Raphael Stevens

More stories

  • 113 Shares149 Views

    in Finance

    China does not always collect its debts on time

    CHINA’S LENDING boom to poor countries is turning sour, as governments struggle to repay their debts to its state-owned lenders like the Export-Import Bank of China and China Development Bank. So how will China handle countries on the brink of default? Will it show the solidarity one developing country might expect from another? Or will it insist on its pound of flesh?Some think defaults would be good for China. It is often accused of “debt-trap diplomacy”: lending heavily to poor countries with an eye to seizing their strategic assets, such as ports, when they cannot repay. The truth is more prosaic. A fresh effort to count China’s debt restructurings finds that when faced with a debtor that cannot repay, China mostly just kicks the can down the road.The new paper by Sebastian Horn and Carmen Reinhart of the World Bank and Christoph Trebesch of the Kiel Institute for the World Economy counts 261 instances of debt relief or renegotiation since 2000. Since China is far from open about its lending, the number is probably an underestimate. It includes 149 cancellations or reschedulings of small, interest-free loans by China’s commerce ministry, mostly in the 2000s when debt relief became a cause célèbre, embraced by G7 governments and Irish rock stars. Another 28 were payment holidays granted to countries in no great debt distress as part of the G20’s response to the pandemic. That leaves 84 restructurings proper (of which 30 were also part of the G20 initiative, but to countries under financial strain).China’s 84 credit mishaps compare with 158 in total by all 22 members of the Paris Club, an informal group of rich-country governments including America, Japan and Britain (see chart). China was perhaps unlucky in lending a lot at a bad time, just before the prices of oil and other commodities exported by African countries began to drop in 2014. In almost all these cases, China simply gave borrowers more time to repay. In only four did it reduce the face value of the debt (Cuba, Iraq and Serbia, twice). Its approach thus resembles that of Western lenders in the 1980s, when they seldom provided deep debt relief.The pandemic may force China to move from forbearance to forgiveness. Otherwise the authors fear that a debt “overhang” may inhibit growth in poor countries. China has joined the G20’s “common framework” for debt relief, which is meant to bring it into line with the Paris Club. In becoming a big lender to poor countries, China has followed in the footsteps of the club’s leading economic powers. It has also repeated a number of their blunders. Now it must follow them in writing off some of its past mistakes. Who is China’s Bono?For more expert analysis of the biggest stories in economics, business and markets, sign up to Money Talks, our weekly newsletter.This article appeared in the Finance & economics section of the print edition under the headline “How to default on China” More

  • 88 Shares159 Views

    in Business

    European nuclear fusion experiment announces 'record-breaking' results

    Sustainable Energy

    Sustainable Energy
    TV Shows

    Record was achieved at the Joint European Torus, or JET, facility in Oxfordshire after work by engineers and scientists from the Eurofusion consortium.
    “If we can maintain fusion for five seconds, we can do it for five minutes and then five hours as we scale up our operations in future machines,” Tony Donne, program manager at EUROfusion, says.

    Nuclear fusion powers the Sun.
    Pierre Longnus | The Image Bank | Getty Images

    Researchers working on a project centered around fusion energy — the process that powers stars — have hailed “record-breaking” results produced by a landmark experiment in the U.K.Engineers and scientists from the Eurofusion consortium were able to produce 59 megajoules of heat energy from fusion across a period of five seconds on Dec. 21, 2021. It surpasses a previous record from 1997, when 22 megajoules of heat energy was generated.The amount of energy produced by the experiment is not huge, however, with reports stating that 59 megajoules can boil around 60 kettles of water.
    The results were achieved at the Joint European Torus, or JET, facility in Oxfordshire, U.K. Co-funded by the European Commission, Eurofusion is made up of thousands of engineers, scientists, students and other experts from throughout Europe.

    “The record, and more importantly the things we’ve learned about fusion under these conditions and how it fully confirms our predictions, show that we are on the right path to a future world of fusion energy,” Tony Donne, program manager at Eurofusion, said on Wednesday.”If we can maintain fusion for five seconds, we can do it for five minutes and then five hours as we scale up our operations in future machines,” Donne added.
    While a significant amount of work is required for fusion to realize its potential, there are high hopes for it going forward.
    A statement released by organizations involved in the JET project said fusion promised a “near-limitless green electricity source for the long term, using small amounts of fuel that can be sourced worldwide from inexpensive materials.”

    Read more about clean energy from CNBC Pro

    The Culham Centre for Fusion Energy, which operates JET and is a member of Eurofusion, describes fusion as “the process that takes place in the heart of stars and provides the power that drives the universe.”
    “When light nuclei fuse to form a heavier nucleus, they release bursts of energy,” it says. Fusion is not the same as fission, which is used in nuclear power plants.

    Those working on the JET project said the results reported this week were “a major boost” for the work being undertaken at the much bigger ITER project in southern France.
    “The larger French-based project and future power plants plan to use the same deuterium-tritium (D-T) fuel mix and operate under similar conditions to the record-breaking Eurofusion experiments held recently at Culham Science Centre, Oxford,” they said.
    ITER is centered around the development of a magnetic fusion device known as a tokamak.
    According to the team at ITER, the tokomak “has been designed to prove the feasibility of fusion as a large-scale and carbon-free source of energy based on the same principle that powers our Sun and stars.”
    ITER is currently under construction. When it is up and running, those behind the project say it will generate net energy.
    This term, ITER says, refers to what happens when “the total power produced during a fusion plasma pulse surpasses the thermal power injected to heat the plasma.”
    ITER is backed by the EU, China, U.S., India, Russia, Japan and South Korea. More

  • 150 Shares199 Views

    in Finance

    Stock futures are flat following a steep sell-off spurred by hot inflation

    Stock futures were flat in overnight trading Thursday after a sharp sell-off on Wall Street spurred by the hottest inflation reading in four decades.
    Futures on the Dow Jones Industrial Average dipped just 30 points. S&P 500 futures and Nasdaq 100 futures were little changed.

    Thursday’s rout in risk assets came as Treasury yields spiked in reaction to data that showed consumer prices surged more than 7% last month, the highest gain since February 1982. The 10-year Treasury yield jumped above 2% for the first time since 2019, while the rate-sensitive 2-year yield soared more than 26 basis points at one point in its biggest intraday move since 2009.
    The hotter-than-expected inflation reading prompted St. Louis Fed President James Bullard to call for accelerating rate hikes — a full percentage point increase by the start of July.
    Futures market also repriced rate-hike odds as CME data pointed to a near-100% chance of a 50-basis-point increase at the March meeting. Meanwhile, the market is forecasting a more aggressive schedule for the rest of this year, calling for as many as seven hikes.
    “The Fed has a Goldilocks and Three Bears Problem, since moving quickly and persistently off of policy that is too easy clearly needs to happen,” Rick Rieder, BlackRock’s chief investment officer of global fixed income, said in a note.

    Stock picks and investing trends from CNBC Pro:

    “While the time has come (or did months ago) to move policy persistently and aggressively away from overly accommodative conditions, and toward a more neutral and appropriate stance, executing on this pivot is going to be a real challenge for policymakers,” Rieder said.

    On Thursday, the blue-chip Dow dropped more than 500 points, breaking a three-day winning streak with its worst daily performance since Jan. 18. The S&P 500 and the Nasdaq Composite fell 1.8% and 2.1%, respectively.
    Still, the major averages are on pace to post their third positive week in a row with modest gains. The Dow is up 0.4% this week, while the Nasdaq has gained 0.6%. The S&P 500 is only up 0.1% after Thursday’s decline.
    “I expect that we’ll see a return of the volatility that was prevalent for most of the month of January in the wake of this report,” said Brian Price, head of investment management at Commonwealth Financial Network. “Investors may want to buckle up as it could be a rough ride for risk assets until inflationary data starts to abate, and I expect that it will, as we move through the year.”

    WATCH LIVEWATCH IN THE APP More

  • 163 Shares199 Views

    in Business

    Soaring used vehicle prices haven't cooled demand yet, Group 1 Automotive CEO says

    Demand for used cars remains strong even though the price of preowned vehicles has soared throughout the Covid pandemic, Group 1 Automotive CEO Earl Hesterberg told CNBC on Thursday.
    Hesterberg said the current mindset that now is the “best time ever” to sell a car has both helped and complicated building up Group 1’s used vehicle fleet.
    Group 1 was at 36 days of used vehicle inventory in December compared to 32 days in 2020, while new vehicle inventory was at 9 days compared to 48 days the year before.

    Demand for used cars remains strong even though the price of preowned vehicles has soared throughout the Covid pandemic, Group 1 Automotive CEO Earl Hesterberg told CNBC on Thursday.
    Hesterberg said on “The Exchange” that Group 1 has largely been able to raise sticker prices to offset higher acquisition costs because there are customers willing to buy them. It helped the company achieve record profitability in 2021.

    Despite Group 1’s ability to successfully protect its margins, Hesterberg suggested there may be a point at which demand cools.
    “I don’t know that we can do that indefinitely, and we move them pretty quickly,” he said. “Normally we have only about a 30-day supply of used vehicles, so we can react pretty quickly to market price changes.”
    There’s a mindset among some people that right now is the “best time ever” to sell a car, Hesterberg said, which has both helped and complicated building up Group 1’s used vehicle fleet.
    “Those cars are worth a lot of money. … We’ve had to be a little more creative in sourcing, but we’ve been able to keep our inventory pretty near ideal levels,” Hesterberg said.
    Group 1 had 36 days of used vehicle inventory as of Dec. 31, compared with 32 days of inventory at the same point in 2020, according to the company’s earnings report issued Thursday. New vehicle inventory stood at nine days as of Dec. 31, compared with 48 days of inventory in 2020.

    Group 1’s stock dropped more than 5% on Thursday, even as its earnings came in better than expected for the fourth quarter. U.S. stocks fell on Thursday after the consumer price index report for January revealed a 7.5% jump since the year before, marking the biggest rise since 1982.
    Thursday’s inflation reading has caused some on Wall Street to believe the Federal Reserve will act more aggressively in raising interest rates. The central bank is expected to do so at its March policy meeting and then multiple times throughout the year.
    Hesterberg said that he isn’t too concerned about the impact higher interest rates will have on demand for both used and new vehicles.
    “The consumer has money and they want to spend the money. They would like to be buying more cars than we can supply. It’s never good when interest rates go up, but they’re just so low,” compared to historical averages, Hesterberg said. He added that even if rates do jump up for auto loans, vehicle manufacturers can offset some of those costs through incentives to keep sales flowing.
    “I don’t see that being a headwind for us either in the near term,” he said.

    WATCH LIVEWATCH IN THE APP More

  • 113 Shares99 Views

    in Business

    Astra stock drops 26% after NASA mission fails mid-launch

    The company confirmed there was an issue mid-flight that prevented the rocket from delivering a set of four cube satellites to orbit on a NASA-funded mission.
    The Nasdaq halted the stock for volatility at 3:05 p.m. ET, as the upper stage of the rocket appeared to be tumbling out of control on the company’s webcast.

    Astra / NASASpaceflight

    Shares of rocket builder Astra fell sharply Thursday, after the company’s latest mission failed to reach orbit.
    Astra’s stock fell 26% to close at $3.91 a share.

    The company confirmed there was an issue mid-flight that prevented the rocket from delivering a set of four cube satellites to orbit on a NASA-funded mission.

    Cameras onboard the company’s LV0008 rocket show the upper stage separating and igniting, before appearing to tumble out of control mid-flight.
    Astra / NASASpaceflight

    “I’m deeply sorry we were not able to deliver our customer’s payloads. I’m with the team looking at data, and we will provide more info as soon as we can,” Astra CEO Chris Kemp said in a tweet.
    The Nasdaq halted the stock down 5% at 3:05 p.m. ET, as the upper stage of the rocket appeared to be tumbling out of control on the company’s webcast of the launch.
    Shares reopened briefly for trading and dropped 32% before being halted again at 3:37 p.m. ET, and then reopened a second time — recovering slightly.
    The NASA mission marked Astra’s first launch from Florida’s Cape Canaveral. The company reached orbit for the first time three months ago with its LV0007 rocket, launched from Kodiak, Alaska.

    WATCH LIVEWATCH IN THE APP More

  • 188 Shares129 Views

    in Business

    FDA committee votes against Eli Lilly cancer treatment over concerns trials conducted only in China

    The monoclonal antibody treatment, sintilimab, treats adults with non-small cell lung cancer in combination with chemotherapy.  
    FDA committee members said the trial population of mostly Asian men did not represent the diversity of U.S. patients.
    Patients who develop lung cancer in the U.S. are split equally across genders and have diverse ethnic backgrounds.

    The outside of the Food and Drug Administration headquarters is seen in White Oak, Md.
    Al Drago | CQ Roll Call | Getty Images

    A Food and Drug Administration committee on Thursday recommended against full approval of a lung cancer treatment developed by Innovent Biologics and Eli Lilly over concerns the clinical trial was conducted solely in China in participants that weren’t as diverse as the U.S. population.  
    The FDA’s Oncologic Drugs Advisory Committee, in a 14 to 1 vote, said the companies should conduct additional clinical trials that reflect U.S. patients before they receive final approval. The monoclonal antibody treatment, sintilimab, treats adults with non-small cell lung cancer in combination with chemotherapy.  

    FDA committee members said the trial population of mostly Asian men did not represent the diversity of U.S. patients, making it difficult to determine whether the results would hold up here.
    Patients who develop lung cancer in the U.S. are split equally across genders and have diverse ethnic backgrounds. The patients in the study were also younger and fewer were current or former smokers compared witho people who develop lung cancer in the U.S.
    “At a time when the FDA and the industry are trying to increase diversity in clinical trials to ensure they are representative of the patient population to be treated, it makes no sense to move in the opposite direction with this application,” said David Mitchell, a committee and founder of Patients for Affordable Drugs.   

    CNBC Health & Science

    Dr. Richard Pazdur, director of the FDA’s Oncology Center of Excellence, emphasized the importance of conducting clinical trials across multiple countries to ensure they reflect racial diversity. He said the goal is not to exclude China, but bring it into the international fold on drug development.
    “Single countries submissions is a step backward in achieving the racial diversity that we need in the United States,” Pazdur said.

    Dr. Lana Shiu, head of regulatory affairs at Innovent, said sintilimab was well tolerated and showed a significant benefit for patients against multiple tumor types. Dr. David Ferry, head oncological medical strategy at Eli Lilly, said race and body weight has no meaningful impact on the effectiveness of sintilimab.
    Committee members also said the trial failed to meet FDA standards of informed consent because it did not explicitly lay out treatments with approved therapies or participation in alternative studies.
    “While data integrity is of utmost importance in clinical research, moral integrity is of greater importance,” said Dr. Ravi Madan, a clinical director at the National Cancer Institute. Madan said the informed consent form was not updated as needed during the trial.
    The companies also did not consult with the FDA through the entire clinical trial. The study began in August 2018 but the FDA was not informed until April 2020, when the companies submitted their results and said they planned to apply for approval. 
    “I’m disappointed to hear that the lack of engagement between the applicant and the sponsor early on during the trial design,” Dr. Jorge Garcia, a cancer specialist. “I would like to believe that if those meetings were held, we probably wouldn’t be actually having this conversation.”
    Dr. Harpreet Singh, a director within the FDA’s Office of Oncologic Diseases, said the agency investigators inspected two sites during the trial and found underreporting of adverse events. Singh said the trial staff were trained on the importance of good recordkeeping to prevent future issues.Dr. Jorge Nieva dissented during the vote, saying the drug works and provides value to patients compared to chemotherapy alone. Nieva said although there are other lung cancer drugs on the market, approving more would help reduce prices and improve access for more patients.
    “We have no evidence that the data presented is unreliable, synthetic or otherwise fraudulent,” Nieva, a cancer specialist and professor at the Keck School Medicine at the University of Southern California. “We have adequate FDA inspections that were not hampered. If more inspections were needed, it is expected the FDA would have performed them,” he said.

    WATCH LIVEWATCH IN THE APP More

  • 150 Shares129 Views

    in Finance

    Stocks making the biggest moves after hours: Zillow, Expedia, Cloudflare and more

    The Expedia homepage is displayed on laptop computers arranged for a photograph in Washington, D.C., U.S.
    Andrew Harrer | Bloomberg | Getty Images

    Check out the companies making headlines after the bell: 
    Expedia — Shares of the travel company jumped more than 5% in extended trading after a better-than-expected earnings report. Expedia posted adjusted earnings of $1.06 per share, higher than a Refinitiv estimate of 69 cents. The company said the impact from the pandemic was less severe and of shorter duration than previous waves.

    Zillow Group — The real estate company saw its shares soaring 14% in after-hours trading after a revenue beat. Zillow reported revenue of $3.9 billion in the fourth quarter, topping Wall Street’s expectations, according to Refinitiv. “Zillow has a rock-solid financial foundation and a core IMT business in which we are reporting record profits today,” said Zillow co-founder and CEO Rich Barton.
    Cloudflare — Shares of the web security company jumped about 5% in extended trading after its quarterly earnings and revenue came in stronger than expected. Cloudflare also announced that it acquired Vectrix to assist businesses in gaining control of their applications.
    Upwork — The freelancer platform’s stock dropped 8% in after-hours trading even after its quarterly revenue beat expectations. Upwork reported sales of $137 million, higher than a Refinitiv estimate of $132 million. It reported a quarterly loss of 5 cents per share, matching analysts’ expectations.

    WATCH LIVEWATCH IN THE APP More

  • 188 Shares129 Views

    in Business

    Kellogg may raise prices again in 2022 as it sees 'double-digit cost inflation,' says CEO

    Kellogg is planning to cover higher input costs due to skyrocketing inflation with higher prices and productivity, CEO Steve Cahillane told CNBC on Thursday.
    “We don’t want prices to get too high, but we’re in an environment where it’s broad-based, it’s across everything, but we’ve been able to cover it. Our pricing performance has been very solid,” he said.
    Cahillane said that price elasticity has been at historic lows, but Kellogg still plans to be cautious about raising prices this year.

    Kellogg is planning to raise prices and increase productivity to offset the skyrocketing inflation it’s seeing for input costs, CEO Steve Cahillane told CNBC on Thursday.
    “As we enter 2022, we are still seeing double-digit cost inflation,” Cahillane said on “Squawk on the Street”

    “We’re going to see the wraparound benefits of the pricing that we took in 2021 into 2022 … but our goal is to cover all of those input costs with pricing and productivity, and we think we’re in very good shape to do that.”
    The chief executive’s comments come after Kellogg before the bell reported better-than-expected profit for its fiscal fourth quarter, with earnings per share of 83 cents topping estimates by 4 cents, according to FactSet.
    Kellogg shares were up nearly 3% on Thursday afternoon, as investors also reacted to the company issuing a full-year profit growth outlook that exceeded Wall Street’s expectations.
    Implementing price hikes last year helped boost the company’s profits and combat the inflationary pressures it was experiencing. Cahillane said customers have been willing to pay up even with higher price tags, but Kellogg still plans to be cautious about marking up prices this year.
    “We don’t want prices to get too high, but we’re in an environment where it’s broad-based, it’s across everything, but we’ve been able to cover it. Our pricing performance has been very solid,” he said.

    The company’s cereal segment took a hit last quarter due to worker strikes. Cahillane said other parts of the company’s portfolio “more than made up for” cereal’s underperformance last quarter, and he expects the line to recover now that employees are back at work.
    “For 2022, what we’re really looking at is the first half of the year, a recovery of our inventory, a recovery of our distribution, a restoration of our commercial plans, which will lead to a back half of the year that sees growing momentum in our cereal business and a real return to normal,” he said.
    Cahillane said Kellogg may also make some deals this year, citing the company’s strong financial position.
    “We’ve got dried powder to think about additions to the portfolio if they add shareholder value … but we’re very disciplined when it comes to price,” he said.

    WATCH LIVEWATCH IN THE APP More