive, while also creating a surge in people coming off the sidelines to search for work.
The administration's optimism comes amid signs of slowing global economic growth, as well as a recent slowdown in manufacturing production and weakness in retail sales in January and December.
Source: NewsMax Politics
FILE PHOTO: A general view of the Corniche Towers is seen in Doha, Qatar February 5, 2019. REUTERS/Stringer/File Photo
March 19, 2019
DOHA (Reuters) – Qatar will launch an energy-focused Islamic lender later this year with a targeted capital of $10 billion to finance both domestic and global projects, an executive said on Tuesday.
Tiny but wealthy Qatar is one of the most influential players in the liquefied natural gas market with annual production of about 77 million tonnes, and it plans to increase this over 40 percent to 110 million by 2024.
Speaking at an Islamic Finance conference in Doha, executives launching Energy Bank said it would be the largest Islamic energy-focused lender in the world, and would target private sector and government energy projects, both at home and abroad.
Mohammed al-Marri, chairman of Energy Bank’s media committee, said operations would begin in the fourth quarter of 2019.
“With paid-up capital of $2.5 billion, the establishment of Energy Bank in Qatar comes in light of the incredible growth projected for Qatar’s energy sector,” Marri told a news conference.
Marri declined to specify how or when the bank planned to raise its capital to the $10 billion target. He said it would focus on financing oil and gas, petrochemicals, and renewable energy projects, but declined to specify how much would be allocated for lending outside the country.
(Reporting by Eric Knecht; Writing by Saeed Azhar; Editing by Louise Heavens and Emelia Sithole-Matarise)
FILE PHOTO: Mark Read, chief executive of WPP, leaves following the AGM in London, Britain, June 13, 2018. REUTERS/Toby Melville/File Photo
March 19, 2019
By Kate Holton and Pamela Barbaglia
LONDON (Reuters) – A series of buyout funds including U.S. firms Advent and Blackstone are in talks with advertising group WPP to explore bids for a majority stake in its data analytics unit Kantar, four sources familiar with the matter told Reuters.
The sale, led by Goldman Sachs, may value Kantar at up to 3.5 billion pounds ($4.7 billion), but some private equity investors are fretting over the decline in profits and revenues that the business has suffered in recent years.
Hellman & Friedman and CVC Capital Partners are also working on the deal, the sources said, while industry players have so far shied away from the process.
Bain Capital has also expressed interest in making a bid for Kantar, another source said, adding Bain might later decide to team up with one of the other buyout funds in the race.
WPP sent out confidential information packs this week, with non-binding offers expected in April, one of the sources said.
WPP, Blackstone, Advent and CVC declined to comment, while representatives at Bain Capital and Hellman & Friedman were not immediately available.
WPP, the owner of agencies including JWT, Finsbury and Ogilvy, is in the middle of an overhaul launched by its new boss Mark Read following several profit warnings in 2017 and 2018.
The London-based group wants to sell a majority stake in Kantar to reduce debt as it braces for a tough year with revenue expected to drop by between 1.5 and 2 percent in 2019.
Kantar, a leading player in market research, provides brand and marketing communications research for some of the world’s largest advertisers.
Yet it has suffered a decline in revenue in recent years, with underlying sales down 2 percent last year to 2.6 billion pounds and operating profit down 14 percent to 301 million.
“The deal poses some challenges for private equity funds as it’s been on a downward trajectory for a while,” one source said.
Private equity investors are examining the turnaround potential of a possible deal, the sources said, and would value the business at up to 10 times its earnings before interest, tax, depreciation and amortization (EBITDA), hoping to reignite growth within the first three years of their investment.
Liberum analyst Ian Whittaker said in February that Kantar could fetch more than 3 billion pounds, with WPP raising close to 2.1-2.2 billion pounds from a 60 percent stake sale.
WPP boss Read aims to complete the sale by the end of the summer as he needs cash to steer the world’s biggest advertising group back to growth.
Read took the helm of WPP last year, pledging to spend 300 million pounds to restructure the group and bring it back in line with peers by the end of 2021.
Founder Martin Sorrell, 74, remains a major WPP shareholder but is now running a new company which last year beat WPP in the race to buy Dutch digital agency MediaMonks.
(Editing by David Holmes)
FILE PHOTO: The HSBC bank is seen in the financial district of Canary Wharf in London, Britain, July 13, 2017. REUTERS/Kevin Coombs
March 19, 2019
By Sinead Cruise and Lawrence White
LONDON (Reuters) – HSBC is stepping up a root-and-branch overhaul of its global banking and markets division, naming 83 new managing directors in a 1,300-strong promotions spree aimed at revitalizing its investment banking franchise.
After another year of underwhelming performance in 2018, HSBC’s management team – bolstered by new finance chief and ex-investment banker Ewen Stevenson – are plotting a push to recover ground lost to rivals, with a revamp of its trading floor seen as top priority, sources close to HSBC said.
Samir Assaf, chief executive of global banking and markets, distributed a memo last Monday pointing out the significant rise in the number of women promoted this year.
HSBC is trying to close a gender pay gap of 61 percent, the worst among major British firms and largely caused by a lack of women in senior, higher paid roles.
Around a third of the 83 new managing directors are female, the memo seen by Reuters showed, a 13 percentage point rise from the previous year, according to a source at the bank with knowledge of the matter.
A spokesman for HSBC declined to comment.
The wave of promotions comes just weeks after the bank axed dozens of sales and advisory jobs in London following an extended period of turmoil in its investment banking operations.
Last year saw an exodus of high-profile dealmakers in Europe, with sources saying there was frustration at a lack of a clear strategy.
36 of the promotions are in HSBC’s global banking business, which includes its mergers and acquisitions and equity advisory bankers.
The bank has also poached senior hires from rivals, including former JPMorgan banker Greg Guyett as head of global banking and former Goldman Sachs banker Peter Enns as the global head of its financial institutions group.
HSBC tumbled further in investment banking league tables in some key market segments in 2018, with its fourth quarter performance in equities particularly weak.
Revenues there fell 20 percent from a year earlier, the second worst performance among major investment banks after France’s BNP Paribas.
HSBC slipped to 20th among global equity deal bookrunners in 2018 from 16th the previous year, according to Refinitiv data. It also fell to 24th from 19th in the rankings for advising on completed mergers and acquisitions.
The bank fared better in its traditional stronghold of debt underwriting, placing 6th according to Refinitiv data, with revenues growing 14 percent in its transaction banking business.
Investors are pinning their hopes on Georges Elhedery to improve productivity and lift the mood in the bank’s global markets business, after he took over the division from caretaker boss Thierry Roland on Friday.
Elhedery, who is relocating to London from Dubai to take up the role, is filling a position vacated by veteran HSBC banker Thibaut de Roux in September last year.
25 of the new promotions are in global markets, and other high-ranking appointments are in progress.
Nathalie Safar, one of the investment bank’s most senior women, is leaving her position as global equities chief operating officer after eight years in the role, a second staff memo seen by Reuters showed.
She will take up a newly-created position of head of front to back resource and cost management, focusing on making savings that will fund investments in the bank’s growth areas.
A search for her successor is underway, the memo said.
(Editing by Kirsten Donovan)
FILE PHOTO: An exterior view of China Evergrande Centre in Hong Kong, China March 26, 2018. Picture taken March 26, 2018. REUTERS/Bobby Yip
March 19, 2019
BEIJING (Reuters) – Chinese property firm Evergrande Group will start producing its first electric vehicles in June as part of a goal to become the world’s largest new energy vehicle (NEV) company within the next three to five years, according to its chairman.
Hui Ka Yan made the comments at a conference in the eastern city of Tianjin over the weekend, according to a statement published on the company’s website on Tuesday.
“The new energy automobile industry has a huge market prospect. Evergrande has completed the entire industrial chain layout in the field of new energy vehicles,” Hui said.
He also said that Evergrande plans to start selling its first electric vehicle model globally “soon”, which will use electric car production technology from Swedish car makers Saab and Koenigsegg, and drive systems from Netherlands’ e-Traction, according to the statement.
Evergrande, China’s second-largest property developer by sales, has been aggressively expanding into the automotive space in search of new areas of growth as the Chinese property market slows.
Its subsidiary, Evergrande Health, invested in vehicle manufacturer National Electric Vehicle Sweden AB and Chinese auto battery maker Shanghai CENAT New Energy Co this year. It is also the majority investor in Swedish super car brand Koenigsegg.
Not all of its investments have gone smoothly, however.
Last year, Evergrande Health bought 45 percent of Chinese electric vehicle firm Faraday Future as part of a $2 billion plan but the deal eventually turned sour. The companies have since ended their legal fight.
Sales of NEV vehicles have remained a bright spot in China’s car market, jumping 61.7 percent in 2018 to 1.3 million vehicles even as the overall car market contracted for the first time since the 1990s. China’s biggest auto industry association predicts NEV sales to hit 1.6 million this year.
(Reporting by Yilei Sun and Brenda Goh; Editing by Muralikumar Anantharaman)
FILE PHOTO: The Swiss National Bank (SNB) is pictured next to the Swiss Federal Palace (Bundeshaus) in Bern, Switzerland December 7, 2018. Picture taken December 7, 2018. REUTERS/Denis Balibouse
March 19, 2019
ZURICH (Reuters) – The Swiss National Bank will leave its ultra-loose policy alone on Thursday, said all the economists polled by Reuters, and most don’t expect any change until at least 2021.
All 32 economists polled by Reuters expect SNB Chairman Thomas Jordan to maintain the bank’s negative interest rates and readiness to intervene in currency markets to restrain the safe-haven Swiss franc.
They expect the SNB to keep its target range for the London Interbank Offered Rate (LIBOR) locked at -1.25 to -0.25 percent, the same level since it ditched its minimum exchange rate of 1.20 Swiss francs to the euro four years ago.
None of the respondents expect any change until the end of this year, especially in view of the European Central Bank’s slowing of its own policy normalization. Most forecast it will come in 2021 at the earliest.
“We do not expect the SNB to change interest rates before the end of 2020. In fact, if we are correct in our assessment that the ECB will be forced to re-start QE next year, upward pressure on the franc – and SNB concerns about deflation – are likely to intensify into 2020,” said Jack Allen at Capital Economics.
“This means the SNB may have to delve into its toolbox to ease policy next year,” Allen said. He thinks the SNB might take rates even further into negative territory if necessary.
There was also no disagreement about the negative interest rate the SNB charges on sight deposits. All the economists expect -0.75 percent to be maintained this week.
All but one expected the bank to retain its description of the franc as “highly valued”. That one expected it will be described as “significantly overvalued”. The franc has gained 3 percent against the euro in the last 12 months to trade around 1.1360.
A strong franc weighs on Switzerland’s export-reliant economy and also adds deflationary pressure. The SNB is expected to cut its 2019 inflation forecast on Thursday from its current view of 1 percent.
The SNB will have to wait at least until the ECB starts its monetary policy tightening — now delayed to 2020 at the earliest — before it begins its own path to normalization, analysts said.
“Pressure on the SNB is mounting from two sides: on the one hand, the financial industry and pension funds are increasingly coming under pressure, which puts pressure on the SNB to end the negative interest rate phase as early as possible,” said Alessandro Bee at UBS.
“On the other hand, the weakness in European growth and the various political risks lead to a higher risk of a Swiss franc appreciation. The SNB is between a rock and a hard place.”
(Reporting by John Revill, polling by Manjul Paul and Richa Rebello, editing by Larry King)