Connect with us

Low interest rates and high liquidity have also generated collateral damages. A recent study by the National Bureau of Economic Research concludes that aggressive monetary policies lead to “rising market concentration, reduced dynamism, a widening productivity-gap between industry leaders and followers, and slower productivity growth.”

Another negative side effect is the rise of zombie companies, those that cannot cover interest expenses with operating profits for an extended period of time. According to Ryan Banerjee, an economist at the Bank of International Settlements, the percentage of zombie firms has risen to multi-year highs.

We must also understand that the concerns about liquidity created a large impact in global markets, as investors worried about central banks normalizing policy. 2018 was the first year in which global money supply fell after years of exceptionally high growth. Central banks have changed their communication to a more dovish tone, but this is not necessarily going to prevent a change of economic cycle, rather the opposite. Failure to normalize sends a message of deteriorating economic signals.

These issues are unlikely to end due to a trade deal. Cycles change. China’s slowdown was inevitable and a reduction in U.S. growth estimates is logical after the longest expansion in history.

Remember that the same reason why tariffs had a relatively small impact on the global economy shows why a new trade agreement is unlikely to change the current trend. Those tariffs affected a relatively small proportion of the global economy.

A new trade deal will probably have a marginal effect on the Chinese and U.S. economies.

Source link

World

Mueller report can lead to new start for US-Russia relations

Published

on

The Mueller report’s findings that President Donald Trump did not collude with Russia to influence the 2016 election should help to improve relations between the U.S. and Russia, Andrey Kostin, the chairman and president of VTB Bank, told CNBC.

“Hopefully, the Mueller report will help to start a rethink (of) the attitude of American politicians towards Russia and maybe we’ll have a new start in our relationship with the United States, hopefully,” Kostin told CNBC’s Geoff Cutmore in Moscow, Wednesday.

Relations between Russia and the U.S. have been strained since the former was found to have meddled in the 2016 election and was punished with U.S. sanctions.

Following a 22-month investigation, special counsel Robert Mueller concluded in March that Trump did not collude with Russia to influence the vote, however.

“For a long time the Russian side was saying that the Mueller report would not find any relationship, or behind-the-scenes relationship or agreement, between Trump and Russia because there are none,” Kostin said.

“Two years or so were spent on asking hundreds of people about this and you see the results are zero.”

Russia has constantly denied any meddling in the U.S. election and Kostin said evidence was lacking.

“I can neither confirm nor deny it, I just haven’t received enough information about this from the Mueller report or other sources to justify the accusation against the Russian side,” he said.

How much wider political appetite there is in the U.S. to forgive Russia, which has labored under various sanctions relating to election meddling and its annexation of Crimea in 2014, remains under scrutiny.

Majority state-owned VTB Bank is no stranger to sanctions. Russia’s second-largest bank was placed on a U.S. sanctions list in 2014 following this annexation and support for a pro-Russian uprising in the east of Ukraine.

In 2018, the U.S. added Kostin to a list of sanctioned individuals as he was deemed to be a government official and close to President Vladimir Putin. He told CNBC last May that the decision to put him on the list was “unfair.”

Source link

Continue Reading

World

Nissan slashes profit outlook to near-decade low

Published

on

Logos for Nissan Motor Co., left, Infiniti, center, and Datsun displayed outside the Nissan headquarters in Yokohama, Japan, on Sunday, Jan. 20, 2019.

Keith Bedford | Bloomberg | Getty Images

Logos for Nissan Motor Co., left, Infiniti, center, and Datsun displayed outside the Nissan headquarters in Yokohama, Japan, on Sunday, Jan. 20, 2019.

Nissan Motor Co slashed its full-year profit forecast to its lowest in nearly a decade due to weakness in the United States, just as it adjusts to life without Carlos Ghosn and charts its future with alliance partner Renault SA.

The Japanese automaker expects operating profit for the year ended March to drop 45 percent versus a year earlier to 318 billion yen ($2.84 billion), from a previous forecast for 450 billion yen, on expenses related to extending vehicle warranties in the United States, its biggest market.

In a statement on Wednesday, Nissan said sales had taken a hit in the aftermath of the arrest of former Chairman Ghosn, contributing to a decline in profit to its lowest since the year ended March 2010.

This is the second cut to the automaker’s operating profit forecast in two months, and adds pressure on Chief Executive Hiroto Saikawa just as he works to draw a line under Ghosn’s legacy by overhauling corporate governance and seeking a more equal footing with Renault, Nissan’s biggest shareholder.

Nissan is scheduled to announce its full-year earnings results on May 14. Falling profit has been a headache since before Ghosn was first arrested in November on allegations of financial misconduct. Currently in jail following his fourth arrest, Ghosn – who denies wrongdoing – could learn as early as Wednesday whether he will be released on bail for a second time.

Nissan has struggled to reduce costly sales incentives in the United States.

For years it has relied on heavy discounting in its biggest market to sell its Rogue compact sport utility vehicles and Altima sedans to expand market share, under aggressive targets Ghosn set during his time as chief executive.

Saikawa has since pledged to stop chasing share and instead focus on improving profit margins. The automaker has also turned it focus to China as its next major growth market, albeit just as vehicle sales in the world’s biggest auto market have slowed.

Since his ouster at Nissan in November, Ghosn has accused his former colleagues of a boardroom coup aimed at scotching his plan to merge Nissan and Renault.

In a video statement shown to reporters earlier this month, Ghosn said Nissan had “management problems” since he gave up the CEO role two years ago, which had resulted in profit warnings.

While Nissan’s troubles could raise the need for stronger co-operation with Renault, the Japanese automaker appears to be resisting closer ties with a partner it exceeds in both vehicle sales and profitability.

“Now is not the time to think of such things,” Saikawa told a group of reporters outside of his house in Tokyo on Monday, in response to a Nikkei report that Nissan would reject an integration proposal from Renault.

Source link

Continue Reading

World

Five of YouTube’s biggest markets in the world are in Asia

Published

on

YouTube has more than a billion users worldwide.

According to Vidyasagar, the first two markets in the world that turned to mobile ahead of desktop consumption of videos were actually Japan and South Korea. But others are catching up, he added.

“Over the last few years, what we’ve seen in markets like India is truly astounding,” he said. “India today has nearly 85% of its volume consumed through mobile devices. We, last year, saw nearly a very, very high triple digit growth on mobile — on top of that very high volume.”

The same is true for Southeast Asia, in markets like Thailand and Indonesia, he added.

That said, in recent years, social platforms like YouTube and others have come under regulatory scrutiny to monitor the spread of hate speech, misinformation and other kinds of banned content on their platforms.

In India, for example, a state court ordered the federal government to ban the popular Chinese video sharing app TikTok, saying it was encouraging pornography, Reuters reported. TikTok has been downloaded by nearly 300 million users so far in India, and the ban puts more than 250 jobs at risk, according to the news agency.

To live up to regulatory standards, companies like YouTube and social networking giant Facebook use a variety of tools, including artificial intelligence, to detect the presence of controversial materials on their sites.

Vidyasagar said both YouTube and Google have invested extensively in technologies like machine learning and in people, as well as implemented tools and policies, to meet regulatory standards.

“We need a mix of both machine and human interference to come together here,” he added.

Source link

Continue Reading

Trending