politics

Market correction: Trump stock tumbles after buoyant debut

BY THOMAS URBAIN

  • Since entering  public markets on March 26, Trump Media and Technology Group has seen its market value plummet from around $11 billion to under $4.5 billion.
  • After a winning debut on Wall Street last month, Donald Trump's media group has suffered a bruising retreat, denting the Republican candidate's wealth as he faces legal challenges.
  • Since entering  public markets on March 26, Trump Media and Technology Group has seen its market value plummet from around $11 billion to under $4.5 billion.
After a winning debut on Wall Street last month, Donald Trump's media group has suffered a bruising retreat, denting the Republican candidate's wealth as he faces legal challenges.
Since entering  public markets on March 26, Trump Media and Technology Group has seen its market value plummet from around $11 billion to under $4.5 billion.
That's an unhappy reversal for the former White House inhabitant and current presidential candidate, who faces around a half billion dollars in civil court judgments if his appeals are unsuccessful.
Trump holds 57.3 percent of the company, which was successfully merged into a shell company known as Digital World Acquisition last month; equity owners in such transactions are typically required to hold the stock for six months before cashing out. 
TMTG's ticker is "DJT," Trump's initials. The company's principal asset is "Truth Social," the social media platform launched for the ex-president after he was kicked off Twitter and Facebook in 2021 in the wake of the January 6 attack on the US Capitol.
Market watchers aren't quite sure what to make of the stock's trajectory.
"Nothing would surprise me about this stock's trading," said Matthew Kennedy, senior IPO Market strategist at Renaissance Capital. "It could jump to $100 or drop to $1 and I would be unfazed."
Though far below its peak valuation, TMTG's stock price is an anomaly in the sense that the company generated just $4 million in revenues in 2023 and lost $58 million, according to a securities filing.
"I can't think of any companies that currently have such a wide gap between revenue and market cap," Kennedy said.
To justify such a valuation, a company would normally be expected to produce significant growth and profitability in the near-future -- scenarios that are considered highly unlikely, if not impossible.
"It's very hard to tell any story that could justify a valuation, at today's price," said Jay Ritter, a finance professor at the University of Florida.
"There's just no plausible story where that's going to be happening," Ritter said. "The media business has been on the decline. And with this company being so closely aligned with Donald Trump, he's not going to live forever."

True believers

Even so, TMTG maintains a valuation above a group of established companies that includes Goodyear and Shake Shack, a phenomenon market watchers struggle to explain.
"I'd say this is a meme stock," said Kennedy, alluding to GameStop and a handful of other equities that caught fire in early 2021 after being embraced by users of the Reddit platform.
"It's a combination of some short-term speculators, but ... there's also a committed number of retail investors who wanted to believe in the company, believe in the stock and weren't paying attention to valuations," Ritter said of the meme stock group, which also included movie theater chain AMC.
With speculators, the play is to benefit from a short-term positive move before selling and cashing out the gains.
Expecting "lots of volatility," one anonymous investor who bought low said on Reddit he "took those profits and rolled them into put options, because of how overvalued the stock was."
Some investors likely sold out after TMTG's securities filing revealed the paltry revenues. Others may fear a sudden sale by Trump of a huge number of shares to raise money.
But some holders are "buying with an ideological motivation where they wanted to show support," Ritter said.

Bet on 2nd term?

Most of the commentators on Reddit have come out swinging against TMTG.
"My dad says he wanted to buy into this for the long-term stability of his grandchildren, and I just had to laugh," said one person on Reddit
Kennedy calls TMTG a "unique stock" and sees one scenario where the investment could take off.
"While voters may have concerns over conflicts of interest, shareholders of DJT would no doubt benefit from a second Trump term, especially if he continues to use it as his official platform," Kennedy said.
"In fact, in a recent client note we called this stock a multi-billion dollar bet on a second Trump term."
tu-jmb/tjj

organisation

IMF confirms Kristalina Georgieva for second 5-year term

  • Georgieva, a 70-year-old Bulgarian, has run the IMF since 2019, and told AFP last month that she was making herself "available to serve, if people want me to serve."
  • The IMF executive board confirmed Friday that it had reappointed Kristalina Georgieva to serve for a second five-year term at the helm of the international financial institution.
  • Georgieva, a 70-year-old Bulgarian, has run the IMF since 2019, and told AFP last month that she was making herself "available to serve, if people want me to serve."
The IMF executive board confirmed Friday that it had reappointed Kristalina Georgieva to serve for a second five-year term at the helm of the international financial institution.
It means that Georgieva, who was the sole candidate in the running to lead the International Monetary Fund, will continue in office when her current term ends on September 30, 2024. 
The decision was taken by consensus, the IMF said in a statement confirming the board's decision. 
"I am deeply grateful for the trust and support of the Fund's Executive Board, representing our 190 members, and honored to continue to lead the IMF as Managing Director," Georgieva said in a statement. 
"I look forward to continue serving our membership, together with the highly professional and committed staff of the IMF," she added.
Georgieva, a 70-year-old Bulgarian, has run the IMF since 2019, and told AFP last month that she was making herself "available to serve, if people want me to serve."
During her tenure, the IMF has helped countries facing financial difficulties during the coronavirus pandemic as well as the havoc wrought by Russia's invasion of Ukraine, especially in Europe.
Under a controversial, decades-old agreement between Europe and the United States, the International Monetary Fund has historically been led by a European, and the World Bank by a US citizen. 
This arrangement was reaffirmed last year when the Biden administration nominated Ajay Banga, an Indian-born, naturalized US citizen, to run the World Bank, which sits just across the street from the IMF in Washington.
Georgieva faced allegations in 2021 -- which she strongly denied -- that she had been involved in amending a popular World Bank business report in order to favor China when she worked at the development lender. 
But after reviewing the World Bank report into the incident, the IMF executive board dismissed the allegations and reaffirmed its confidence in Georgieva, allowing her to remain in post. 
The board's announcement means that next week's IMF and World Bank-hosted meetings of the world's financial leaders in Washington can proceed without a distracting battle over the future of the Fund running in the background. 
da/tjj

environment

Biden rule hikes fees for oil projects on public lands

  • "Let's be real: We need to get these oil companies off our public lands," said Evergreen Action's Mattea Mrkusic. 
  • Oil companies drilling on public lands must post larger bonds and pay higher royalties under a rule finalized Friday by the Biden administration.
  • "Let's be real: We need to get these oil companies off our public lands," said Evergreen Action's Mattea Mrkusic. 
Oil companies drilling on public lands must post larger bonds and pay higher royalties under a rule finalized Friday by the Biden administration.
The bonding requirements for development increased to $150,000 from $10,000, a level set in 1960 that no longer covers potential cleanup costs, the Bureau of Land Management (BLM) said in a press release.
In another shift, the Department of the Interior lifted royalty rates for leases to 16.67 percent from the previous level of 12.5 percent.
The changes were described by Interior Secretary Deb Haaland as the most significant reform to the leasing program "in decades" but were criticized by petroleum interests.
They come as President Biden emphasizes the environment in his reelection campaign against former president Donald Trump, who has mocked climate change as an issue.
Friday's action finalizes the department's preliminary step taken in July 2023 that the Biden administration described as part of a "transition to a clean energy economy."
"Our public lands are owned by all Americans, and the Bureau of Land Management remains committed to managing them in a balanced, responsible way," said BLM Director Tracy Stone-Manning.
"This rule will help protect critical wildlife habitat, cultural resources, and recreational values, and it will ensure a fair return for American taxpayers."
Petroleum industry officials are reviewing the rule "to ensure the Biden administration is upholding its responsibilities to the American taxpayers and promoting fair and consistent access to federal resources," said Holly Hopkins, vice president of upstream policy at the American Petroleum Institute.
API, which had raised objections to the proposal during a public comment period, released figures on the economic contribution of petroleum development on federal lands, citing some 170,000 jobs in five states.
"As energy demand continues to grow, oil and natural gas development on federal lands will be foundational for maintaining energy security, powering our economy and supporting state and local conservation efforts," Hopkins said. 
"Overly burdensome land management regulations will put this critical energy supply at risk," Hopkins added.
The environmental group Evergreen Action characterized the change as a "long overdue" step to boost biodiversity and the climate.
"Let's be real: We need to get these oil companies off our public lands," said Evergreen Action's Mattea Mrkusic. "But for now, we're glad they won't get to stiff the public while they keep using public resources."
But Gladys Delgadillo, a climate campaigner at the Center for Biological Diversity, called on the Biden administration to go further.
"Updating oil and gas rules for federal lands without setting a timeline for phaseout is climate denial, pure and simple," said Delgadillo, who called for a complete shutdown of drilling on federal lands. 
"Public lands should be places for people to enjoy nature and wildlife to roam free, not hotspots for toxic pollution," Delgadillo said.
jmb/bjt

stocks

Middle East tensions weigh on markets

BY ROLAND JACKSON

  • Eurozone stock markets had spent much of Friday higher after the European Central Bank signalled Thursday a likely June interest rate cut, but gave up their gains as Middle East tensions rose.
  • Global oil and gold prices shot higher Friday as worries mounted about the conflict in the Middle East widening.
  • Eurozone stock markets had spent much of Friday higher after the European Central Bank signalled Thursday a likely June interest rate cut, but gave up their gains as Middle East tensions rose.
Global oil and gold prices shot higher Friday as worries mounted about the conflict in the Middle East widening.
The tensions overshadowed the start of US corporate earnings season, with Wall Street stocks sliding despite banks beating expectations.
"Geopolitical worries have triggered some risk aversion, but worries about a growth slowdown have presumably triggered some residual angst about corporate earnings not living up to expectations," said Briefing.com analyst Patrick O'Hare.
Oil prices were up more than two percent as regional tensions soared after Iran threatened reprisals over a strike in Syria this month that killed two Iranian generals.
Gold also benefitted from its status as a haven investment, breaking the $2,400 per ounce level to set a fresh record.
"US stocks are falling, and gold is rising in risk-off trade as fears rise that the Israel-Hamas war could escalate if Iran directly attacks Israel, which could happen this weekend," said Fiona Cincotta at City Index.
Investor attention had been set to focus on Friday's start of the corporate earnings season after economic data released earlier this week largely killed off the possibility that the US Federal Reserve could begin cutting interest rates in June.
Equity markets took the recalibration of expectations of interest rate cuts in stride as data showing the US economy in strong health raised hopes that companies will keep reporting strong earnings.
At the start of the year markets had priced in six interest cuts by the Fed in 2024, but now expect only two.
JPMorgan Chase, Wells Fargo and Citigroup all reported Friday better-than-expected earnings results for the first quarter. 
But their shares fell, with those in JPMorgan Chase slumping more than five percent in late morning trading.
Wall Street's main indices fell at the opening bell.
Eurozone stock markets had spent much of Friday higher after the European Central Bank signalled Thursday a likely June interest rate cut, but gave up their gains as Middle East tensions rose.
London stocks fizzed higher, approaching a record intra-day high, on data showing the UK economy grew for a second straight month in February, further fuelling recovery hopes after sliding into a shallow recession in the second half of last year.
Dimming hopes for US rate cuts continued to support the dollar, which surged to another 34-year high above 153 yen, putting Japanese officials in the spotlight after they said they were ready to intervene in markets to support their currency.

Key figures around 1530 GMT

New York - Dow: DOWN 0.8 percent at 38,140.68 points
New York - S&P 500: DOWN 0.9 percent at 5,151.66
New York - Nasdaq Composite: DOWN 1.1 percent at 16,264.60
London - FTSE 100: UP 0.9 percent at 7,995.58 (close)
Paris - CAC 40: DOWN 0.2 percent at 8,010.83 (close)
Frankfurt - DAX: DOWN 0.1 percent at 17,930.32 (close)
EURO STOXX 50: DOWN 0.4 percent at 4,948.38 (close)
Tokyo - Nikkei 225: UP 0.2 percent at 39,523.55 (close)
Hong Kong - Hang Seng Index: DOWN 2.2 percent at 16,721.69 (close)
Shanghai - Composite: DOWN 0.5 percent at 3,019.47 (close)
Dollar/yen: DOWN at 153.07 yen from 153.27 yen on Thursday
Euro/dollar: DOWN at $1.0641 from $1.0726 
Pound/dollar: DOWN at $1.2449 from $1.2553
Euro/pound: UP at 85.47 pence from 85.44 pence
Brent North Sea Crude: UP 2.0 percent at $91.54 per barrel
West Texas Intermediate: UP 2.3 percent at $86.95 per barrel
burs-rl/gv

Austria

Thai group buys iconic Berlin department store

  • "We are pleased to add KaDeWe Berlin to Central Group's historic flagship luxury store real estate portfolio," said Central Group's chief executive, Tos Chirathivat.
  • Thailand's Central Group said Friday it has bought the iconic KaDeWe department store in Berlin from insolvent Austrian real-estate giant Signa.
  • "We are pleased to add KaDeWe Berlin to Central Group's historic flagship luxury store real estate portfolio," said Central Group's chief executive, Tos Chirathivat.
Thailand's Central Group said Friday it has bought the iconic KaDeWe department store in Berlin from insolvent Austrian real-estate giant Signa.
The 650,000-square-foot (60,000-square-metre) store is located on one the German capital's main shopping streets, and has long been a major draw for tourists.
The Thai group, a multinational conglomerate with a sprawling retail and property portfolio, did not confirm the purchase price, but German daily Handelsblatt put the figure at around one billion euros ($1.1 billion).
The news came several months after the company that operates the store, KaDeWe group, filed for bankruptcy, reportedly blaming the turmoil engulfing Signa.
"We are pleased to add KaDeWe Berlin to Central Group's historic flagship luxury store real estate portfolio," said Central Group's chief executive, Tos Chirathivat.
Vittorio Radice, a board member of Central Group Europe, said the purchase was "the first important milestone for us in the attempt to restore and restructure the KaDeWe Group operating company towards a sustainable, financially viable business".
Central Group is already a majority shareholder in the KaDeWe Group, with a 50.1 percent stake.
Handelsblatt reported the Thai conglomerate was in advanced talks to take over the entire group, which also operates the department stores Alsterhaus in Hamburg and Oberpollinger in Munich.
KaDeWe, short for "Kaufhaus des Westens" or the "Department Store of the West", first opened its doors in 1907, and is one of Europe's biggest department stores. 
When Berlin was divided during the Cold War, its well-stocked shelves symbolised the capitalism and consumerism of the West, a stark contrast to life in the communist East. 
As well as problems caused by the crisis in Signa, it has suffered like other department stores as customers increasingly choose to shop online.
Signa -- which owns the Chrysler building in New York -- initiated insolvency proceedings in November, marking the spectacular downfall of its founder, self-made Austrian tycoon Rene Benko.
Central Group has been a long-standing business partner of Signa. 
Late last year, it also ended another partnership with the Austrian group, becoming the majority shareholder in the group that runs historic British department store Selfridges.
sr/hmn/rl

earnings

Solid profits at banks as execs debate US economic risks

BY JOHN BIERS

  • Officials such as Federal Reserve Chair Jerome Powell have pointed to the chance the US economy can achieve a "soft landing" -- shifting relatively painlessly from a period of high growth and elevated inflation to one of slower growth, while avoiding a recession.
  • Large American banks reported solid earnings Friday behind still-high interest rates while offering varying views on the likelihood the United States can avoid a near-term recession.
  • Officials such as Federal Reserve Chair Jerome Powell have pointed to the chance the US economy can achieve a "soft landing" -- shifting relatively painlessly from a period of high growth and elevated inflation to one of slower growth, while avoiding a recession.
Large American banks reported solid earnings Friday behind still-high interest rates while offering varying views on the likelihood the United States can avoid a near-term recession.
JPMorgan Chase reported higher profits, citing increased asset management and investment banking fees as well as the lift from lofty interest rates, while Citigroup and Wells Fargo reported dipping profits on higher costs.
Compared with a year ago, the banks have seen some uptick in write-offs for bad loans, reflecting the weaker profile of low-income consumers. However, bankers still point to a healthy American employment market and a lingering boost from pandemic-era government spending.
Officials such as Federal Reserve Chair Jerome Powell have pointed to the chance the US economy can achieve a "soft landing" -- shifting relatively painlessly from a period of high growth and elevated inflation to one of slower growth, while avoiding a recession.
While allowing that "many economic indicators continue to be favorable," JPMorgan Chief Executive Jamie Dimon highlighted risks to the outlook, including geopolitical instability and the possible persistence of inflation.
"The market is probably too happy," Dimon said on a conference call with reporters. "I think the chance of bad outcomes is higher than other people think." 
Dimon's comments echoed his tone in a shareholder letter this week in which he warned interest rates could go even higher. He emphasized that he is not predicting this but merely pointing it out as a possibility.
On Friday, Citigroup Chief Financial Officer Mark Mason offered a somewhat more optimistic appraisal.
While noting that "there's a lot of risk out there," Mason characterized the global economy as generally "resilient," with consumers mostly healthy and inflation "moving in the direction that central banks want."
Mason sees a "soft landing" in the United States as "increasingly likely" and says Europe appears poised for modest growth after a period of stagnation.
The chief concern, along with geopolitical risk, "is still around inflation" and the question of when, and by how much, rates will fall, Mason said in a conference call with reporters.

Job cuts

At JPMorgan, profits came in at $13.4 billion, up six percent from the year-ago period, boosted by higher net interest income (NII) -- the benefit from charging more for loans minus the higher interest paid to depositors.
Revenues rose nine percent to $41.9 billion.
Markets were a weak spot, with trading revenue dropping for fixed income and staying flat for equities.
While JPMorgan increased its estimate for full year NII by $1 billion, to $89 billion, the bank said it expects the boost from higher interest rates on profits to erode or "normalize" over time.
At Citi, profits were $3.4 billion, down 27 percent from the year-ago period, in part due to a two percent drop in revenues to $21.1 billion.
While the results were boosted by higher NII, that was offset by the impact of higher credit losses. 
Another drag came from $110 million in severance costs. Through the end of the quarter, Citi has cut 7,000 of the 20,000 jobs targeted in a global reorganization, Mason said.
Wells Fargo reported profits of $4.6 billion, down seven percent from the year-ago period. Revenues rose one percent to $20.9 billion.
Unlike the other two banks, Wells Fargo had an eight percent drop in NII, which it attributed to a shift in consumers to higher interest products.
But the bank cited higher investment banking fees as a strong point and said it reduced provisions for commercial real estate and auto loans -- two areas that have seen an erosion in credit quality in recent quarters.
Shares of JPMorgan slumped 4.5 percent, while  Citi rose 0.1 percent and Wells Fargo climbed 0.3 percent.
jmb/bbk

trial

Vietnam's multi-billion dollar fraud case: key things to know

  • Many of its real estate projects are in prime locations in central Ho Chi Minh City.
  • A high-profile Vietnamese real estate tycoon was sentenced to death on Thursday in one of the biggest corruption cases in history, with an estimated $27 billion in damages.
  • Many of its real estate projects are in prime locations in central Ho Chi Minh City.
A high-profile Vietnamese real estate tycoon was sentenced to death on Thursday in one of the biggest corruption cases in history, with an estimated $27 billion in damages.
Truong My Lan, chair of major developer Van Thinh Phat, was found guilty of embezzling cash from Saigon Commercial Bank (SCB) over the course of a decade in a case that has stunned the nation.
Eighty-five others, including Lan's husband, niece and several SCB executives, were also sentenced at the court in southern commercial hub Ho Chi Minh City.

Who is Truong My Lan?

Lan was Born in 1956 in Ho Chi Minh City and her mother was a market trader who sold cosmetics, according to state media. 
She founded Van Thinh Phat in 1992, and it went on to purchase high-end hotels, restaurants and luxury apartments as well as invest in financial services. Many of its real estate projects are in prime locations in central Ho Chi Minh City.
Investigators said there were more than 1,000 businesses in the "Van Thinh Phat" ecosystem, including a group of "ghost companies" and a network of interests abroad.
Lan met her husband Eric Chu Nap Kee in the early 90s when he was looking for investment opportunities, state media said. The Hong Kong billionaire was on Thursday sentenced to nine years in prison.

How did she steal so much?

Lan was found guilty on three counts: bribery, violating banking regulations and embezzlement.
Between 2012 and 2022, she stole $12.5 billion from SCB, setting up fake loan applications to withdraw money from the bank, in which she owned a 90 percent stake.
She ordered SCB officers to transfer the money to shell companies and then moved the money around or withdrew as cash to cover her wrongdoing, court judges said, according to state media.
Between February 2019 and September 2022, her driver transported the equivalent of more than $4.4 billion in cash from SCB's headquarters in Ho Chi Minh City to her nearby home and Van Thinh Phat's head office.
She also took advantage of a government plan to restructure SCB to use the bank as a cash cow after merging two lenders with it, the judges said.
Police identified more than 40,000 victims of the scam, all of them SCB bondholders.
Former employees at the State Bank of Vietnam -- the central bank -- were bribed with millions of dollars to hide SCB's wrongdoings and poor financial performance.
Do Thi Nhan, the former head of the central bank's inspection team, was sentenced to life in prison for accepting $5.2 million in cash given to her in three Styrofoam boxes.

How was she exposed?

Lan and the others were arrested as part of the country's "blazing furnace" graft crackdown that has swept up numerous corrupt officials and members of the country's business elite.
The sweep has been driven by powerful Communist Party General Secretary Nguyen Phu Trong, and more than 4,400 people have been indicted across more than 1,700 graft cases since 2021.
But the scale of Thursday's trial was unprecedented. Evidence was in 104 boxes weighing a total of six tonnes, and 200 defence lawyers were involved. 
Cameras inside the court -- which are not always allowed in Vietnam -- showed Lan fidgeting and looking anxious ahead of the verdict, while many of her co-accused sat with their heads bowed.
However, the corruption purge has dealt a blow to Vietnam's economy and analysts say that some foreign investors have been spooked, even as they have broadly praised what they see as the campaign's aim to improve rule of law.
Trong is still urging the crackdown to speed up.
bur-aph/jfx

technology

Japan seeks to reclaim tech edge with overseas help

BY HIROSHI HIYAMA AND ETIENNE BALMER

  • "The traditional corporate culture in Japan tends to be risk-averse and hierarchical, which can stifle the rapid innovation typically seen in the software industry."
  • Massive overseas and domestic investments offer Japan a chance to reclaim its tech crown, but to become a convincing alternative to China the country must embrace rapid innovation, experts say.
  • "The traditional corporate culture in Japan tends to be risk-averse and hierarchical, which can stifle the rapid innovation typically seen in the software industry."
Massive overseas and domestic investments offer Japan a chance to reclaim its tech crown, but to become a convincing alternative to China the country must embrace rapid innovation, experts say.
US tech giants are pumping billions of dollars into artificial intelligence, cybersecurity and chip production in Japan, which dominated the hardware industry in the 1980s.
Google launched a regional cyber defence hub in the country last month, and Amazon Web Services is spending $14 billion to expand Japanese cloud infrastructure.
And in the latest move, this week saw Microsoft, a partner of ChatGPT-maker OpenAI, pledge $2.9 billion to boost the nation's AI prowess.
"Geopolitical tensions have made Japan a more attractive and stable partner compared to China," said Khos-Erdene Baatarkhuu, CEO of fintech company AND Global.
"Japan's tech sector, once a leader, lost ground due to a slower response to digital and mobile trends" compared with neighbours such as South Korea, he told AFP.
But "now, with supportive government policies, resilient start-ups, and a potentially shifting global tech scene, Japan has an opportunity to regain its tech edge".
It's not there yet, however. Japan was ranked a lowly 32nd in the latest global classification of digital competitiveness by Swiss management school IMD.
And only seven Japanese firms appear among more than 1,200 tech "unicorns" -- start-ups worth more than $1 billion -- listed by CB Insights.
A "perfection-seeking approach" and preference for "stability and gradual improvement" among businesses is partly to blame, Khos-Erdene said.
"The traditional corporate culture in Japan tends to be risk-averse and hierarchical, which can stifle the rapid innovation typically seen in the software industry."

Microchip 'revival'

Masayoshi Son, CEO of Japanese tech investment vehicle SoftBank Group, has warned the country could be left a gawping "goldfish" if it ignores AI.
"Wake up Japan!" he said at a corporate event in October. "I want to be on the side of evolution."
Son and tech titans including Apple boss Tim Cook and Amazon founder Jeff Bezos joined Japan's Prime Minister Fumio Kishida and US President Joe Biden at a Washington dinner on Wednesday.
At a summit that day, Kishida and Biden had vowed to strengthen "our shared role as global leaders in the development and protection of next-generation critical and emerging technologies".
They also agreed to work with "like-minded countries to strengthen global semiconductor supply chains" in a joint statement.
Semiconductors, which power everything from mobile phones to cars, have become a key battleground in recent years.
The United States and some European countries have blocked exports of high-tech chip technology to China over fears of military use.
Meanwhile, Taiwanese chip behemoth TSMC is facing pressure to diversify its production from customers and governments worried about the possibility of China invading Taiwan.
TSMC opened a new $8.6 billion chip factory in southern Japan in February, and is planning a second, $20-billion facility for more advanced chips.
On a visit to the TSMC plant this month, Kishida said he "felt first-hand the revival of our country's semiconductor industry".
Japan has spent 3.9 trillion yen ($25 billion) in the past three years on chip-related subsidies -- a larger portion of gross domestic product than the United States or Germany.
Japanese firms including Sony and Toyota are also collaborating with US giant IBM on a semiconductor project called Rapidus, aiming to mass-produce two-nanometre logic chips in Japan from 2027.

'Crossroads'

"This is a great time to invest in Japan" with the yen's value at a 34-year low, said Hideaki Yokota, vice president of the specialist IT think-tank MM Research Institute.
Tech firms hope the country can become their "best partner in Asia" while its workforce boasts many highly educated engineers ready to be snapped up, he told AFP.
Established Japanese businesses, especially in the auto and household appliance sectors, provide real-world opportunities to make AI profitable, he said.
But Khos-Erdene warned that Japan should not rely on its legacy as a manufacturer, given its low labour productivity and shrinking workforce.
"As CEO of a tech company, I see Japan at a crossroads," he said, with the question not if but how quickly the country can become a "producer, not just a consumer, of these transformative technologies".
Microsoft plans to offer AI training to three million of Japan's population of 125 million.
Japanese and American universities are also teaming up on new technology research programmes funded by global companies such as Nvidia and Arm.
"Overall, Japan's commitment to AI holds tremendous potential for economic revitalisation," Khos-Erdene said.
"By fostering collaboration, retaining top talent, and learning from successful models like the US and China, Japan can bridge the AI gap and re-establish itself as a major force in the global tech landscape."
hih-etb/kaf/dan

watches

Patek Philippe chief not worried for top-end Swiss watches

BY NATHALIE OLOF-ORS

  • "Right now, I can't think of a market in trouble -- not at the top end, in any case," Stern said.
  • Patek Philippe's chief says he is not anxious about the prospects for top-end timepieces, despite Swiss watch exports slowing overall after three years of spectacular growth.
  • "Right now, I can't think of a market in trouble -- not at the top end, in any case," Stern said.
Patek Philippe's chief says he is not anxious about the prospects for top-end timepieces, despite Swiss watch exports slowing overall after three years of spectacular growth.
Thierry Stern told AFP he was "not worried about the high end" of the market during the Geneva watch fair, which brings together 54 major brands at Swiss watchmaking's landmark annual event.
For lower- and mid-range brands, "I think it must be tougher", especially as there is "more competition" at those levels, Stern said at the Watches and Wonders salon, which opened on Tuesday and runs until Monday.
"But for Patek Philippe, I am not worried," said the president of the brand which ranks among the most prestigious in Swiss watchmaking.
"Right now, I can't think of a market in trouble -- not at the top end, in any case," Stern said.
The United States for example, which accounts for 38 percent of Patek Philippe sales, remains a "collectors' market" for the brand, he said.
"Europe is doing very well too," he added, and if "Asia was a little tougher for a while", then "today it's back up again".
Known for its complex timepieces, Patek Philippe is presenting a new version of its World Time model at the salon. It comes in white gold with an opaline blue-grey dial, and a price tag of 65,000 Swiss francs ($71,400).
- 'A little calmer' - 
Swiss watchmaking had a brutal shock in 2020 as the Covid-19 pandemic hammered sales.
But the sector quickly rebounded, and broke records three years in a row, with exports reaching 26.7 billion Swiss francs ($29.5 billion) in 2023.
However, exports saw their first significant year-on-year decline in February -- down 3.8 percent compared with February 2023.
That said, not all brands are feeling the effects.
Globally, across the luxury goods sector, the top two percent of customers account for about 40 percent of sales, according to the US management consultants Bain & Company.
The most high-end brands, like Patek Philippe, rely on a very wealthy clientele that is not particularly exposed to the vagaries of the economy -- meaning those brands are well placed to withstand slower phases across the industry.
For Stern, the fourth generation of his family at the helm of Patek Philippe, the recent slowdown is perhaps a sign of "a return to reality" after three years in which watch sector sales "exploded".
"We can't say it's a crisis," it's just "a little calmer", he said.
This year, he intends to keep production at the same "record" level of 72,000 timepieces reached last year.
Established in 1839 and owned by the Stern family since 1932, the private company never reveals its turnover.
According to an estimate by the US bank Morgan Stanley and the consulting firm LuxeConsult, the company's sales reached around 2.05 billion Swiss francs last year, up 14 percent on the previous year.
noo/rjm/nl/gv

economy

Educated and unemployed: India's angry young voters

BY ANUJ SRIVAS

  • The International Labour Organization estimates 29 percent of India's young university graduates were unemployed in 2022.
  • At a run-down job centre in the suburbs of India's financial capital Mumbai, 27-year-old Mahesh Bhopale dreams of a well-paid government post -- just like millions of other young, unemployed graduates.
  • The International Labour Organization estimates 29 percent of India's young university graduates were unemployed in 2022.
At a run-down job centre in the suburbs of India's financial capital Mumbai, 27-year-old Mahesh Bhopale dreams of a well-paid government post -- just like millions of other young, unemployed graduates.
As the world's most populous nation readies for general elections that begin April 19, politicians face a sobering reality. India is the fastest-growing major economy, but there are still not enough white-collar jobs for its educated youth.
"Our only way out of this life is to get a government job and get good benefits," said biology graduate Bhopale. "That will help us get married and start a family."
He has eked out a living in part-time jobs ranging from a tailor's assistant to a nighttime security guard while cramming for gruelling civil service examinations.
Coming from a farming village to the big city seeking work, Bhopale said he lacked the contacts to push his application in the private sector.
"A government job is the best kind of job," he said. "Educated people from villages like us can't get high-paying private sector jobs."
He isn't alone. The International Labour Organization estimates 29 percent of India's young university graduates were unemployed in 2022.
That rate is nearly nine times higher than for those without a diploma, who typically find work in low-paid service or construction jobs.

'Demographically expanding'

Over half of India's 1.4 billion people are aged under 30, according to government health figures.
"Jobs are not rising as fast as the potential workforce is demographically expanding," said development economist R. Ramakumar, from Mumbai's Tata Institute of Social Sciences, noting many of the new jobs being created are in farming.
"That is one reason why you see a large number of applicants for a small number of positions in government jobs," Ramakumar said.
It also explains the "urge of people to go out of India through illegal channels", seeking jobs in the United States or Canada, he added.
Prime Minister Narendra Modi, who is widely expected to win a third term in the upcoming elections, points to his success in convincing global tech giants like Apple and Dell to set up in India.
But critics say this has not translated into the millions of manufacturing jobs that people demand.
The World Bank warned this month that India -- like other South Asian nations -- was "not creating enough jobs to keep pace with its rapidly increasing working-age population".
South Asia is failing "to fully capitalise on its demographic dividend", said Franziska Ohnsorge, the bank's regional chief economist, calling it a "missed opportunity".
Many young Indians say they have no choice but to join the frenetic race for government jobs, prized for their decent pay, benefits and security.
Competition is intense.
State-run Indian Railways, for instance, receives millions of applications for hundreds of thousands of mid or low-level jobs.
Ganesh Gore, 34, said he had tried and failed the civil service exam five times. 
"No party or politician helps us out," said Gore. "They are sitting there to eat money."
In 2022, after the government switched some permanent military jobs to temporary contracts, violent protests erupted, with people setting railway trains on fire.
Riskier jobs also find many takers.
Earlier this year, thousands queued to submit applications for jobs in Israel after labour shortages sparked by the war against Palestinian militants in Gaza.

'Millionaires and billionaires'

India overtook Britain in 2022 to become the world's fifth-largest economy, and grew at a robust 8.4 percent in the October-December quarter, helped by a surging manufacturing sector.
But many young people say they are frustrated by a lack of opportunities.
In December 2023, protestors hurled smoke canisters into parliament while shouting anti-government slogans to highlight unemployment.
Saraswati Devi, whose daughter Neelam was arrested after the protest, said she was distraught over her inability to find a job.
"She is highly qualified, but wasn't getting a job.... she often used to say that 'I should just die as despite studying so much, I am unable to earn two meals,'" Saraswati told local media.
But it remains unclear if anger at unemployment will translate to voters turning from Modi's ruling party.
A March survey of students in the capital Delhi found only 30 percent blamed Modi's government for high unemployment rates, according to the Delhi-based Lokniti-CSDS research centre.
But some like Gore, smarting from his latest exam failure, see politicians as the tools of the mega-rich.
He believes they are profiting from national growth without supporting the wider country.
"The country is run by the handful of millionaires and billionaires," said Gore. "So politicians don't have much sway."
asv/pjm/cwl/jfx

MLB

Ohtani translator charged with stealing over $16 mn from Dodgers star

BY ROB WOOLLARD WITH CHRIS LEFKOW IN WASHINGTON

  • According to the Justice Department, Mizuhara transferred more than $16 million from Ohtani's bank account "to pay off his own substantial gambling debts incurred with an illegal bookmaking operation."
  • The former Japanese-language translator for Shohei Ohtani was charged with bank fraud on Thursday for allegedly stealing more than $16 million from the Los Angeles Dodgers superstar to pay off gambling debts.
  • According to the Justice Department, Mizuhara transferred more than $16 million from Ohtani's bank account "to pay off his own substantial gambling debts incurred with an illegal bookmaking operation."
The former Japanese-language translator for Shohei Ohtani was charged with bank fraud on Thursday for allegedly stealing more than $16 million from the Los Angeles Dodgers superstar to pay off gambling debts.
Ippei Mizuhara, 39, made a series of unauthorized transfers from Ohtani's checking account between November 2021 and January 2024, the Justice Department said.
US federal prosecutor Martin Estrada told a press conference there was no evidence to suggest Ohtani was aware of or involved in Mizuhara's illegal gambling activity.
"I want to emphasise this point: Mr. Ohtani is considered a victim in this case," Estrada said.
Ohtani, the biggest star in baseball, joined the Dodgers last December in a record-breaking $700 million deal.
The 29-year-old Ohtani told reporters last month that he has never bet on baseball and had not known previously about Mizuhara's gambling problems. Ohtani has not said in public how so much money could go missing from his account without his knowledge.
According to the Justice Department, Mizuhara transferred more than $16 million from Ohtani's bank account "to pay off his own substantial gambling debts incurred with an illegal bookmaking operation."
It said Mizuhara in 2018 accompanied Ohtani, who did not speak any English at the time, to a bank branch in Arizona to open an account.
"Ohtani's salary from playing professional baseball was deposited into this account and he never gave Mizuhara control of this or any of his other financial accounts," according to an affidavit in the case.
"Mizuhara allegedly told Ohtani's US-based financial professionals, none of whom spoke Japanese, that Ohtani denied them access to the account," the department added.
Estrada said that while employed as Ohtani's interpreter, Mizuhara had in fact operated as the baseball star's "de facto manager."

'Used and abused' trust

"Due to the position of trust he occupied with Mr. Ohtani, Mr. Mizuhara had unique access to Mr. Ohtani's finances," Estrada said. 
"He used and abused that position of trust in order to take advantage of Mr. Ohtani and to feed his insatiable appetite for sports betting," Estrada said, adding that Mizuhara "committed fraud on a massive scale."
The Justice Department complaint detailed a staggering volume and value of wagers placed by Mizuhara as his gambling spiralled out of control.
Between December 2021 and January 2024, Mizuhara placed approximately 19,000 bets ranging in value from $10 to $160,000 at an average of around $12,800 per bet. During that period, Mizuhara had winning bets worth $142.3 million, and losing bets of $182.9 million -- leaving him with losses of roughly $40.7 million.
The complaint detailed that contact information on Ohtani's bank account was later changed to link it to Mizuhara's phone number and to an anonymous email address connected to Mizuhara, the affidavit said.
Mizuhara also would allegedly falsely identify himself as Ohtani to trick bank employees into authorizing wire transfers. 
Bank recordings of telephone calls captured Mizuhara impersonating Ohtani as he sought to make wire transfers.
The Justice Department said Ohtani, in an interview with law enforcement, had denied authorizing Mizuhara's wire transfers.
"Ohtani provided his cellphone to law enforcement, who determined that there was no evidence to suggest that Ohtani was aware of, or involved in, Mizuhara's illegal gambling activity or payment of those debts," the department added.
Major League Baseball's gambling policy bars "any player, umpire, or club or league official or employee" from betting on baseball or making illegal bets on any other sport. 
Players found guilty of betting on a game they were involved in are subject to life bans, with one-year suspensions if they are found to have gambled on games they are not directly involved in.
Ohtani is a rarity in baseball in that he combines elite level pitching and hitting ability, making him a generational talent who has been portrayed as a modern-day version of Babe Ruth. 
Those skills and his clean-cut image have made him the global face of baseball. 
Bank fraud carries a maximum sentence of 30 years in prison.
cl-rcw/caw

technology

Apple to fix 'bug' behind Palestinian flag emoji suggestions

  • She pointed out no flag emojis were suggested when an array of other capital cities were typed into iPhone messages.
  • Apple on Thursday promised it would stop a Palestinian flag emoji from being suggested to some iPhone users when they type "Jerusalem" in messages.
  • She pointed out no flag emojis were suggested when an array of other capital cities were typed into iPhone messages.
Apple on Thursday promised it would stop a Palestinian flag emoji from being suggested to some iPhone users when they type "Jerusalem" in messages.
The Silicon Valley tech titan blamed a software bug for the prompt, which sparked accusations Apple was showing anti-Israel bias amid the ongoing conflict in Gaza.
Apple told AFP that the predictive emoji suggestion in the iPhone keyboard was not intentional and would be fixed in the next update to its mobile operating system.
The quirk was pointed out on social media by British television presenter Rachel Riley, renewing debate over whether Israel or Palestinians have rightful claim to Jerusalem as their capital.
"When I type the capital of Israel, Jerusalem, I'm offered the Palestinian flag emoji," Riley wrote in a post on X, formerly Twitter, calling on Apple to explain.
She pointed out no flag emojis were suggested when an array of other capital cities were typed into iPhone messages.
"Showing double standards with respect to Israel is a form of antisemitism, which is itself a form of racism against Jewish people," Riley contended in the post.
She said the Palestinian flag emoji began popping up in connection with Jerusalem after a recent update of the iPhone operating system.
Riley signed her post "a Jewish woman concerned about the global rise in antisemitism."
gc-juj/des

Global Edition

European shares sag after ECB as Nasdaq rallies

BY ROLAND JACKSON

  • That helped eurozone stocks pull higher, but they failed to hold onto gains and ended the session lower.
  • Global stocks were mixed Thursday with the Nasdaq advancing, while a signal by the ECB of a likely interest rate cut in June failed to pull eurozone equities into the green.
  • That helped eurozone stocks pull higher, but they failed to hold onto gains and ended the session lower.
Global stocks were mixed Thursday with the Nasdaq advancing, while a signal by the ECB of a likely interest rate cut in June failed to pull eurozone equities into the green.
US wholesale inflation rose by 0.2 percent in March, a bit less than expected. However, on an annual level the index for final demand increased 2.1 percent for the 12 months ending in March -- its highest level since April 2023.
US indices spent most of the morning in the red, but picked up momentum as the session progressed, with Nasdaq ending 1.7 percent higher.
Tom Cahill of Ventura Wealth Management said the equity gains were reflective of investor "relief" that the inflation report "wasn't worse than expected" after Wednesday's consumer price report sent stocks tumbling.
The European Central Bank held interest rates steady, as expected, but said the slowing rate of price increases in Europe could open the door to easing monetary policy, raising hopes of a first cut in June.
That helped eurozone stocks pull higher, but they failed to hold onto gains and ended the session lower.
In an update, the ECB said that if inflation in the eurozone keeps falling towards its 2.0 percent target then rate cuts would be appropriate. The next update in its inflation forecast is due for its June meeting.
"The ECB's decision to update its guidance suggests that an interest rate cut at the next meeting in June is very likely," said Jack Allen-Reynolds, deputy chief eurozone economist at Capital Economics.
World oil prices sagged, taking Brent crude futures below $90 per barrel although simmering tensions in the Middle East limited losses and kept prices near a six-month high.
Kathleen Brooks, research director at XTB, pointed to oil prices as a source of frustration for central bankers looking to lower interest rates.
"What unifies the ECB, the Fed and the BOE is the potential for the oil price to get to $100, triggering another uptick in inflation," she said.
The dollar has meanwhile surged to 153.33 yen, the strongest since 1990, as chances for US rate cuts diminish.
Tokyo authorities have said they would keep their options open on supporting the unit.

Key figures around 2030 GMT

New York - Dow: FLAT at percent at 38,459.08 (close)
New York - S&P 500: UP 0.7 percent at 5,199.06 (close)
New York - Nasdaq Composite: UP 1.7 percent at 16,442.20 (close)
London - FTSE 100: DOWN 0.5 percent at 7,923.80 (close)
Paris - CAC 40: DOWN 0.3 percent at 8,023.74 (close)
Frankfurt - DAX: DOWN 0.8 percent at 17,954.48 (close)
EURO STOXX 50: DOWN 0.7 percent at 4,966.68 (close)
Tokyo - Nikkei 225: DOWN 0.4 percent at 39,442.63 (close)
Hong Kong - Hang Seng Index: DOWN 0.3 percent at 17,095.03 (close)
Shanghai - Composite: UP 0.2 percent at 3,034.25 (close)
Dollar/yen: UP at 153.25 yen from 153.16 yen on Wednesday
Euro/dollar: DOWN at $1.0730 from $1.0743 
Pound/dollar: UP at $1.2556 from $1.2540
Euro/pound: DOWN at 85.43 pence from 85.66 pence
Brent North Sea Crude: DOWN 0.8 percent at $89.74 per barrel
West Texas Intermediate: DOWN 1.4 percent at $85.02 per barrel
burs-jmb/mdl

fraud

Sam Bankman-Fried appeals fraud conviction, 25-year jail term

  • He was convicted by a federal jury in New York in November 2023 on seven counts of fraud, embezzlement and criminal conspiracy. 
  • Fallen cryptocurrency wunderkind Sam Bankman-Fried has appealed his federal conviction and 25-year jail sentence in a sweeping fraud case, according to a legal filing made public Thursday.
  • He was convicted by a federal jury in New York in November 2023 on seven counts of fraud, embezzlement and criminal conspiracy. 
Fallen cryptocurrency wunderkind Sam Bankman-Fried has appealed his federal conviction and 25-year jail sentence in a sweeping fraud case, according to a legal filing made public Thursday.
News of the appeal comes two weeks after US District Court Judge Lewis Kaplan set the prison term and ordered Bankman-Fried, known as "SBF," to pay $11 billion in forfeiture.
Bankman-Fried had soared to the top of the crypto world, becoming a billionaire before age 30 and turning FTX, a small start-up he cofounded in 2019, into the world's second largest exchange platform.
But in November 2022, Bankman-Fried's breakneck rise came crashing down, with a deluge of customer withdrawals and revelations that billions of dollars had been illegally moved from FTX to Bankman-Fried's personal hedge fund, Alameda Research.
He was convicted by a federal jury in New York in November 2023 on seven counts of fraud, embezzlement and criminal conspiracy. 
During last month's sentencing hearing, Bankman-Fried expressed regret about the firm's demise, which also affected many colleagues.
"It haunts me every day," he said. "I made a series of bad decisions."
But the judge said Bankman-Fried had not fully accepted responsibility.
Bankman-Fried said "mistakes were made, but never a word of remorse for the commission of a terrible crime," said Kaplan, who characterized the violations as "brazen" and called out SBF for his "exceptional flexibility" towards the truth.
jmb/sst

EU

French PM, Trudeau defend Canada-EU trade pact

BY ANNE RENAUT

  • Attal also "welcomed Canada's support for Ukraine." 
  • Prime Ministers Gabriel Attal of France and Canada's Justin Trudeau on Thursday defended a trade pact between Canada and the European Union whose ratification has been stymied in France's legislature.
  • Attal also "welcomed Canada's support for Ukraine." 
Prime Ministers Gabriel Attal of France and Canada's Justin Trudeau on Thursday defended a trade pact between Canada and the European Union whose ratification has been stymied in France's legislature.
The pair expressed confidence in the continued implementation of the Comprehensive Economic and Trade Agreement (CETA), with Attal calling it a "win-win agreement" despite opposition in his own country.
"The figures do not lie," the visiting Attal told a joint press conference. "Since it came into force, trade between our two countries has progressed by more than a third."
Trudeau meanwhile said Canada would continue to "demonstrate the positive impact on citizens of trade and responsible commerce between friends and allies who share the same values."
Following its approval by the European parliament in early 2017, the trade agreement has been applied provisionally since September of that year, but requires ratification in all EU member countries to take full effect.
Amid protests by farmers, France's Senate voted against it last month, in a major blow to the government of President Emmanuel Macron.
Ten European states have yet to ratify the agreement that includes preferential access to Canadian minerals, such as uranium or lithium, which are critical for energy transition and prized by Paris.
Trade between the EU and Canada has increased since the war in Ukraine, as European countries substituted Russian imports for Canadian products.

Fighting wildfires

The two leaders also discussed climate change and the devastating forest fires that ravaged Canada last year.
France sent 350 firefighters to help Canada battle the blazes, which destroyed more than 15 million hectares (37 million acres). Smoke from these fires billowed as far as the United States and Europe.
Trudeau announced the purchase of two Canadian water bombers by France and a deal to boost cooperation on dealing with such wildfires.
Attal also "welcomed Canada's support for Ukraine." 
He headed to French-speaking Quebec later in the day for talks and a speech to the Quebec National Assembly.
are/amc/md/sst

Brazil

Report links H&M, Zara to environmental destruction in Brazil

  • But that has contributed to environmental destruction in the Cerrado, where "a ruinous mix of corruption, greed, violence and impunity has led to the blatant theft of public lands and dispossession of local communities," Earthsight said.
  • Fast fashion giants H&M and Zara have used cotton from farms linked to massive deforestation, land-grabbing, corruption and violence in Brazil, a report by the environmental group Earthsight said Thursday.
  • But that has contributed to environmental destruction in the Cerrado, where "a ruinous mix of corruption, greed, violence and impunity has led to the blatant theft of public lands and dispossession of local communities," Earthsight said.
Fast fashion giants H&M and Zara have used cotton from farms linked to massive deforestation, land-grabbing, corruption and violence in Brazil, a report by the environmental group Earthsight said Thursday.
Based on satellite images, court rulings, shipment records and an undercover investigation, the report, titled "Fashion Crimes," found the companies sourced "tainted cotton" farmed in the fragile Cerrado savanna by two of Brazil's biggest agribusiness firms, SLC Agricola and the Horita Group.
Despite abuses linked to its production, the cotton had been labeled as ethical by leading certification scheme Better Cotton, exposing "deep flaws" in the oversight program, said the British environmental group.
The Cerrado, the most biodiverse savanna on Earth, has been disappearing at an accelerating rate as Brazil's massive agribusiness industry has increasingly turned to the region in recent decades.
Earthsight traced at least 816,000 tonnes of cotton exported from 2014 to 2023 to farms run by SLC and Horita, which "have a long record of court injunctions, corruption rulings and millions of dollars in fines related to clearances of around 100,000 hectares of Cerrado wilderness," it said.
The cotton in question was farmed in the northeastern state of Bahia and shipped to eight Asian clothing manufacturers whose clients include Sweden-based H&M and Spain-based Zara, the report said.
Brazil, the world's top exporter of beef and soybeans, has also emerged as a major cotton producer in recent years, now second only to the United States.
But that has contributed to environmental destruction in the Cerrado, where "a ruinous mix of corruption, greed, violence and impunity has led to the blatant theft of public lands and dispossession of local communities," Earthsight said.
Better Cotton said in a statement it had conducted an independent audit of the "highly concerning issues raised" in the report, and that it would provide a summary of the findings.
Zara parent company Inditex and H&M said they took the allegations seriously, and urged Better Cotton to release the auditors' findings.
The Brazilian Cotton Producers' Association (ABRAPA) said it had worked with the growers in question to provide records and evidence countering the report's allegations.
"Unfortunately, these were largely disregarded," it said in a statement.
"ABRAPA unequivocally condemns any practices that undermine environmental conservation, violate human rights or harm local communities."
ola-vab/jbo/de/jhb/md

Fed

US Fed's Barkin says recent inflation data 'not supportive' of case for rate cuts

BY JULIE CHABANAS

  • "But you've got to start with when does inflation start to make that case?"
  • The recent uptick in US inflation has weakened the case for the Federal Reserve to start cutting interest rates, a senior Fed policymaker told AFP on Thursday.
  • "But you've got to start with when does inflation start to make that case?"
The recent uptick in US inflation has weakened the case for the Federal Reserve to start cutting interest rates, a senior Fed policymaker told AFP on Thursday.
The Fed has lifted its benchmark lending rate to a 23-year high of between 5.25 percent and 5.50 percent as it looks to bring inflation back down to its long-term target of two percent with as little damage to the labor market as possible. 
While US consumer inflation has slowed significantly since peaking in 2022, it has crept higher in recent months, keeping markets guessing about when the Fed will implement its first rate cut, even as other indicators of US economic strength have remained resilient. 
"When we gain greater confidence that inflation is headed toward our target, then it'll be appropriate to ask whether it's not time to recalibrate the setting of monetary policy," Richmond Fed president Tom Barkin said in an interview.
"But you've got to start with when does inflation start to make that case?" he added. "And unfortunately, the last three months have not been supportive of that case. But we'll see."

'Coming under control'

Barkin is one of the 12 members of the Fed's rate-setting Federal Open Market Committee (FOMC) with a vote on setting US interest rates this year, and his words are closely scrutinized by traders looking to predict the direction of travel of US monetary policy. 
"I think, on the inflation side, we spent the last seven months of last year celebrating two percent inflation -- and we were right to do that," he said. 
"And what's happened over the last three months is we've seen elevated inflation, not nearly at the levels that it was at a year or two ago, but higher than our target," he added.
At its most recent meeting in March, FOMC policy makers penciled in three rate cuts in 2024. 
But since then, fresh data has fueled concerns that inflation is accelerating, causing traders to dial back and delay their rate cut forecasts.
"The markets, for reasons that I can understand, are very focused on 'Is it zero or one or two or three?' or whatever the number is," he said. 
"I'm more focused on, is inflation coming under control? And are rates having the impact you would hope that they would have on the economy in a way that brings inflation under control?" he added. 
At the March meeting, FOMC members also predicted that inflation wouldn't return to the Fed's two percent target before 2026, and that the interest rate would settle slightly higher over the long run than previously thought. 
"It wouldn't surprise me if it took a while," Barkin said when asked how quickly he thought inflation would settle at two percent. 

'We value our independence'

Futures traders currently see a high probability that the Fed will make its first interest rate cut in September this year,  according to data from the financial services firm CME Group.
Such a move would place the first cut just before November's presidential election, thrusting the independent US central bank into the middle of a fractious fight between President Joe Biden and his likely opponent, former president Donald Trump. 
The former president has repeatedly criticized the Fed, most recently on Wednesday, when he suggested on social media that it "will never be able to credibly lower interest rates, because they want to protect the worst President in the history of the United States!" 
Barkin would not be drawn on the timing of the first interest rate cut, and said he wanted the Fed to remain independent and focused on its dual mandate. 
"We value our independence very much," he said. 
"History has shown, and academic studies confirm, that the best thing for an economy is an independent central bank," he continued. 
"The number one way to keep your independence is to do a good job at your job," he added. "And our job is stable prices and maximum employment."
da/ia

growth

'Robust' US has helped improve global economic outlook: IMF chief

  • "Global growth is marginally stronger on account of robust activity in the United States and in a number of emerging markets economies," International Monetary Fund managing director Kristalina Georgieva said in a speech in Washington.
  • Strong growth in the United States has helped to lift the outlook for the world economy, but more needs to be done to stem a slide in productivity, the head of the IMF said Thursday. 
  • "Global growth is marginally stronger on account of robust activity in the United States and in a number of emerging markets economies," International Monetary Fund managing director Kristalina Georgieva said in a speech in Washington.
Strong growth in the United States has helped to lift the outlook for the world economy, but more needs to be done to stem a slide in productivity, the head of the IMF said Thursday. 
"Global growth is marginally stronger on account of robust activity in the United States and in a number of emerging markets economies," International Monetary Fund managing director Kristalina Georgieva said in a speech in Washington.
The US economy grew by a robust 2.5 percent last year, according to the Commerce Department, far outstripping most other advanced economies.
"Sustained household consumption and business investment, and an easing of supply chain problems helped," Georgieva added. "And inflation is going down."
She spoke days before the IMF-World Bank spring meetings of world financial leaders in Washington, one of two such gatherings hosted annually by the international institutions.
Her remarks suggest the IMF now expects the world economy to grow faster than it predicted in January, when it forecast global growth to rise by 3.1 percent in 2024, and 3.2 percent in 2025. 
"It is tempting to breathe a sigh of relief. We have avoided a global recession and a period of stagflation," Georgieva said.
"But there are still plenty of things to worry about."

Geopolitical tension

A challenge Georgieva mentioned was rising geopolitical tension, which increases the risk of fragmentation in the global economy.
"We have to buckle up for more to come," she told a question-and-answer session when asked if volatility is the new normal in international affairs.
Georgieva also noted that while China, the world's second biggest economy, has taken steps to address problems in its struggling property sector, "they can do more."
This includes being more decisive in dealing with failing companies and directing support towards uncompleted construction, given the key role real estate has in boosting people's confidence.
Beijing also needs to improve domestic demand and deal with issues like local government debt, she said, stressing that China contributes a third of global growth and is important for the world.
Georgieva also broadly highlighted the challenges of growing public debt and a "broad-based slowdown in productivity." 
Because of this, the IMF expects growth to remain at just above three percent over the medium term -- below its historical average.
To help the global economy to heal and fix the productivity challenge, Georgieva laid out steps to bring global inflation and public debt back down to sustainable levels, and also called for moves to eliminate "constraints to economic activity." 
"In short, if there is a market failure that needs to be addressed -- such as accelerating innovation to address the existential threat of climate change -- there is a case for government intervention, including through industrial policy," she said.
"If there is no market failure, there is a need for caution," she added. 
da-bys/nro

offsets

Corporate climate pledge weakened by carbon offsets move

BY MARLOWE HOOD

  • - 'Extremely serious' - But critics say offsets give corporations a free pass to keep polluting without cleaning up their act, and their usage to make claims of "carbon neutrality" has become increasingly contentious.
  • The world's main benchmark for vetting corporate climate action has been accused by its own staff of "greenwashing" after allowing businesses to use carbon credits to offset pollution from their value chains.
  • - 'Extremely serious' - But critics say offsets give corporations a free pass to keep polluting without cleaning up their act, and their usage to make claims of "carbon neutrality" has become increasingly contentious.
The world's main benchmark for vetting corporate climate action has been accused by its own staff of "greenwashing" after allowing businesses to use carbon credits to offset pollution from their value chains.
The ruling by the Science Based Targets Initiative (SBTi) was slammed as a "coup" on Thursday and has sparked a revolt by staff who want the decision reversed and the non-profit's CEO and board to resign.
Experts say it could irreversibly damage the credibility of the SBTi, which is partnered with the UN Global Compact and WWF, and is the gold standard for assessing the net zero plans of big business.
An internal letter sent to SBTi leadership, and seen by AFP, said the board's decision was taken without adequate consultation, defied science, and "resulted in significant harm to our organisation's reputation and viability.
"We stand ready to support any efforts aimed at ensuring that the SBTi does not become a greenwashing platform where decisions are unduly influenced by lobbyists, driven by potential conflicts of interest and poor adherence to existing governance procedures," read the letter to SBTi's CEO and Board of Trustees.
"In the event that our concerns are not addressed, SBTi staff will have no choice but to take further action," it added, without elaborating on what that would mean.
It was signed by staff from "the Target Validation Team, Target Operations Team, the Technical Department, Communications, Impact and IT, and multiple department heads."
Comment has been sought from SBTi, which receives funding from the Bezos Earth Fund and IKEA Foundation, among others.
On April 9, SBTi issued a statement rolling back its previous opposition to the use of carbon credits to offset Scope 3 emissions. 
These occur in the value chain, and represents the lion's share of the carbon footprints -- in some cases more than 90 percent -- of most companies.
Carbon credits are generated by projects that reduce or avoid emissions -- like renewable energy, tree planting and forest protection -- and sold to companies wanting to offset pollution from their activities.
"The voice of business on this issue is clear... This change empowers companies to bring more innovation and investment into cutting emissions from their value chains," María Mendiluce, CEO of the We Mean Business Coalition, and a board trustee to SBTi, said in a statement.

'Extremely serious'

But critics say offsets give corporations a free pass to keep polluting without cleaning up their act, and their usage to make claims of "carbon neutrality" has become increasingly contentious.
Gilles Dufrasne from Carbon Market Watch, who sits on the technical advisory group to SBTi, said allowing their usage by companies represented a "fundamental U-turn on SBTi policy so far".
"It is pretty much a coup from the board," he told AFP, adding at least one member of the advisory group had resigned in protest.
"It's extremely serious, I've never seen anything like it."
Verification by SBTi allows companies to say their climate plans align with science and the goals of the Paris agreement to limit global warming.
More than 4,000 companies and financial institutions have sought to have their net zero claims verified by SBTi, the nonprofit said.
Dufrasne said the decision was "extremely damaging" to corporate climate responsibility because it sent a signal that companies could just pay someone else if they can't meet their own targets.
"I'm not sure if SBTi's credibility can survive this," he said.
Carsten Warnecke from the NewClimate Institute, a nonprofit policy organisation, said in a statement: "Anyone who still believed that the voice of science still had weight in this initiative has been proven wrong."
np/mh/rl

Cannes

Coppola's 'Megalopolis' among entries for Cannes Film Festival

BY ERIC RANDOLPH

  • Success at Cannes can give a major boost to arthouse films such as last year's winner, "Anatomy of a Fall", which went on to win an avalanche of awards, including an Oscar.  er/ah/tw
  • Legendary director Francis Ford Coppola will return to the Cannes Film Festival with his long-awaited epic "Megalopolis", 45 years after winning a Palme d'Or for "Apocalypse Now", organisers said on Thursday, announcing a line-up that includes major names of world cinema. 
  • Success at Cannes can give a major boost to arthouse films such as last year's winner, "Anatomy of a Fall", which went on to win an avalanche of awards, including an Oscar.  er/ah/tw
Legendary director Francis Ford Coppola will return to the Cannes Film Festival with his long-awaited epic "Megalopolis", 45 years after winning a Palme d'Or for "Apocalypse Now", organisers said on Thursday, announcing a line-up that includes major names of world cinema. 
The 77th edition of the festival on the French Cote d'Azur, considered the most prestigious in the film industry, runs from May 14 to 25. 
This year's competition for the Palme d'Or, the festival's top prize, includes another team-up between Emma Stone and Greek director Yorgos Lanthimos -- "Kinds of Kindness" -- just weeks after Stone's Oscar win for their Frankenstein-style satire "Poor Things".
"The Apprentice", a biopic about the early years of Donald Trump by Iran-born director Ali Abbasi, is also expected to draw attention. 
But all eyes are likely to be on Coppola's "Megalopolis", marking the return of "The Godfather" director to Cannes at the age of 85. 
He has twice won the Palme d'Or -- for "The Conversation" (1974) and, controversially, for "Apocalypse Now" (1979), which was not even finished when it premiered at the festival.
He has self-funded "Megalopolis", said to be a Roman political drama transplanted to modern-day New York, starring Adam Driver, Forest Whitaker and  other stars. 
"We are overjoyed that he has done us the honour of coming to present this film," festival director Thierry Fremaux told reporters.

Gerwig's choice

This year's jury is led by "Barbie" director Greta Gerwig, who "embodies perfectly the soul of the festival", said Cannes president Iris Knobloch.
Only 19 entries of the main competition were announced Thursday -- there are usually around 22 -- though more may be added.
Among the more intriguing entries is "Emilia Perez", a musical comedy about a Mexican cartel boss undergoing a sex-change operation, with popstar-actor Selena Gomez in a supporting role. It is the latest unlikely creation from Palme-winning French director Jacques Audiard. 
Writer-director Paul Schrader reunites with his "American Gigolo" star Richard Gere for "Oh Canada", and Oscar-winner Paolo Sorrentino pens another love letter to his native Naples with "Parthenope", starring Gary Oldman. 
Canadian horror maestro David Cronenberg returns with what is billed as his most personal film yet, "The Shrouds", with Vincent Cassel.
Russian director Kirill Serebrennikov is to tell the true story of a radical Soviet poet "who became a bum in New York, a sensation in France, and a political antihero in Russia" in "Liminov: The Ballad of Eddie".

Gaza, Ukraine

It was already known that "Furiosa: A Mad Max Saga", the latest instalment of the post-apocalyptic franchise, would get its world premiere at the festival, playing out of competition. 
So will Kevin Costner's new opus, "Horizon, An American Saga", in which the veteran star plays alongside Sienna Miller in the first of a planned series about the American West.  
Meanwhile, George Lucas -- the man behind "Star Wars" and "Indiana Jones" -- will receive an honorary Palme d'Or at the closing ceremony. 
A film about women's rights in China will also play out of competition. "She Has No Name" stars two of the country's biggest stars, Lei Jiayin and Zhang Ziyi.
Two highly topical films will have special screenings. 
"La Belle de Gaza" follows transsexual Palestinians moving to Israel, while "The Invasion" by Sergei Loznitsa centres on the war in his native Ukraine. 
Success at Cannes can give a major boost to arthouse films such as last year's winner, "Anatomy of a Fall", which went on to win an avalanche of awards, including an Oscar. 
er/ah/tw