Aurelia Butler

European stocks wavered in early dealings on Thursday as investors balanced monetary easing in China with prospects of rapid rate rises in the US and geopolitical tensions over Ukraine. The Stoxx Europe 600 index opened 0.3 per cent higher after early morning futures trading was buoyed by rallies in Asia in response to China lowering a key lending rate in a move analysts said would boost its flagging economy. The European share gauge then slipped 0.3 per cent, echoing an indecisive session on Wall Street on Wednesday where markets initially rose but ended lower, with the technology-heavy Nasdaq Composite closing in correction territory. In Asia, Hong Kong’s Hang Seng index rose more than 3 per cent in response to China cutting its one and five year loan prime rates, easing funding costs for mortgage borrowers and small businesses. In Tokyo, the Nikkei 225 share index closed 1.1 per cent higher. “China is becoming less of a macroeconomic risk,” said Samy Chaar, chief economist at Lombard Odier, after the nation’s GDP growth decelerated to its slowest pace in a year and half in the quarter to December. “But this is not the dominant story,” for European and US markets,” he said, with traders mostly focused on what the US Federal Reserve will signal at its meeting next week about rate increases and plans to shrink a balance sheet that has ballooned to $9tn after it bought vast quantities of US Treasuries from March 2020. A warning by US President Joe Biden that Russia may “move in” on Ukraine, as well as the start of corporate earnings season, was also muddling the market outlook, Chaar added. “Push all this together and its clearly difficult to find a direction.”Futures markets implied Wall Street equities would edge higher in early New York dealings, with contracts on the S&P 500 rising 0.2 per cent and those on the technology-heavy Nasdaq 100 gaining 0.3 per cent. In debt markets, Treasuries continued to fall in price as traders sold the fixed income paying securities. The yield on the 10-year Treasury, which moves inversely to its price and underpins global borrowing costs and equity valuations, added 0.01 percentage point to 1.84 per cent. The two-year yield, which tracks monetary policy expectations, rose by 0.02 percentage points to 1.04 per cent. Futures markets have priced in around four rate rises by the Fed this year, with its main funds rate exceeding 1 per cent by December, after the US central bank tethered borrowing costs close to zero since March 2020. US inflation hit an annual rate of 7 per cent last month, its fastest pace since 1982, while unemployment fell to almost pre-pandemic levels. The Bank of England is also widely expected to raise rates by a quarter point at its meeting in two weeks. On Wednesday, data showed UK inflation hit a 30-year high of 5.4 per cent in December because of a broad increase in the costs of goods and services. Sterling rose 0.2 per cent against the dollar, buying $1.363, and was steady against the euro, purchasing €1.199. The dollar index, which measures the UK currency against six others, was down by 0.1 per cent. Brent crude, the oil benchmark, fell 1 per cent to $87.51 a barrel but remained close to its highest level since 2014. More

WASHINGTON (Reuters) -President Joe Biden on Wednesday said it was too soon to make commitments on lifting U.S. tariffs on Chinese goods, but his chief trade negotiator Katherine Tai was working on the issue.”I’d like to be able to be in a position where I could say they’re meeting their commitments, or more of their commitments, and be able to lift some of them, but we’re not there yet,” Biden told a news conference at the White House.He was referring to China’s commitments under a Phase 1 trade deal signed by his predecessor Donald Trump.China has fallen far short of its pledge under the two-year Phase 1 trade agreement to buy $200 billion in additional U.S. goods and services during 2020 and 2021, and it remains unclear how the shortfall will be addressed.Chinese purchases reached only about 60% of the target through November 2021, according to data compiled by the Peterson Institute for International Economics. The U.S. Census Bureau is expected to release December data next week.Biden said he was aware that some business groups were clamoring for him to start unwinding U.S. tariffs of up to 25% imposed by Trump on hundreds of billions of dollars of Chinese imports, and that was why Tai was working on the issue.But he said it was too soon to move forward given China’s failure to boost its purchases.Shu Jueting, a spokesperson for China’s Ministry of Commerce, said on Thursday that removing U.S. tariffs on Chinese goods would help the global economic recovery especially at a time of high inflation. “China has always believed the cancellation of imposed tariffs would be beneficial to China, the United States and the world,” Shu told a news conference. China has said before it hopes the United States can create conditions to expand trade cooperation. More

“This will stabilise and ease gradually in the course of 2022,” she said. Asked on her policy to counter price pressures, Lagarde reiterated that the ECB did not need to act as boldly as the U.S. Federal Reserve because of a different economic situation. “The cycle of the economic recovery in the U.S. is ahead of that in Europe. We thus have every reason not to act as rapidly and as brutally that one can imagine the Fed would do,” she said, adding that inflation, too, was higher in the U.S. “But we have started to react and we obviously are standing ready, to react by monetary policy measures if the figures, the data, the facts demand it,” she said. In the interview, Lagarde also commented on recent trends in euro zone yields as Germany’s 10-year Bund, viewed as the primary benchmark, rose above 0% for the first time since 2019. “If the yields rise again, this means that the fundamentals of the economy are improving”, Lagarde said. More

A decade ago, the Federal Reserve, the European Central Bank and the Bank of England were all headed by men who had — at one time or another — studied or taught monetary economics at the Massachusetts Institute of Technology. By the time the pandemic was upon us, none of the world’s three most powerful central bankers even held a doctorate in the dismal science. Anyone after confirmation that policymaking circles are no longer quite so dominated by people with the same background should take a look at last week’s nominations for the open seats on the Fed’s board of governors. US president Joe Biden listed three picks that, if approved by lawmakers, would mark the first time women outnumber men on the policy-setting Federal Open Market Committee. Philip Jefferson, a professor at Davidson College who has focused his research on poverty, would be the only male to make the cut. Lisa Cook, an economics professor at Michigan State University who has published research on wealth, gender and race inequality, would become the first African-American woman governor. Duke professor Sarah Bloom Raskin is — like chair Jay Powell and governor Michelle Bowman — a lawyer by training, leaving the legal profession only slightly outnumbered by the economics PhDs should she be approved.Investors should not rip up their bets on the trajectory of US interest rates. Raskin, nominated for the vice-chair in supervision, would toughen rules and sharpen the Fed’s focus on greening the financial system. But any shift in monetary policy will be subtler.“It isn’t that common that people who are openly dovish get appointed to central banks. And usually when they are, they feel enormous institutional pressure to change,” says Adam Posen, president of the Peterson Institute think-tank and a former rate-setter in the UK. “It’s the Thomas à Becket phenomenon — when people move from state to church, or from academia to the central bank, they change their behaviour to better reflect the institution they now represent.”Powell and Lael Brainard, who could soon be confirmed as vice-chair for monetary policy, have already set out a clear path for 2022. “The March meeting is where I’d expect there to be a decision on whether or not to raise rates,” says Claudia Sahm, director of macroeconomic research at the Jain Family Institute and a former Fed economist. “The chances of having a whole new board around the table by then is basically zero.”The nominees could aid the central bank in traversing the most difficult year it has had in a long time. “The messaging is going to be very important, explaining to families who are seeing their incomes squeezed that wage growth isn’t necessarily a good thing due to possible inflation is hard to do. These different backgrounds will help do that,” Sahm says. “They’re gonna make mistakes and we’re not gonna like all the things they do, but the FOMC will have a lot of really thoughtful, really technically skilled people.”For an institution that has faced barbs from lawmakers on both sides of the aisle and, more recently, been engulfed in a scandal involving the trading activity of some of its most senior officials, the nominations offer a chance to show the Fed is capable of shifting with the times. And boy have they changed. The triumvirate of Ben Bernanke, Mario Draghi and Mervyn King was the culmination of an era that began in the 1990s, when handing power to unelected technocrats to control inflation as they saw fit seemed the most foolproof way to produce economic and financial stability. As it turned out, the three ended up spending most of their time battling crises. A near-myopic focus on consumer prices had enabled financial risk-taking, while the gap between the richest 1 per cent of the population and the rest yawned.Monetary policy cannot solve all of the economy’s problems, regardless of the composition of the FOMC. But a more diverse group could mitigate some of the damage caused by the hubris of earlier generations by having a better understanding of what matters to Main Street.“The Fed is an independent agency that makes decisions which disproportionately affect economically disadvantaged people. So it needs a boost in legitimacy that comes from having broader representation,” says Posen. “The Powell Fed made a lot of progress, encouraging public discussion and constructively looking at broader measures of labour market participation, but to really do it credibly, it helps if you don’t have a committee that’s all white males from relatively privileged backgrounds.”[email protected] More

Joe Biden backed the Federal Reserve’s shift towards tighter monetary policy to fight inflation, using his first formal press conference in months to defend his handling of the economy and reboot his presidency after a string of setbacks.Responding to reporters for nearly two hours in the Roosevelt Room of the White House, Biden tried to project confidence that he could still address the concerns of the American public in the face of aggressive Republican resistance and divisions within his own Democratic party. But he also acknowledged that his $1.75tn flagship “Build Back Better” legislation would probably have to be broken up into pieces in order to pass Congress, and noted the widespread concern among people about the enduring pandemic and the messy economic recovery.Biden repeatedly cited high prices as one of the country’s biggest problems, and pointed to Fed action as the primary solution, even though he noted the central bank’s independence. Under chair Jay Powell, the Fed has already moved to wind down its bond-buying more rapidly than planned and officials are predicting the start of interest rate increases later this year.A growing number of Fed officials and Wall Street economists have signalled recently that more than three interest rate increases may be appropriate in 2022 in order to temper the pace of US consumer price growth, with “lift-off” occurring in March.“The critical job of making sure that the elevated prices don’t become entrenched rests with the Federal Reserve,” Biden said. “Given the strength of our economy and the pace of recent price increases, it is appropriate . . . to recalibrate the support that is now necessary.”

Biden showed flashes of both defiance and empathy, but little contrition, as he tried to sell his accomplishments and battle declining public approval ratings on the eve of the first anniversary of his inauguration.“For all this progress, I know there’s a lot of frustration and fatigue in this country,” Biden acknowledged. For many, the enduring pandemic was “too much to bear”, the president said. But he added that the White House was doing its best to tackle the problem, rebutting accusations that his administration had underestimated the surge of the Omicron variant.“Should we have done more testing earlier? Yes. We’re doing more now,” he said. “We’re not going back to lockdowns, we’re not going back to closing schools.”In addition to nudging the Fed on the high prices, Biden also said the White House’s economic plans and a more aggressive approach to competition policy would help rein in the problem, with the consumer price index increasing at its highest annual rate since 1982.Biden said he was confident that he could get “big chunks” of his $1.75tn Build Back Better spending package through Congress. However, in a notable admission, he said that it would probably have to be broken up into individual components after facing opposition from pivotal centrist Democratic legislators Joe Manchin and Kyrsten Sinema.“It’s clear to me that we’re going to have to probably break it up,” Biden said.Biden also suggested that the administration would work to reduce crude oil prices, which hit a seven-year high this week, adding to concerns about further inflation in petrol prices.“It’s going to be hard. That’s the place where most middle-class people get hit the most. They pull up at the pump and all of sudden instead of paying $2.40 a gallon [of petrol], they’re paying $4 a gallon,” said Biden.The latest Gallup polling shows that 40 per cent of Americans approve of the job Biden is doing, with 56 per cent disapproving. That compares to a 38 per cent approval rating for Donald Trump one year into his presidency, and a 49 per cent approval for Barack Obama at the same point in his tenure.Democrats fret that the low approval ratings could spell disaster for their party in this year’s midterms, when control of both the House of Representatives and the Senate will be up for grabs. Biden’s party at present controls both chambers of Congress by the slimmest of margins.The press conference marks one of his first big appeals to the American public in 2022. The president’s State of the Union address has been scheduled for the relatively late date of March 1, and Biden said he would start travelling more to take his message across the country. Biden began his presidency with broad public support, but his approval rating started slipping over the summer amid a chaotic withdrawal of troops from Afghanistan that tested the country’s alliances abroad and cast doubt in the eyes of many Americans. Meanwhile, many Democrats have been disappointed at Biden’s inability to persuade Congress to pass legislation to protect voting rights in the face of new restrictions being imposed in many Republican-led states. The press conference took place as Senate Democrats sought to advance new voting rights measures in a procedural vote on Wednesday evening that was set to fail. “It’s going to be difficult. I make no bones about that. It’s going to be difficult, but we’re not there yet,” Biden said. “We’ve not run out of options yet.” More

China’s Huawei Technologies is aggressively ramping up its chip packaging capabilities to lessen the impact of a US clampdown that has cut the company’s access to vital semiconductor production technologies, sources briefed on the matter told Nikkei Asia.Chip packaging refers to the final step in semiconductor manufacturing before they are mounted on to print circuit boards and assembled into electronic devices. Compared to the manufacture of chips themselves, less of the relevant technology is controlled by American companies. Washington has cut off Huawei’s access to advanced US chipmaking technologies since 2019, citing national security concerns.One example of Huawei’s new focus is a recent collaboration with Quliang Electronics, a little-known chip packaging and testing supplier based in Fujian province. Quliang is rapidly expanding its production capacity in the city of Quanzhou to help Huawei put its advanced chip assembly designs into production and trial some of the company’s cutting-edge chip stacking and packaging technologies, four people familiar with the matter told Nikkei Asia.The Fujian government is among the most supportive of Huawei’s ambition to beef up its chip packaging capabilities, the sources added, though the company is also looking for manufacturing partners in several other provinces. Additionally, Huawei in late December established a new subsidiary, Huawei Precision Manufacturing, with a paid-in capital of Rmb600m ($94.5m), in Shenzhen to tap electronics manufacturing. One of the new subsidiary’s key aims is to develop chip packaging technologies, sources familiar with the matter said.The embattled tech giant has also accelerated efforts to hire experts from leading suppliers such as ASE Technology Holding of Taiwan, the world’s top chip packing and testing service provider, sources told Nikkei Asia. ASE declined to comment.Partnerships with local tech giants are another strategy Huawei is pursuing. The company has teamed up with display champion BOE Technology Group to develop panel-level chip packaging technology, in which chips are assembled on display panel-like substrates, rather than on the usual wafer materials, people familiar with the matter said. This novel approach is gaining traction among new and established industry players, such as Powertech Technology, the world’s biggest memory chip packaging service provider.Such moves are part of Huawei’s ongoing push to improve its overall chip capabilities. In 2021 alone, the company’s investment arms — including Hubble Technology Investment — took or raised stakes in more than 45 domestic tech companies, Nikkei Asia analysis showed, more than double the figure in 2020. Some 70 per cent of its investments last year were in semiconductor-related suppliers, ranging from chip developers and design tools to production equipment and materials.Chip packaging specifically has emerged as a major battleground for the world’s top chipmakers, namely Samsung, Intel and Taiwan Semiconductor Manufacturing, as they seek to produce ever more powerful chips.

Previously, semiconductor development primarily focused on how to squeeze more transistors on to a chip — in general, more transistors translates to greater computing power. But as the space between transistors has shrunk to just a few nanometres, this approach has become more difficult, leading some to predict the end of Moore’s law, the postulation that the number of transistors on a chip will double every two years.In response, the world’s top chipmakers and developers have begun devoting more resources to the previously neglected area of chip packaging, developing new ways of placing or stacking chips together to boost performance.Intel CEO Pat Gelsinger himself has stressed the importance of chip packaging.“Most importantly, packaging. Packaging is now leveraging silicon processes even [more broadly],” he said in video remarks delivered at an Intel forum in Taipei on January 9, adding that chip packaging, along with cutting edge production methods, would help the chip industry maintain or even surpass the pace of Moore’s law over the next decade.For Huawei, the appeal of this approach is the existence of several non-US suppliers of chip packaging equipment. This means Chinese companies have alternatives for developing a self-reliant supply chain that is not vulnerable to US sanctions. The production lines for advanced chip manufacturing and fabrication, by comparison, are dominated by a handful of US equipment makers such as Applied Materials, Lam Research and KLA.Since it was first placed on a US blacklist in 2019, Huawei has never given up its goal of advancing its chip capabilities, the core competitiveness that helped it become the largest Chinese tech company. Its semiconductor design arm, HiSilicon Technologies, enabled Huawei to challenge Apple, Qualcomm and MediaTek in mobile processors, and is still China’s top chip developer.Meanwhile, Huawei is dispatching teams to build several mini production lines in Shenzhen, Shanghai and Wuhan in collaboration with domestic contract chipmakers to put different chip designs into trial production, multiple sources briefed on the matter told Nikkei.Huawei’s aggressive investment in domestic semiconductor-related companies, particularly those in areas controlled by US companies, is in line with Beijing’s campaign to build a secured, controllable supply chain amid the ongoing US-China tensions, Nikkei Asia reported earlier. The company also expanded its talent hunt to Europe, Central Asia and Canada to maintain its technological progression.Brady Wang, a tech analyst with Counterpoint Research, said Huawei had a record of identifying and investing in key technologies for the longer term, as it did with mobile chips for more than a decade.“It’s natural that Huawei will further identify some key areas to move forward its technologies and bet new rounds of investments, especially as it suffered the most in the current geopolitical conflicts,” Wang said. “However, it’s not possible for any company, country or region to be fully self-reliant. Putting current US-China tensions into context, all countries, regions and companies will definitely need to secure some key edges and vital technologies — like how Japan has crucial chipmaking materials — that they can later use to negotiate or compete on the global stage.”A version of this article was first published by Nikkei Asia on January 12 2022. ©2022 Nikkei Inc. All rights reservedRelated storiesJapan chip subsidy requires 10-year pledge from TSMC, othersApple and other EV hopefuls chip away at auto industry pyramidComeback kid: How Taiwan’s MediaTek rose to mobile chip dominanceAsia’s lesser-known tech manufacturers shine in 2021 stock market More

NEW YORK (Reuters) – New York state’s attorney general has accused Donald Trump’s family business of repeatedly misrepresenting the value of its assets to obtain financial benefits, citing what it said was significant new evidence of possible fraud.The accusations by Attorney General Letitia James mark a substantial escalation of her civil probe into the Republican former U.S. president’s business, the Trump Organization, and the roles of his adult children.They are part of her effort to force Donald Trump and his children Donald Trump Jr and Ivanka Trump to comply with her subpoenas to testify under oath, which the family has asked a judge to block.Neither Trump nor his children have been accused of criminal wrongdoing. While James cannot file criminal charges because her probe is civil, she can sue the Trumps and the company.James is examining whether the Trumps violated a New York law targeting “persistent fraud or illegality,” allowing her to seek damages or a court-ordered halt to any wrongdoing.Trump has called the nearly three-year probe by James, a Democrat, a political “witch hunt.”In filings late Tuesday with a New York state court in Manhattan, James described what she called misleading statements about the values of six Trump properties, as well as the “Trump Brand.”The properties are golf clubs in Aberdeen, Scotland, and suburban Westchester County near New York City, the Seven Springs Estate in Westchester, buildings on Wall Street and Park Avenue in Manhattan, and Trump’s penthouse in Trump Tower.James has been investigating whether real estate values were inflated to obtain bank loans and reduced to lower tax bills, and her filing described evidence of misstatements to lenders, insurers and the Internal Revenue Service.The attorney general wants a judge to order the Trumps to testify within 21 days.”We have uncovered significant evidence that suggests Donald J. Trump and the Trump Organization falsely and fraudulently valued multiple assets and misrepresented those values to financial institutions for economic benefit,” James said in a statement.’UNFOUNDED ATTACKS’Alina Habba, a lawyer for Trump, in a statement called James’ accusations “merely the latest in a long line of unfounded attacks against my client and an obvious attempt to distract the public from her own inappropriate conduct. Letitia, you are not above the law.”The Trump Organization in a statement said it will defend against James’ “baseless” accusations, accusing her of twisting the facts and misleading the public because she faces “the stark reality that she has no case.”James’ probe also partially overlaps a criminal probe by the office of Manhattan District Attorney Alvin Bragg, which James joined in May, into the Trump Organization’s practices.The attorney general said the Trump Organization has “not made anything approaching a complete production of documents for Mr. Trump,” including from cabinets holding his files.Lawyers for the Trump family have argued that James’ subpoenas are an improper means to gather evidence in the civil probe that could then be used in the criminal probe.Alan Futerfas, a lawyer for Donald Trump Jr and Ivanka Trump, in a statement said James’ filings did not address her “repeated threats to target the Trump family” and ignore their constitutional rights by conducting overlapping probes.In July, the Trump Organization and its longtime Chief Financial Officer Allen Weisselberg pleaded not guilty in the criminal probe to charges they awarded “off-the-books” benefits to company executives in a 15-year tax fraud.FINANCIAL CONDITIONMany of James’ accusations center on Donald Trump’s annual “statements of financial condition,” which give lenders and other counterparties the values and liabilities associated with various assets.James said she found evidence that Trump was “personally involved” in approving the statements, and used them “in numerous commercial transactions for his own financial benefit.”She said one statement in June 2015 valued Trump’s building at 40 Wall Street at $735.4 million, tacking on nearly $200 million to its appraised value, a mere eight months after one lender valued the same building at $257 million.James said Trump inflated the values of the Scotland golf club and Seven Springs in part based on assumptions that residential housing could be built there.She also said Trump in his 2015 and 2016 statements overstated the value of his penthouse apartment, putting it at $327 million by claiming it contained 30,000 square feet and not the 10,996 square feet described in various documents he signed.Under questioning by her office, Weisselberg conceded that “this amounted to an overstatement of ‘give or take’ $200 million,” James said in a filing.Last month, Donald Trump sued James in a federal court in Albany, the state capital, to halt her civil probe, calling it a means to harass and intimidate a political opponent. More