Aurelia Butler

Biden is calling on lawmakers to raise the federal government’s self-imposed borrowing limit without conditions. Republican House Speaker Kevin McCarthy has said his chamber will not approve any deal that doesn’t cut spending to address a growing budget deficit.PRESIDENT JOE BIDEN”I had a productive meeting with congressional leadership about the path forward, to make sure America does not default on its debt.””We agreed to continue our discussions and we’re going to meet again on Friday. In the meantime, our staffs are going to meet today and daily between now and then and everyone in the meeting understood the risk of default.””I made clear during our meeting that default is not an option.” “I told congressional leaders I’m prepared to begin a separate discussion about my budget.”Biden also did not rule out eventually invoking the 14th amendment to the U.S. Constitution, an untested approach that would seek to declare the debt limit unconstitutional. Doing so would require litigation, he said, but it’s an option he may study in the future.”I have been considering the 14th amendment,” Biden said. “It would have to be litigated.””Over these last few days and weeks, there’s a lot of politics, posturing and gamesmanship and it’s going to continue for a while.”On canceling trip to the G7: “I’m still committed but obviously this is the single most important thing that’s on the agenda.” “If somehow we got down to the wire and we still hadn’t resolved this,” and the due date was during the trip “I would not go. I would stay until this gets finished.” KEVIN MCCARTHY, SPEAKER, HOUSE OF REPRESENTATIVES”Everybody in this meeting, reiterated the positions they were at. I didn’t see any new movement. President said the staff should get back together. But I was very clear with the president, we have now just two weeks to go.””Unfortunately, the president has waited 97 days without ever meeting. Every day I asked ‘could we meet?’ And he said no.””I asked him numerous times ‘are there some places we could find savings’? He wouldn’t give me any. So I’m hopeful that we’ll be able to find them.” “I would hope that he would be willing to negotiate for the next two weeks so we could actually solve this problem.”CHUCK SCHUMER, SENATE MAJORITY LEADERSchumer said legislative and White House staff will begin meeting as soon as Tuesday night to seek common ground on a potential appropriations package, but he warned: “The disagreements are wide.””We explicitly asked speaker McCarthy would he take default off the table? He refused.” “Instead of him giving us a plan to remove default, he gave us a plan to take default hostage and that is a shame because that makes things more complicated.””The president asked the people from all four of the leaders to start sitting down as early as tonight, certainly tomorrow, to see whether we can come to an agreement on the budget and the appropriations process. There are probably some places we can agree and some places we can compromise, hopefully but that has to occur as part of the budget appropriations process.”MITCH McCONNELL, SENATE REPUBLICAN LEADER”We ought to have at least some restraint on our spending related to the debt ceiling, and this is not unusual. We’ve been here before. Debt ceilings have frequently carried other measures.””What we have here is we’re running out of time, and it’s time for the President to get serious and just sit down with the Speaker and get a solution.”PROSPERUS, A COALITION OF PROGRESSIVE GROUPS”We cannot allow extremists in the House to make devastating ransom demands in exchange for not cratering our economy – period.””The Republican House majority’s shameful default bill is completely unworkable. Their plan is full of wildly unpopular and damaging cuts to health care, food assistance, clean energy jobs, and more. This bill would be devastating for workers and the economy while doing nothing to make corporations and the wealthy pay their fair share.”NEIL BRADLEY, CHIEF POLICY OFFICER, U.S. CHAMBER OF COMMERCE”While we are disappointed that there was no new movement today, we are pleased that the president and Congressional leadership will meet again this week, but we cannot stress enough that time is short, with each passing day increasing the risk for a misstep resulting in a default. It is clear that a clean debt limit cannot become law, so we encourage both parties to focus on areas where a bipartisan agreement is possible, including reforming the permitting process and agreeing on limits on future federal spending.” More

(Reuters) – A look at the day ahead in Asian markets from Jamie McGeever.A heavy dose of Japanese corporate earnings and a smattering of South Korean economic data give Asian markets a local steer on Wednesday against a backdrop of growing unease surrounding the U.S. debt ceiling crisis.Full-year Japanese earnings on tap Wednesday include Softbank (OTC:SFTBY), Toyota and Panasonic (OTC:PCRFY). They follow bumper numbers on Tuesday from some of the country’s biggest trading houses, some of which billionaire investor Warren Buffett has gravitated to recently.Japan’s Nikkei 225 index has been on a roll lately, last week hitting a 16-month high. It rose 1% on Tuesday and only four of the last 20 trading sessions have been down days. (Graphic: Japanese yen and stocks – https://fingfx.thomsonreuters.com/gfx/mkt/akveqywjyvr/JapanYenStocks.jpg) South Korean unemployment figures for April and current account data for March are the main economic numbers out on Wednesday, while Japan’s FX reserves for April will be released too.But global markets are getting nervy, inching closer to the X-Date when the U.S. government runs out of cash as stalemate between Republicans and Democrats in Washington deepens the $31.4 trillion debt ceiling crisis.Treasury Secretary Janet Yellen has repeatedly warned that the X-Date could be June 1, meaning there is barely three weeks between now and a potential U.S. default. Investors are beginning to wake up to the possibility. One-month U.S. T-bills are yielding 5.50%, the highest in decades and reflecting a premium of around 25 basis points over three-month bills and the upper limit of the fed funds target range. (Graphic: US 1-month/3-month bill spread – https://fingfx.thomsonreuters.com/gfx/mkt/zgpoblxyyvd/BILLSPREAD.png) Famed bond investor Bill Gross said 1-month bills are a screaming ‘buy’ at current levels because history shows a deal will be done, even if it is at the last minute. But what if it is different this time? Broader markets are feeling the heat. Wall Street and world stocks closed lower on Tuesday, Asian stocks ex-Japan had their biggest fall in two weeks, while gold and the Japanese yen rose. Here are three key developments that could provide more direction to markets on Wednesday:- South Korea unemployment (April)- South Korea current account (March)- Japan FX reserves (April) (By Jamie McGeever) More

A leading Chinese chipmaker is going ahead with a listing in Shanghai that will fund major expansion, after receiving confirmation from US chip toolmakers that they can supply its new production lines.After months of uncertainty, ChangXin Memory Technologies has been told the chipmaking equipment it needs will not be subject to US export controls, according to three people with direct knowledge of the matter.CXMT was founded seven years ago and is one of China’s biggest DRam memory-chip makers. It is also the only one capable of producing them at a miniaturisation level below 20 billionths of a metre. CXMT plans to use American equipment that can make less sophisticated chips for phones, servers and electric vehicles, bypassing the tightened requirements for exports of advanced chip tools.The company was one of several Chinese chipmakers forced to put expansion plans for fabrication plants on hold after the US introduced its sweeping export controls on October 7 last year. Another larger Chinese memory-chip maker, Yangtze Memory Technologies, has since found workarounds to resume capital spending. Now CXMT, based in the eastern province of Anhui, is stretching its goals for growth in 2023.“CXMT has set a very ambitious expansion target this year, even despite the memory chip downturn,” said one person with knowledge of the situation, adding that its annual capital expenditure would increase by about $4bn in 2023 as it boosted purchases of chipmaking equipment.“CXMT plans to turn to more Chinese equipment suppliers for the expansion, so the capital expenditure can be raised by $5bn or even more. Testing the relatively immature domestic equipment requires additional cash,” said another person familiar with the situation.To fund this, it plans an initial public offering on Shanghai’s tech-heavy Star board and is in discussions with at least two possible underwriters for the listing, including Chinese bank CICC, according to three people with knowledge of the matter. The listing plans are still in their early stages, so the size and timeline of the IPO have not been determined, one banker said.CXMT and CICC did not respond to requests for comments.CXMT’s current valuation is well above Rmb100bn ($14.5bn), based on its technology assets and chip production capacity, said one banker close to the company. That would be well in excess of a valuation of about Rmb72bn after a fundraising round in December, according to another person close to CXMT. Current investors in its holding-company parent Innotron Memory include Alibaba, a fund controlled by smartphone maker Xiaomi and the “big fund” for chips — the National Integrated Circuit Industry Investment Fund.The sources for its new American equipment have not been revealed, but Lam Research and KLA, two of the biggest US tool manufacturers for chipmakers, recently said the US government had issued a “clarification” that enabled them to increase sales in China this year. They said the clarification meant they could sell equipment which they previously were concerned might be barred under the October 7 export controls.Doug Bettinger, Lam’s chief financial officer, said on a recent earnings call that the increase would be worth “a few hundred million dollars”.

On KLA’s latest earnings call, Bren Higgins, chief financial officer, said the clarification would create “some incremental opportunities to support some of the older-generation memory devices in China”. He said the additional sales would be more than $200mn.Neither company provided any detail about which Chinese company would account for the additional sales. But one person familiar with the situation said the “clarification” would enable them to sell tools to CXMT.Another person said the commerce department “clarification” did not change the parameters of the October 7 controls, but outlined the correct method that companies should use to calculate the nanometre level of their customers’ chips.China feels less vulnerable about its access to memory chips, which are commoditised products dominated by non-US vendors. In April, regulators initiated a cyber security review of US memory-chip maker Micron’s technology, a move widely seen as Beijing’s first retaliatory action against Washington’s measures to prevent China from developing leading-edge chips.Industry experts said the investigation would prompt Micron’s Chinese customers to find alternative suppliers, but CXMT’s products were not ready replacements.“CXMT is about eight years behind Micron,” said a semiconductor consultant in China who declined to be named. “It is four generations behind Micron and has no clear path to catching up.” More

SINGAPORE (Reuters) -Singapore’s second-biggest lender Oversea-Chinese Banking Corp (OCBC) reported on Wednesday a better-than-expected 39% jump in first-quarter profit from a year earlier on the back of strong net interest income growth.OCBC, which is also Southeast Asia’s second-biggest bank by assets, said January-March net profit rose to a record S$1.88 billion ($1.42 billion) from S$1.36 billion a year earlier. That beat the mean estimate of S$1.74 billion from five analysts polled by Refinitiv. Singapore’s banks have been benefiting from strong inflows from wealthy customers amid global economic uncertainty because of the city-state’s status as financial safe haven.”Our loan portfolio was resilient and our wealth management business continued to attract net new money inflows,” OCBC Group Chief Executive Officer Helen Wong said in a statement.The bank reported a total net interest margin, a key gauge of profitability, of 2.30% for the first quarter, up from 1.55% in the same period a year earlier. OCBC expected full-year net interest margin in the region of 2.2%. The lender said it was starting to see growth in cross-border flows after China’s reopening, but it was also closely monitoring volatility in developed markets and geopolitical tensions.”Looking ahead, we are watchful of tighter financial conditions which may slow global economic growth and elevate overall risks,” Wong said.OCBC, which counts Singapore, greater China and Malaysia among its key markets, said net interest income rose 56% to S$2.34 billion in the first quarter from a year earlier.Return on equity rose to 14.7% in the first quarter from 10.6% in the same period of 2022. The first quarter was also strong for Singapore’s other major banks, with larger peer DBS Group (OTC:DBSDY) reporting last week a 43% jump in first quarter net profit that was also a record. Smaller United Overseas Bank (OTC:UOVEY) posted last month a 74% surge in core net profit.($1 = 1.3245 Singapore dollars) More

WASHINGTON (Reuters) -Wall Street executives who have advised the U.S. Treasury’s debt operations for the past 25 years warned on Tuesday they are “deeply concerned” about the debt limit impasse that has markets worried about a U.S. default on payment obligations.The 18 current and former chairs and vice chairs of the Treasury Borrowing Advisory Committee (TBAC) since 1998 said in a letter to Treasury Secretary Janet Yellen, “Any delay in making an interest or principal payment by Treasury would be an event of seismic proportions, not only for financial markets but also the real economy.”The advisers said the standoff between Republicans and Democrats in Congress and the White House has already raised taxpayer borrowing costs through weak Treasury auctions and high yields for short-dated Treasury Bills, while ratings agencies are already publishing analyses of potential U.S. ratings downgrades.”There will be a direct impact on any issuer whose credit relies on backing from the U.S. government,” such as mortgage entities Fannie Mae and Freddie Mac (OTC:FMCC), municipal issuers or Amtrak and the Tennessee Valley Authority. “A U.S. government downgrade or default would surge broadly throughout the real economy.”They said the Treasury market’s role as the backbone of the entire financial system would be called into question, leaving the debt market without a benchmark pricing firm and causing investors to pull back from fixed-income and equity markets.”The validity of Treasuries as eligible collateral for margin would be called into question, with devastating consequences for interest rate derivative, commodity, and mortgage markets,” wrote the chairs, led by current TBAC chair Beth Hammack of Goldman Sachs (NYSE:GS) and vice chair Deirdre Dunn of Citigroup (NYSE:C).Their letter was distributed after President Joe Biden met with Republican House of Representatives Speaker Kevin McCarthy at the White House with no signs of softening their positions, though they agreed to continue talks.The advisers said that following the banking turmoil that started in March, the debate over raising the debt limit is “reckless and irresponsible.”A protracted negotiation would have short-term costs, but a default is an “unthinkable” event, the executives said. “The magnitude of adverse consequences from a prolonged negotiation, or a default, is unquantifiable, with both the American taxpayer and the U.S. economy bearing the burden,” they wrote.( More