US stock plunge sparks global sell-off

By: Admin on February 05, 2018 / comment : 0 Business, Slider

The Dow Jones Industrial Average index tumbled 1,175 points, or 4.6% to close down at 24,345.75.
The White House moved to reassure investors saying it was focused on "long-term economic fundamentals, which remain exceptionally strong".
Signs of improvement in the economy had driven US markets to record highs.
Ever since he was elected in November 2016 President Donald Trump has tweeted a number of times about the increase in US stock markets, using the gains since he took office to illustrate market improvement.
"Economic news from the US has been stronger than anticipated," said David Kuo, chief executive of financial services advisory Motley Fool.
"So, perversely, the market correction has been caused by positive economic news".
Monday's decline is the largest decline in percentage terms for the Dow since August 2011, when markets dropped in the aftermath of "Black Monday" - the day Standard & Poor's downgraded its credit rating of the US.

What has the reaction been?

The drop on the Dow was closely followed by the wider S&P 500 stock index, down 4.1% and the technology-heavy Nasdaq, which lost 3.7%.
In London, the FTSE 100 index of leading companies also fell to close down 1.46% or 108 points lower.
In Tuesday's early Asian trade, stocks were following Wall Street's lead. Japan's benchmark Nikkei 225 sank 4.8% before recovering slightly, while Australia's benchmark S&P/ASX 200 was down 2.7%. In South Korea, the Kospi lost 2.3%.

Why is this happening?

Investors are reacting to changes in the outlook for the American and global economy, and what that might mean for the cost of borrowing.
The stock market sell-off accelerated on Friday when the US Labour Department released employment numbers which showed stronger growth in wages than was anticipated.
CMC Markets analyst Michael McCarthy said the wage numbers "blew lower interest rates out of the water".
"The share selling....reflects a higher than previously anticipated interest rate environment," Mr McCarthy said.
In response to that, investors moved to sell out of stocks and put money into assets like bonds which benefit from higher interest rates.
"This isn't a collapse of the economy. This isn't a concern that markets aren't going to do well," said Erin Gibbs, portfolio manager for S&P Global Market Intelligence.
"This is concern that the economy is actually doing much better than expected and so we need to re-evaluate," she said.
Stronger global growth has prompted central banks in Europe, Canada and elsewhere to ease away from policies put in place to stimulate the economy after the financial crisis.

What impact will this have?

Analysts say investors should be prepared for choppier stock markets in the months ahead.
But the Dow closed Monday having shed about a third of its gains since Mr Trump took office in January 2017.
It marks a dramatic turnaround from January, when it raced past the 25,000 and 26,000 point milestones in less than a month.
Joel Prakken, chief US economist for IHS Markit, predicts share price gains will be limited over the next two years.
But he added that markets would need to deteriorate more significantly for him to start to worry about the broader economy.
"The difference between this year and last year is we're going to see more periods of volatility like this as the market reacts to higher inflation," he said.
"We're just not used to it because it's been so long since we've had a significant correction."

What does it mean for investors?

Investors have been bracing for a downturn after months of seemingly unstoppable gains.
Amid the market plunge on Monday, websites for several large money management companies suffered slowdowns or crashes.
Wall Street firms also said they have been fielding calls from people worried about their investments.

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Boasting about stock market gains is a dangerous game that most presidents avoid playing. Barack Obama did it occasionally, but only after the US economy had climbed significantly from the wreckage of the 2008 collapse.
After warning of a market bubble during the campaign, however, Donald Trump became the Dow Jones's biggest cheerleader- in tweets, at rallies and even during last week's State of the Union address. That set up the jarring visual of the president boasting about the benefits of his tax cuts in a speech as the markets headed south.
US cable news channels, which had been airing the president live, cut into their coverage to report on the record-setting day. It was a highly visible hiccup in the recent US economic success story that will be hard for most Americans to miss.
The president will make the case that the fundamentals in the economy are still strong. Wages are up and unemployment is down - possibly contributing to stock drop. If growth continues, this could be chalked up as yet another rhetorical mis-step by a non-politician.
If it's the beginning of a larger correction in an election year, however, the president's words could come back to haunt him.

Coincheck: World's biggest ever digital currency 'theft'

By: Admin on January 27, 2018 / comment : 0 Asia, Business

Coincheck froze deposits and withdrawals for all crypto-currencies except Bitcoin as it assessed its losses in NEM, a lesser-known currency.
It may be unable to reimburse the funds lost on Friday, a representative told Japanese media.
If the theft is confirmed, it will be the largest involving digital currency.
Another Tokyo exchange, MtGox, collapsed in 2014 after admitting that $400m had been stolen from its network.
The stolen Coincheck assets were said to be kept in a "hot wallet" - a part of the exchange connected to the internet. That contrasts with a cold wallet, where funds are stored securely offline.
Coincheck says it has the digital address of where the assets were sent.

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What do we know about the hack?

Hackers broke in at 02:57 on Friday (17:57 GMT Thursday), the company said in a statement, but the breach was not discovered until 11:25, nearly eight and a half hours later.
Company chief operating officer Yusuke Otsuka said 523m NEMs had been sent from Coincheck's NEM address during the breach.
"It's worth 58bn yen based on the calculation at the rate when detected," he told reporters at the Tokyo Stock Exchange. 
Coincheck was still examining how many customers had been affected and trying to establish whether the break-in had been launched from Japan or another country.
"We know where the funds were sent," Mr Otsuka added. "We are tracing them and if we're able to continue tracking, it may be possible to recover them."
Coincheck reported the incident to the police and to Japan's Financial Services Agency.

How damaging is the loss?

NEM, the 10th-largest crypto-currency by market value, fell 11% over a 24-hour period to 87 cents, as of 18:30, Bloomberg news agency reports.
Among the other crypto-currencies, Bitcoin dropped 3.4% and Ripple retreated 9.9% on Friday, according to prices seen by the agency.
More was lost on Friday than in 2014, when MtGox lost what it thought was 850,000 bitcoins. However, MtGox later found 200.000 bitcoins in an old digital wallet.
"In a worst-case scenario, we may not be able to return clients' assets," an unnamed Coincheck representative was quoted as saying on Saturday by Japan's Kyodo news agency.
After the collapse of MtGox shook the digital currency world, a licensing system was introduced in Japan to increase oversight of local currency exchanges such as Coincheck.
"What's the lasting impact? It's hard to tell," Marc Ostwald, global strategist at ADM Investor Services International in London, told Bloomberg.
"Japan is one of the most pro-crypto trading countries, among the G-20. In Japan they don't really want a wholesale clampdown. So it will be interesting how Japanese regulators respond to this, if they indeed do."

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What is Coincheck?

Founded in 2012, the company is based in Tokyo, where it employed 71 people as of August last year.
Its headquarters are located in the city's Shibuya district, an area popular with start-ups that was also home to MtGox, Bloomberg reports.
Last year, Coincheck began running adverts on national television featuring popular local comedian Tetsuro Degawa, the agency adds.
Kunihiko Sato, a 30-year-old customer from Tokyo, told Kyodo he had deposited about 500,000 yen ($4,600), into his account with the exchange.
"I never thought this kind of thing would happen with Japan's developed legislation," he said.

How do crypto-currencies work?

Whereas money is printed by governments or traditional banks, digital currencies are generated through a complex process known as "mining". Transactions are then monitored by a network of computers across the world using a technology called blockchain.
There are thousands of them, largely existing online, unlike the notes or coins in your pocket.
It may be more useful to think of them as assets, rather than digital cash. The vast majority of Bitcoin holders, for instance, appear to be investors. But the anonymity that crypto-currencies afford has also attracted criminals.
The value of a crypto-currency is determined by how much people are willing to buy and sell them for.

Are President Trump's tax cuts helping workers?

By: Admin on January 26, 2018 / comment : 0 Business, Slider

At Disney, 125,000 workers will receive a $1,000 one-time bonus. Alaska Airlines said 23,000 of its staff would get $1,000 awards, on top of their usual incentive system. And about 60,000 employees at Fiat Chrysler Automobiles are due to take home $2,000 extra.
Those companies are just three of the roughly 250 firms that have announced bonuses, pay increases, more generous benefits or US investments, citing tax cuts the US passed in December, according to Americans for Tax Reform, an organisation that lobbies for lower taxes.
All told, the group counts at least 3 million Americans due for some kind of boost from employers as a result of the overhaul, which slashed the corporate rate from 35% to 21%.
The announcements have reignited debate over whether the controversial law - estimated to cost a total of $1.5tn from 2018 through 2027 - is good for the average American.

What does the White House say?

On its face, the new law provides relatively minimal benefit for households.
The cuts for families are estimated to amount to an average of just $1,600 in 2018 - a difference of less than $31 per week. And most of the benefits will accrue to the wealthiest families.
The White House has seized on the company announcements as proof the law offers other benefits to workers.


As President Donald Trump put it in a recent Twitter post: "Tremendous investment by companies from all over the world being made in America. There has never been anything like it.
"Now Disney, J.P. Morgan Chase and many others. Massive Regulation Reduction and Tax Cuts are making us a powerhouse again. Long way to go! Jobs, Jobs, Jobs!"

What do opponents say?

Opponents of the overhaul have dismissed the announcements as little more than publicity stunts, pointing to billions more going to share buybacks and dividends - and in some cases, layoffs at the very companies promoting the awards.
Telecommunications giant AT&T, for example, was among the first to announce its plans: $1,000 bonuses for more than 200,000 workers and $1bn in extra US investment in 2018.
But the company - which is trying to win government approval to purchase Time Warner - is also negotiating with union workers over roughly 1,000 layoffs.
Similar elements of spin and redundancies have coloured other announcements.

On the same day that Walmart announced plans to increase its minimum pay to $11 and offer bonuses of up to $1,000, word emerged that the firm was closing 63 of its Sam's Club stores and laying off thousands of workers.
Apple, after touting a five-year $350bn contribution to the US economy, acknowledged that much of the money reflected its current spending pace.

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And the firm - which politicians have criticised for years for its overseas cash pile and offshore manufacturing - had already committed nearly as much - $300bn - to buy back shares and boost dividends.
In the broader context, the benefits for workers are "trivial", says Beth Allen, spokeswoman for the Communications Workers of America, the labour union that represents staff at AT&T and other companies.
"Our workers at AT&T in particular, because the layoffs happened at the same time, saw it for what it was - which was something the company was doing to get to the press," she said.

Are there other reasons for the plans?

Analysts say companies have reasons outside of the tax bill to be re-thinking worker benefits.
The US unemployment rate is now hovering around 4.1% - a level last seen in 2000 - putting pressure on firms to keep workers happy.

But it is also clear that self-promotion and political calculus are driving some of the announcements.
"Why didn't they just tell their workers privately?" says Laurence Kotlikoff, an economics professor at Boston University, who described some of the announcements as "implicit back-scratching" for the White House.
"They're making a big deal of this to serve some other purpose, maybe getting the country to like their product or getting the government to lay off a bit."
Banks represent more than a third of the companies with announcements on the Americans for Tax Reform list. That sector is among the biggest beneficiaries of the tax changes, and also expects lighter regulations.
Many companies, however, were already paying below the 35% headline rate.
Professor Kotlikoff says that suggests firms are making their decisions due to sentiment - not policy changes. Those moods can shift quickly, he warns.

What long-term effect will this have?

The White House maintains the optimism will translate into expansion and investments, hiring, and, ultimately, higher wages, as firms compete for workers.
That would be a welcome change for the US after years of relatively stagnant wage growth

John Bremen, who advises companies on human capital and benefits as a managing director for Willis Towers Watson, says there are signs that is starting to happen.
His firm surveyed more than 300 companies, and found that roughly two-thirds were considering improving benefit packages or had already taken action as a result of the law.
Many firms were already looking at ways to retain and attract workers due to the tight labour market, but the tax law "amplifies it and accelerates it," he says.

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Economists predict the tax cuts will boost the US - and global - economy, albeit modestly, by spurring consumer spending and investment.
This week, the IMF revised up its global growth forecast by 0.2 percentage points, citing the overhaul. In the US, the Tax Policy Center says tax cuts are likely to lift the economy by 0.8% in 2018, but the effects will fade over the decade.
As departing Federal Reserve Chair Janet Yellen said when asked about the effect of the tax cuts last month: "Much uncertainty remains."
The same could be said for the American worker.

 Thanks BBC.com