Aurelia Butler

TOKYO (Reuters) -Japan spent nearly 30 trillion yen less in the last fiscal year than it had planned for a second year running, which analysts said raises questions about whether stimulus measures like those adopted during COVID-19 could be implemented more efficiently. The Ministry of Finance said on Tuesday there was an excess of some 22.4 trillion yen ($161.41 billion) in the budget for fiscal year 2021, which ended in March, mostly unspent pandemic support funds. A further 6.3 trillion yen ended up being “unneeded” according to figures calculated by the ministry as it settles the accounts for FY2021. The excess came on top of some 30 trillion yen that was carried over from the previous fiscal year, ended March 2021.The figures could offer lessons for the future around effective implementation of heavy fiscal stimulus, some analysts said. Unspent funds included money earmarked for public works, subsidies to restaurants and funding to revive business activity. “It’s not the size of stimulus that matters, but the question is how it should be implemented more efficiently,” said Takuya Hoshino, senior economist at Dai-ichi Life Research Institute.”The public-sector staff as well as those in the private sector tend to be overwhelmed by cumbersome process that involves subsidies and other administrative applications.”Japan makes it a rule that the budget for a given year should be used up by the end of the same fiscal year.Top lawmakers are still expected to call for large fiscal stimulus ahead of upper house elections on July 10, and as authorities focus on reviving an economy struggling to mount a strong recovery from the COVID hit and global supply chain woes.Overall net surplus amounted to 1.38 trillion yen, ministry officials said, half of which can be used for funding the cost of any extra budget for the current fiscal year.For fiscal year 2021, Japan had planned to spend over 142 trillion yen. The record 6.3 trillion yen deemed unnecessary included corporate funding and tourism discount campaign.Fiscal 2021 tax revenue was seen revised up to 67.0 trillion yen, up 3.2 trillion yen from earlier estimates and a record amount for a second straight year.”Global recovery and weak yen bolstered corporate profits, gradual improvement in wages and jobs underpinned income tax, and firm consumption and rising fuel imports pushed up sales tax receipt,” a ministry official said.Larger than expected tax revenue has allowed the government to reduce bond sales by 8 trillion yen out of planned issuance of 65.7 trillion yen for the fiscal 2021, they said.($1 = 136.3000 yen) More

HONG KONG (Reuters) – The former head of short video giant TikTok’s gaming unit, Jason Fung, is launching a blockchain gaming startup as one of two co-founders, he told Reuters in an interview, as the buzz around blockchain games grows while sector heavyweights remain wary.The 34-year-old left TikTok last month after two years with the firm, and his exit comes as TikTok and its Chinese owner ByteDance have been aggressively expanding into the $300 billion dollar global gaming market to take on rival Tencent Holdings (OTC:TCEHY), an effort that has yielded mixed results so far.It also reflects ballooning interest among entrepreneurs and investors in blockchain games – a new generation of online games built on blockchains which allow players to trade items in the form of non-fungible tokens (NFTs). Fung, whose new venture is called Meta0, said he left TikTok after seeing an opportunity to offer a solution to the current segregated nature of infrastructure options available to developers looking to build blockchain games. “Right now, if you look at any developer when they implement NFTs or blockchain in their games, they have to choose a single blockchain, be it Polygon or Solana or Binance Smart Chain. But imagine a more interoperable option,” he told Reuters in Hong Kong, referring to popular existing blockchains. “So we decided, let’s do it. Let’s co-found this company. Let’s give up my cushy corporate life at TikTok and take a giant risk,” said Fung, who was based in Shenzhen and had reported to TikTok’s chief operating officer Vanessa Pappas.Meta0’s founding team comprises six members in addition to the two co-founders, and the firm has closed a first round of funding, said Fung. He declined to disclose details of the other co-founder, the rest of the team or the investment. He said the company was looking to raise funds through issuing tokens, as well as from venture capitalists and strategic investors. BIG NAMES STEER CLEARAdvocates of blockchain games say they will disrupt the gaming industry as cryptocurrencies can make virtual items more transactable and even distribute games’ ownership to players. But blockchain games are sometimes also associated with scams, and the virtual economies of some games have collapsed soon after players buy in. Most established gaming companies like Tencent, Sony (NYSE:SONY) and Microsoft (NASDAQ:MSFT) have yet to place any big bets on blockchain games. Fung, as TikTok’s global head of strategy and operations for gaming, was tasked with expanding gaming content and testing new features such as hosting mini-games on the app.TikTok and ByteDance expanded aggressively into gaming during Fung’s tenure, with ByteDance’s acquisitions including a $4 billion purchase of gaming studio Moonton, and TikTok trying out mini-game features on its app.The efforts have seen both successes and setbacks. Last month, data tracking firm Sensor Tower said ByteDance’s portfolio of mobile games had generated more than $1 billion of revenue worldwide over the past 12 months. However, ByteDance also disbanded its Shanghai-based 101 Studio last month, laying off half of the 300-plus staff. A product of its 2019 acquisition of Mokun Technology, 101 Studio was the first development unit ByteDance has shut down as it struggled to perform.Fung, who led the e-sports units in Alibaba (NYSE:BABA) Group Holding and Electronic Arts (NASDAQ:EA) in Asia before joining TikTok, declined to comment when asked about who might replace him at TikTok.TikTok did not immediately respond to a request for comment. BLOCKCHAIN GAMES A HOT INVESTMENT TRENDDespite the wariness of some in the industry, blockchain games have become one of the hottest investment trends discussed by crypto tycoons from Silicon Valley to Dubai. Prior to the recent crypto market meltdown, the blockchain gaming industry had raised a record $1.2 billion in the first quarter, according to a report by investment banking firm Drake Star Partners in April. Last year, a total of $3.6 billion was raised for the sector.”We’ve built a protocol for game developers, and we take a flexible, blockchain-agnostic approach to their game development,” said Fung, discussing future prospects for blockchain gaming.”With a protocol that we’re developing, developers can easily build their game-leveraging strengths of different blockchains, and allow the user the flexibility of transferring their NFTs cross-chain.” More

The central bank governor John Mangudya said in a statement on Monday that the coins will be available for sale from July 25 in local currency, U.S. dollars and other foreign currencies at a price based on the prevailing international price of gold and the cost of production.The “Mosi-oa-tunya” coin, named after Victoria falls, can be converted into cash and be traded locally and internationally, the central bank said.The gold coin will contain one troy ounce of gold and will be sold by Fidelity Gold Refinery, Aurex and local banks, it added.Gold coins are used by investors internationally to hedge against inflation and wars.Last week, Zimbabwe more than doubled its policy rate to 200% from 80% and outlined plans to make the U.S. dollar legal tender for the next five years to boost confidence.Soaring inflation in the southern African country has been piling pressure on a population already struggling with shortages and stirring memories of economic chaos years ago under veteran leader Robert Mugabe’s near four-decade rule.Annual inflation, which hit almost 192% in June, cast a shadow over President Emmerson Mnangagwa’s bid to revitalise the economy.Zimbabwe abandoned its inflation-ravaged dollar in 2009, opting instead to use foreign currencies, mostly the U.S. dollar. The government reintroduced the local currency in 2019, but it has rapidly lost value again. More

Police have been urged by the UK government to take a zero-tolerance approach to fuel campaigners who brought motorways to a standstill on Monday.Following the demonstrations by Fuel Price Stand Against Tax, which resulted in 13 arrests, home secretary Priti Patel is prepared to use new legal powers to prevent further disruption over the summer. The move comes as ministers fear the movement could morph into a repeat of the “gilets jaunes” protests that caused havoc in France in recent years.The protests against the record high cost of fuel appeared to be largely co-ordinated through a group on Facebook, where there was some discussion about future protests in central London. But there were no signs of further disruption on the UK’s roads on Tuesday morning. The demonstrations coincided with wider disruption across the transport system, with delays at airports and more train strikes threatened by the railway unions. Roads affected on Monday included the M4, M5, A12 and A64, with vehicles crawling at just 30mph in two lanes.The cost of petrol has rocketed from 145p to 191p since the start of this year.Chancellor Rishi Sunak in March cut duty on fuel by 5p a litre, but that has had little effect. Although Sunak has not ruled out a further reduction, the government said any announcement must wait until the autumn Budget.Breakdown assistance group the RAC on Monday called on big retailers to cut the cost of petrol by 5p a litre after it hit a record of 191.53p a litre, while diesel remained on the brink of £2.Downing Street said prime minister Boris Johnson expected the police to act under the new Police, Crime, Sentencing and Courts Act to halt the protests.The new legislation, intended mainly to tackle climate protesters, has increased the maximum penalty for blocking a highway to six months’ imprisonment and an unlimited fine. “The government has given the police a lot of powers to deal with this sort of stuff and we are looking to them to use it,” a government official said.The disruption is the latest to hit the UK’s road network over the past year, after climate protesters blocked motorways.National Highways, the operator of England’s trunk roads, won an injunction banning further blockades in September after campaigners from the group Insulate Britain blocked the M25 five times in a week. More

After a strong performance through 2020 and 2021, Taiwan assets are being dumped as investors start to worry that rising interest rates around the world are going to hurt economic growth for the export-dependent island, a major producer of semiconductors.The benchmark index has dropped 21% this year, completely unwinding 2021 gains. The currency has lost 7% on the dollar.The ministry said in a statement that the global economic situation in the second half of the year does have “various variables” that need watching, but Taiwan industry’s fundamentals are good, as are exports.”The Ministry of Economic Affairs maintains a cautious but not pessimistic view of Taiwan’s economic development in the second half of the year, which is not affected by short-term fluctuations in the stock market,” it added.The ministry said both exports and export orders in May were positive and Taiwan’s chip industry is a world leader, which will help support growth.Recent fluctuations in Taiwan’s stock market “are mainly affected by uncertainty in the international environment”, it added. Taiwan releases preliminary second quarter economic growth data at the end of the month. More

LONDON (Reuters) – More G10 central banks raised interest rates in June than in any month for at least two decades, Reuters calculations showed, and with inflation at multi-decade highs, the pace of policy-tightening is unlikely to let up in the second half of 2022.Central banks overseeing seven of the 10 most heavily traded currencies delivered 350 basis points of rate hikes between them last month – nearly half the total 775 bps administered by policymakers across the group this year to date.While the U.S. Federal Reserve lifted rates 75 bps to a range of 1.5%-1.75%, its biggest single move since 1994, Switzerland stunned markets with a 50 bps hike in borrowing costs, matching moves by Australia, Sweden, Norway and Canada.These countries are still far behind the emerging market central banks which mostly initiated rate hike cycles last year. But they are moving fast. Already in July, the Reserve Bank of Australia has delivered a 50 bps rate increase. On July 21, the European Central Bank will deliver its first rate hike since 2011 and the Fed is widely expected to go with another 75 bps at its July 26-27 meeting.”The Fed seems on autopilot to get to 3.5% and the ECB similarly is on autopilot to get rates to positive levels,” said Alex Brazier deputy head of the BlackRock (NYSE:BLK) Investment Institute.But U.S. rates at 3.5% “will have the effect of seriously slowing the economy, so after that it will have to change course”, Brazier added. GRAPHIC: https://graphics.reuters.com/GLOBAL-MARKETS/byprjawakpe/chart.png The task of squaring that circle between avoiding a hard-landing on growth and reining in inflation – now in double-digits in many countries – is hardest for developing nations. Emerging economies for the most part were quick off the mark in their battle against inflation, raising rates well before developed peers began to do so. Many continue to lift borrowing costs but the situation poses risks. With inflation failing to peak as expected in the first six months of the year, “hiking fatigue” may set in, warned Luis Oganes, JPMorgan (NYSE:JPM)’s head of Global Macro Research.”Those central banks will face the question of what is the least they can hike in the second half to anchor inflation expectations without pushing their economies into recession,” Oganes said. GRAPHIC: https://graphics.reuters.com/GLOBAL-MARKETS/gdpzyglgrvw/chart.png In May, as it became clear that the Russia-Ukraine conflict – and the ensuing inflationary shocks – would last longer than anticipated, 12 central banks from a group of 18 big developing economies raised rates. Eight more followed in June. In total, emerging market central banks have raised interest rates by 4,415 bps year-to-date, compared to 2,745 bps for the whole of 2021, calculations show. “Ironically, even though emerging markets tightened much earlier and more forcefully, inflation may not fall as quickly as in developed markets if food inflation continues to rise,” said Manik Narain, head of emerging markets strategy at UBS.”In this respect the biggest growth/inflation tradeoff is likely being faced in emerging markets, not the U.S..” More

WASHINGTON (Reuters) – By some early estimates, the U.S. economy, as measured by gross domestic product, may have shrunk in the three months from April through June. Add that to the decline from January through March, and that would be a contraction for two quarters in a row.By an often-cited rule of thumb, that means the world’s largest economy is in recession. But deciding when a recession has begun or predicting when one might occur is not straightforward. The “two quarters” definition is not how economists think about business cycles, because GDP is a broad measure that can be influenced by factors like government spending or international trade. Instead they focus on factors like jobs, industrial production, and incomes. GRAPHIC: https://graphics.reuters.com/USA-ECONOMY/UNEMPLOYMENT/egvbkggxxpq/chart.png At issue now is personal consumption data for May, released last week, which showed spending and disposable income dropped on an inflation-adjusted basis. That sparked a host of gloomy forecasts for June, and increasing speculation that a downturn is coming soon, if it is not here already. The weeks ahead are likely to include pitched debate about the real health of the economy. Whether the U.S. is headed for a recession or already in one is a growing concern for corporate chief executives and their employees, the Federal Reserve, and the administration of President Joe Biden.DOESN’T FALLLING GDP = RECESSION? Not always. In 2001 gross domestic product, after revisions, fell in the first three months of the year, but then rebounded in the next three months to a level higher than it ended the year before. GDP declined again in the fall. Even though there were not two consecutive quarters of declining GDP, the situation was dubbed a recession at the time, because employment and industrial production were falling. The pandemic recession only lasted two months, from March to April 2020, even though the steep drop in economic activity over those weeks meant GDP shrank overall in both the first and second quarters of the year. In 2016 there was a noticeable drop in industrial activity that some dubbed a “mini-recession,” though GDP never declined. WHO DECIDES, AND HOW?In the United States the official call is made by a panel of economists convened by the National Bureau of Economic Research, and sometimes comes a year or more after the fact. The private non-profit research group defines https://www.nber.org/business-cycle-dating-procedure-frequently-asked-questions#:~:text=A%3A%20The%20NBER’s%20traditional%20definition,more%20than%20a%20few%20months recession as a “significant decline in economic activity that is spread across the economy and that lasts more than a few months.” The panel concentrates on things like jobs and industrial output that are measured monthly, not quarterly like GDP. It examines the depth of any changes, how long declines seem to be lasting, and how broadly any trouble is spread. There are tradeoffs. In the pandemic, for example, the depth of the job loss, in excess of 20 million positions, offset the fact that growth resumed quickly, leading the group to officially call the situation a recession in early June, before the end of the second quarter. While each of three criteria – depth, diffusion, and even duration — “needs to be met individually to some degree, extreme conditions revealed by one criterion may partially offset weaker indications from another,” the group says.SO ARE WE IN A RECESSION NOW?Almost certainly not. While the “two quarter rule” has caveats and exceptions, there has never been a recession declared without a loss of employment. Jobs are being added in the U.S. by hundreds of thousands monthly.The pace will likely slow, but there would need to be a sharp reversal for the current path of job growth to turn into one that looks like recession.Industrial production, another factor that figured prominently in declaring the 2001 recession, has also been rising steadily, at least through May. GRAPHIC: https://graphics.reuters.com/USA-ECONOMY/UNEMPLOYMENT/gdpzygglkvw/chart.png WHAT IS THE SAHM RULE? One criticism of the NBER’s role as a recession arbiter is that its members take their time in order to avoid reacting to changes in jobs, production or other data that prove temporary. A closer to real-time recession indicator, called the Sahm rule after former Fed economist Claudia Sahm, is based on the unemployment rate .It states that when the 3-month rolling average of the unemployment rate rises a half a percentage point from its low over the prior 12 months, the economy has entered a recession. The Sahm rule shows no sign of a U.S. downturn. Instead, the unemployment rate has been below 4% and falling or stable since January. WHY DOES THE R-WORD MATTER? Discussion of a recession, and predictions that the U.S. economy is headed into one, can have an impact on what happens next. CEOs, investors and everyday consumers make decisions on where and how to spend money based on how they think sales, profits and employment conditions will evolve. Economist Robert Shiller predicted in June that there was a “good chance” the U.S. would experience a recession as a result of a “self-fulfilling prophecy” as consumers and companies prepare for the worst. “The fear can lead to the actuality,” he told Bloomberg. WHAT IS A ‘SHALLOW RECESSION?’Recessions come in many shapes. They can be deep but brief, like the pandemic recession which sent the unemployment rate briefly to 14.7%. They can be deep and scarring, like the Great Recession or the Depression in the 1930s, taking years for the job market to regain lost ground. Economists and analysts have recently flagged the possibility that the next U.S. recession may be a mild one. Even the shortest and weakest recessions have trimmed payroll jobs by more than 1%, which would currently amount to more than a million and a half people. WHAT IS A GROWTH RECESSION? Another idea discussed by some economists and analysts is a “growth recession,” in which economic growth slows below the U.S. long-term growth trend of 1.5 to 2 percent annually, while unemployment increases but not by a lot. This is the scenario mapped out by some Fed policymakers as the best case outcome of recent interest rate increases. WHAT’S THE INVERTED YIELD CURVE LINK?When the market rate for short-term borrowing exceeds that for a longer-term loan, it is known as an inverted yield curve, and seen as a harbinger of a recession. Historically at least some part of the yield curve has inverted before every recent recession, and alarm bells started ringing when that happened on June 13.Research from the Federal Reserve argues that the most widely followed yield-curve measure, the gap between yields on the two-year and the 10-year Treasury notes, doesn’t actually predict much of anything; a better gauge is the gap between three-month and 18-month rates, which has not inverted. GRAPHIC: https://graphics.reuters.com/USA-ECONOMY/UNEMPLOYMENT/akvezllkjpr/chart.png WHAT IS THE BEAR MARKET LINK TO RECESSION? The recent steep stock sell-off has also set off alarms. Nine of 12 bear markets, or drops of more than 20%, that have occurred since 1948 have been accompanied by recessions, according to investment research firm CFRA. More

Investing.com — Freedom from British tyranny, maybe. But freedom from the fear of recession isn’t as easy to come by. U.S. stocks and bond yields are set to open lower, while the euro falls to its lowest in two decades against the dollar after the latest round of business surveys show growth stalling. U.S. factory goods orders are expected to have picked up in May, nonetheless. Tesla (NASDAQ:TSLA) is pausing its factories in Shanghai in Berlin for reasons that aren’t entirely clear but appear linked to planned capacity increases. And Citigroup forecasts that oil could fall to $65 a barrel by the end of the year in the worst-case scenario. Here’s what you need to know in financial markets on Tuesday, 5th July.1. Recession fears dominate as Euro hits 20-year low on PMIThe euro fell to a new 20-year low against the dollar as market participants pared their bets on rate hikes from the European Central Bank in response to signs of a looming recession.S&P Global’s composite purchasing managers index for the single currency bloc fell to a 16-month low, implying growth of around only 0.2% in the quarter. Weakness in new orders and confidence suggests worse to come in the current quarter.Major European stock markets fell over 1% and bond yields tumbled in response to the survey, while recession fears were also evident in commodity markets, where copper futures fell to their lowest in 16 months. However, analogous surveys from S&P Global showed a sharp rebound in China’s services sector after the relaxation of lockdown restrictions in Shanghai and elsewhere, while India’s services sector grew at its fastest pace in over a decade.  2. U.S. factory orders due; Chinese tariff cut eyedThe rebound in China is one possible reason why the U.S. may yet avoid a recession too, as the normalization of supply chains eases inflation pressures and reduces the pressure on the Federal Reserve to act.  That thesis will be put to the test later with new figures for factory orders and durable goods data for May. The Institute of Supply Management’s surveys have suggested that demand for U.S. factory goods is slackening a little, but the hard data will show whether that is actually happening.Orders growth is expected to have picked up a little to 0.5% from April’s 0.3%. In the meantime, sentiment is being supported a little by hopes that President Joe Biden will announce the lifting of import tariffs on some Chinese goods this week – something that ought to reduce inflation pressures – if only marginally.3. Stocks set to open lower; Tesla factory pause in focusU.S. stocks are set to open lower though, with recession fears still leading investors to take money off the table ahead of an earnings season that could bring another slew of downgraded forecasts, especially for those companies whose foreign earnings will be hit by the strong dollar.By 6 AM ET (1100 GMT), Dow Jones futures were down 170 points, or 0.6%, while S&P 500 futures were down 0.5% and Nasdaq 100 futures were down 0.7%The earnings slate is pretty bare but stocks likely to be in focus include Tesla, which is reportedly set to pause output at its plants in Shanghai and Berlin for a couple of weeks, with a view to raising output at the latter in particular. CEO Elon Musk recently dubbed the Berlin factory a “money furnace”, amid reports of problems ramping up output volumes both there and in Austin.4. U.S. airlines negotiate tricky holiday weekend; Europe’s struggleOther stocks likely to be in focus will be airlines, after a July 4th weekend that started on a bad note but improved as it went on. Flight cancellations ran into the thousands on Friday and Saturday, hindered by bad weather, but data from FlightAware suggest that that had dropped to only 235 on Monday.Airlines around the world continue to struggle with the resurgence of tourism this year, having lost key personnel both in cabin crew and on the ground during the pandemic. Scandinavian airline SAS filed for chapter 11 bankruptcy protection for the second time in two years on Monday, while the chief operating officer of EasyJet, Europe’s second-largest discount flyer, resigned after failing to get on top of the airline’s operational problems.Bottlenecks are also holding up the delivery of new planes. Bloomberg estimated that Airbus’s (OTC:EADSY) delivery numbers for June leave it on course to miss its full-year target.5. Oil weakens on Citi warning; Norwegian strike hits European gasCrude oil prices weakened in line with much of the rest of the commodities complex as the gloomy outlook for the global economy dominated. In addition to the European news, there was a reminder of ongoing problems in China, where the city of Xi’an announced seven days of mobility restrictions due to Covid-19.Citigroup analysts warned that crude prices may fall to as low as $65 a barrel by the end of the year as global growth slows.By 6:15 AM ET, Brent crude was down 1.2% at $112.16 a barrel, while U.S. futures were at $108.44, flat from Friday’s close.U.S. natural gas prices also eased 2.8%, despite a fresh tightening of the European market as Norwegian oil and gas workers forced more North Sea fields to shut down with their ongoing strike. More