Fed’s Neel Kashkari says rate hikes ‘were not called for’ and that policy has been ‘too tight’

In an unusually harsh rebuke of central bank actions, Kashkari said the central bank shouldn’t have tightened monetary policy with inflation so low. “In my view, these rate increases were not called for by our symmetric framework,” Kashkari said during a speech in Santa Barbara, California. He based his position on a job market that is still growing even though wage gains are still tame, and inflation is averaging around 1.6%. Even with the low rate, another gauge that includes discouraged worke


In an unusually harsh rebuke of central bank actions, Kashkari said the central bank shouldn’t have tightened monetary policy with inflation so low. “In my view, these rate increases were not called for by our symmetric framework,” Kashkari said during a speech in Santa Barbara, California. He based his position on a job market that is still growing even though wage gains are still tame, and inflation is averaging around 1.6%. Even with the low rate, another gauge that includes discouraged worke
Fed’s Neel Kashkari says rate hikes ‘were not called for’ and that policy has been ‘too tight’ Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2019-05-16  Authors: jeff cox
Keywords: news, cnbc, companies, inflation, hikes, feds, policy, rates, neel, low, market, job, tight, fed, kashkari, rate, called, target


Fed's Neel Kashkari says rate hikes 'were not called for' and that policy has been 'too tight'

The Federal Reserve erred by raising interest rates during the recovery, part of a policy implementation that misread key signals and threatened to send the economy into recession, Minneapolis Fed President Neel Kashkari said Thursday.

In an unusually harsh rebuke of central bank actions, Kashkari said the central bank shouldn’t have tightened monetary policy with inflation so low. Instead, he said, the policymaking Federal Open Market Committee should be signaling that it will allow inflation to run higher than the 2% target, a move that would send a clear signal that the Fed is serious about stimulating the economy.

The FOMC hiked rates nine times starting in December 2015 as part of an effort to normalize policy following the extreme accommodations made during and after the financial crisis and Great Recession. Those hikes came even as inflation stayed well below the Fed’s goal.

“In my view, these rate increases were not called for by our symmetric framework,” Kashkari said during a speech in Santa Barbara, California.

The remarks came as part of a review the Fed is doing of its framework and the approach it has taken to jolting the economy back to life.

They also jibe closely with sentiments from the White House. President Donald Trump has repeatedly criticized the rate hikes and has said the economy would be much stronger had the Fed backed off.

While acknowledging the aggressive measures the central bank took — bringing its target rate down to near-zero and implementing three rounds of asset purchases that took its balance sheet to $4.5 trillion — Kashkari said the Fed should have kept its foot on the pedal.

He based his position on a job market that is still growing even though wage gains are still tame, and inflation is averaging around 1.6%.

“With inflation somewhat too low and the job market still showing capacity after 10 years, the only reasonable conclusion I can draw is that monetary policy has been too tight in this recovery,” he said.

Kashkari said one of the main problems was that Fed officials didn’t see how low unemployment could go without generating inflation. The current unemployment rate is at 3.6%, the lowest reading in nearly 50 years.

“I believe that we misread the labor market, thinking we were at maximum employment when, in fact, millions of Americans still wanted to work, and fearing that if we hit maximum employment, inflation might suddenly accelerate, and we would then have to raise rates quickly to contain it,” he said.

“The headline unemployment rate has been giving a faulty signal,” he added.

Even with the low rate, another gauge that includes discouraged worker and those holding part-time positions for economic reasons remains at 7.3%, reflective of slack remaining in the job market.

Kashkari said the lesson from the tightening cycle is that the Fed probably will want to be even more aggressive with policy in the next downturn. Evidence of tightening too fast came in the fourth quarter of 2018, when markets feared the Fed would continue raising rates and reducing its balance sheet and sold off aggressively.

“Perhaps we’d have achieved maximum employment already if monetary policy had been more accommodative,’ he said, adding that “by raising rates more quickly than called for by our symmetric framework, we ran the risk of overtightening and causing a recession. Markets signaled this risk with the steep drop in bond yields and equity prices late last year. The FOMC’s quick adjustment to pause further rate hikes was appropriate and, thankfully, seems to have mitigated this risk for now.”

However, he said he fears what may happen next time if the Fed doesn’t do a better job of listening to economic and market signals.

“For our current framework to be effective and credible, we must walk the walk and actually allow inflation to climb modestly above 2 percent in order to demonstrate that we are serious about symmetry,” Kashkari said. “Make-up strategies such as price-level targets offer this attractive feature. But we must honestly ask ourselves: If we felt compelled to raise rates when inflation was below target in this recovery, would we really keep rates low when inflation is above target next time? Count me as skeptical.”


Company: cnbc, Activity: cnbc, Date: 2019-05-16  Authors: jeff cox
Keywords: news, cnbc, companies, inflation, hikes, feds, policy, rates, neel, low, market, job, tight, fed, kashkari, rate, called, target


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German data fails to lift euro from 1-week low

“The announcement of the increased trade tariffs has generated negative sentiment about global growth and that is exerting downward pressure on the euro despite the German data,” said Nikolay Markov, senior economist at Pictet Asset Management. “We expected the data to be worse than last month, but this is going to increase concerns about the state of the Chinese economy. The market will be very nervous and looking out for the PMI data,” said Commerzbank FX strategist Esther Maria Reichelt. The


“The announcement of the increased trade tariffs has generated negative sentiment about global growth and that is exerting downward pressure on the euro despite the German data,” said Nikolay Markov, senior economist at Pictet Asset Management. “We expected the data to be worse than last month, but this is going to increase concerns about the state of the Chinese economy. The market will be very nervous and looking out for the PMI data,” said Commerzbank FX strategist Esther Maria Reichelt. The
German data fails to lift euro from 1-week low Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2019-05-15
Keywords: news, cnbc, companies, beijing, german, 1week, aussie, trade, week, growth, low, fails, lift, currency, economy, data, chinese, euro


German data fails to lift euro from 1-week low

The euro held at a one-week low on Wednesday, ignoring data from Germany that showed the economy returned to growth in the first quarter, as trade tensions between the world’s two biggest economies cast a shadow over risk appetite.

The single currency has been caught in the cross-currents of an escalating dispute between Washington and Beijing since last week, unable to conclusively rise above the $1.1250 level.

“The announcement of the increased trade tariffs has generated negative sentiment about global growth and that is exerting downward pressure on the euro despite the German data,” said Nikolay Markov, senior economist at Pictet Asset Management.

U.S. President Donald Trump threatened higher tariffs on billions of dollars of Chinese imports last week, and Beijing responded with planned tariff hikes of its own on Monday.

The escalation in the trade dispute comes at a time when latest data from Germany showed the economy returned to growth in the March quarter as householders spent more freely and construction activity picked up.

The single currency was broadly steady at $1.1213 – just above a one-week low of $1.1197 hit in the Asian session and more than 3% below a 2019 high of nearly $1.16 in early January.

Germany’s economic figures were a sole bright indicator in an otherwise slate of dismal data.

China on Wednesday reported surprisingly weaker growth in retail sales and industrial output for April, adding pressure on Beijing to roll out more stimulus as the trade war with the United States rumbles on.

“We expected the data to be worse than last month, but this is going to increase concerns about the state of the Chinese economy. The market will be very nervous and looking out for the PMI data,” said Commerzbank FX strategist Esther Maria Reichelt.

The Aussie dollar dropped as low as $0.6922, its lowest level since Jan. 3 when a flash crash in the foreign exchange markets rocked major currencies.

Barring that level, the currency was at its weakest in three years and down 0.2% on the day.

The weak data gave further impetus to Aussie bears to add to their negative bets with net outstanding short positions still below 2019 highs of above $5.2 billion.

The Aussie is often seen as a proxy for Chinese growth because of Australia’s export-reliant economy and China being the country’s main destination for its commodities.

Domestic data added to the woes, with the pace of growth in Australian wages stagnating.

Neighbouring New Zealand saw its currency dip 0.1% to $0.6567.

The Chinese yuan itself was slightly improved on the day at 6.8993 per U.S. dollar, but still close to a five-month low hit on Tuesday.


Company: cnbc, Activity: cnbc, Date: 2019-05-15
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Cisco is the big tech stock to buy for low China trade risk, Bank of America says

Bank of America highlighted Cisco Systems on Tuesday, pointing to the company as having lower risk compared to other tech stocks from the escalating U.S. trade war with China. The average revenue from China among FAANG companies is 7.5% – although that is heavily influenced by Apple and Netflix. Cisco shares have fallen 4% in the past week, at the low end of the range compared to FAANG stocks. Bank of America believes Cisco will bounce back from its recent drop, saying the stock has “room for up


Bank of America highlighted Cisco Systems on Tuesday, pointing to the company as having lower risk compared to other tech stocks from the escalating U.S. trade war with China. The average revenue from China among FAANG companies is 7.5% – although that is heavily influenced by Apple and Netflix. Cisco shares have fallen 4% in the past week, at the low end of the range compared to FAANG stocks. Bank of America believes Cisco will bounce back from its recent drop, saying the stock has “room for up
Cisco is the big tech stock to buy for low China trade risk, Bank of America says Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2019-05-14  Authors: michael sheetz
Keywords: news, cnbc, companies, tech, stock, buy, trade, china, big, llanl, faang, risk, america, ciscos, bank, cisco, low, stocks


Cisco is the big tech stock to buy for low China trade risk, Bank of America says

Bank of America highlighted Cisco Systems on Tuesday, pointing to the company as having lower risk compared to other tech stocks from the escalating U.S. trade war with China.

“We flag Cisco’s relatively low exposure to China, which is particularly attractive in the current market environment,” Bank of America’s Tal Llanl said in a note to investors.

The biggest tech stocks, known as FAANG – Facebook, Apple, Amazon, Netflix and Google-parent Alphabet – have been among the hardest hit by trade risk, falling anywhere between 4% to 8% each over the past week.

Only 3.3% of Cisco’s revenue comes from China, according to FactSet. The average revenue from China among FAANG companies is 7.5% – although that is heavily influenced by Apple and Netflix. The two tech giants respectively bring in 18.3% and 10.3% of total revenues from China.

Cisco shares have fallen 4% in the past week, at the low end of the range compared to FAANG stocks. Bank of America believes Cisco will bounce back from its recent drop, saying the stock has “room for upside.”

“Cisco has been actively shifting contract manufacturing and pricing to offset the previous 10% tariffs on Chinese-produced goods, and we expect such workarounds to also help soften the recent tariff increase to 25%,” Llanl said.

“Separately, we note that backlash versus Huawei’s products in certain regions may help Cisco indirectly,” Llanl added.

Cisco shares rose 1.9% on Tuesday to $52.26.

Bank of America expects Cisco’s strong earnings performance in its first two quarters “to continue,” with the company set to report third quarter earnings on Wednesday. The firm has a $56 a share price target on Cisco.


Company: cnbc, Activity: cnbc, Date: 2019-05-14  Authors: michael sheetz
Keywords: news, cnbc, companies, tech, stock, buy, trade, china, big, llanl, faang, risk, america, ciscos, bank, cisco, low, stocks


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Why every US company has a stake in Bed Bath & Beyond’s heated boardroom war

Shares of Bed Bath & Beyond have declined from near-$80 in 2015 to as low as $10 earlier this year. A spokesman for the investors said they have a long track record of promoting diverse candidates. “Bed Bath, that board has had the same people for a long time.” There have been more retail store closures already in 2019 than in all of last year. In 2017 a record was set for store closures, but that record is expected to be eclipsed this year.


Shares of Bed Bath & Beyond have declined from near-$80 in 2015 to as low as $10 earlier this year. A spokesman for the investors said they have a long track record of promoting diverse candidates. “Bed Bath, that board has had the same people for a long time.” There have been more retail store closures already in 2019 than in all of last year. In 2017 a record was set for store closures, but that record is expected to be eclipsed this year.
Why every US company has a stake in Bed Bath & Beyond’s heated boardroom war Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2019-05-09  Authors: noah higgins-dunn, michael nagle, bloomberg, getty images, shironosov, reuters karen pulfer focht, -stephanie creary, assistant professor at the wharton school of busin
Keywords: news, cnbc, companies, board, stake, low, track, record, war, company, bed, store, promoting, heated, boardroom, retail, beyonds, stock, bath, activist


Why every US company has a stake in Bed Bath & Beyond's heated boardroom war

Shares of Bed Bath & Beyond have declined from near-$80 in 2015 to as low as $10 earlier this year. The stock has traded between $15 and $16 in recent days and is up strongly off its 2019 low as a result of the activist pressure. But it remains a battleground stock, and the battle is not just about the future of retail in the Amazon era, but the future of board composition across corporations.

Bed Bath said in a statement at the time of the board changes announced in April that the new appointees are “leaders in the fields of global retail, merchandising, technology, logistics, finance and governance” and have held senior positions in companies such as Amazon, Avon Products and Family Dollar Stores.

The activist investor group has offered 16 candidates they believe should replace the current board, including former executives from Macy’s, Guess, Pier 1 Imports and Gap. Almost all of them have retail experience focused in operations, ecommerce, marketing, private labels and corporate turnarounds. None of them, however, are people of color, while five of them are women. A spokesman for the investors said they have a long track record of promoting diverse candidates. He cited an article about the overall poor track record of activist hedge funds when it comes to promoting diversity on the board — his investors, according to the data, look good, but only in comparison to hedge funds making little to no effort.

“The boards don’t run the company, but if they’re not pushing the company toward the right direction and to try new things, then that’s the issue,” said Bobbie Lenga, who leads the global retail practice for Russell Reynolds Associates, an executive search and management consulting firm. “Bed Bath, that board has had the same people for a long time.”

The assumed role of a board of directors has been changing from primarily a defender of shareholder interests to a body that gives active input on competitive landscapes, especially in the battered retail sector. There have been more retail store closures already in 2019 than in all of last year. In 2017 a record was set for store closures, but that record is expected to be eclipsed this year.


Company: cnbc, Activity: cnbc, Date: 2019-05-09  Authors: noah higgins-dunn, michael nagle, bloomberg, getty images, shironosov, reuters karen pulfer focht, -stephanie creary, assistant professor at the wharton school of busin
Keywords: news, cnbc, companies, board, stake, low, track, record, war, company, bed, store, promoting, heated, boardroom, retail, beyonds, stock, bath, activist


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Uber prices IPO at $45 per share, at low end of range

When going public, there needs to be path to profitability: Pro 4 Hours Ago | 03:34Uber priced its IPO at $45 per share Thursday, at the low end of its stated range. On a fully diluted basis, Uber has an implied market valuation of $82.4 billion. Early reports suggested Uber was seeking a valuation of up to $120 billion. Its expected range was between $44 and $50 per share, according to a filing last month. While Khosrowshahi is working to restore Uber’s reputation, the company faced driver stri


When going public, there needs to be path to profitability: Pro 4 Hours Ago | 03:34Uber priced its IPO at $45 per share Thursday, at the low end of its stated range. On a fully diluted basis, Uber has an implied market valuation of $82.4 billion. Early reports suggested Uber was seeking a valuation of up to $120 billion. Its expected range was between $44 and $50 per share, according to a filing last month. While Khosrowshahi is working to restore Uber’s reputation, the company faced driver stri
Uber prices IPO at $45 per share, at low end of range Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2019-05-09  Authors: leslie picker, lora kolodny, ali balikci, anadolu agency, getty images, alex kraus, bloomberg
Keywords: news, cnbc, companies, needs, prices, 45, companies, share, uber, ubers, company, billion, losses, ipo, range, car, end, low


Uber prices IPO at $45 per share, at low end of range

When going public, there needs to be path to profitability: Pro 4 Hours Ago | 03:34

Uber priced its IPO at $45 per share Thursday, at the low end of its stated range.

At the IPO price of $45 per share, the company will be valued on a non-diluted basis at about $75.46 billion, which will put the stock’s market cap right around the size of Caterpillar’s and make it one of the most valuable companies ever to go public. On a fully diluted basis, Uber has an implied market valuation of $82.4 billion.

Early reports suggested Uber was seeking a valuation of up to $120 billion. Its expected range was between $44 and $50 per share, according to a filing last month.

The company is offering 180 million shares of its common stock, which means it could raise around $8.1 billion on Friday, with an option for underwriters to buy an additional 27 million shares.

A ride-hailing pioneer and Silicon Valley darling, Uber made on-demand transportation a new norm throughout the world, while accumulating massive losses and controversy along the way.

In 2018, Uber’s revenue reached $11.3 billion for the year, up 43% from 2017, while reporting adjusted losses of $1.8 billion, an improvement over losses of $2.6 billion in 2017, according to its IPO filing. The company has never turned a profit.

To cover these losses and fund its rapid expansion, the company raised more than $24 billion from a wide range of investors since its founding a decade ago, according to Crunchbase. Investors have included traditional VC firms like Benchmark, and companies with interests in transportation like Alphabet and Toyota. Its biggest shareholder is Japanese tech conglomerate SoftBank, which invested more than $8 billion through its Vision Fund and owns 16.3% of the company pre-IPO.

Shawn Carolan, an early Uber investor and partner at Menlo Ventures, said: “Uber is a great reminder to venture capitalists that the biggest opportunities lie in our most common needs as humans. When a startup presents, look beyond the current product, which often feels trivial, to the underlying need being served. An on-demand black car service was easy to dismiss, but nearly everyone needs transportation.”

At Uber, CEO Dara Khosrowshahi replaced co-founder Travis Kalanick in 2017 after myriad missteps for the company. Kalanick’s ouster was preceded by revelations about unchecked sexism within Uber’s ranks, and a high-stakes lawsuit over trade secrets from Waymo, Alphabet’s self-driving car business.

While Khosrowshahi is working to restore Uber’s reputation, the company faced driver strikes in major cities this week leading up to the IPO.

Personal mobility remains Uber’s core business. Its ride-hailing services reach into 63 countries and more than 700 cities. But its ambitions and revenue streams have diversified into bike and scooter rentals, food delivery and freight. Uber is also developing air taxis and driverless car technology, among other things.

Uber is engaged in an intense pricing battle with its chief competitor in the U.S., Lyft, as the companies try to attract and retain riders with low fares, while paying drivers just enough to keep them on the platform too.

The company plans to list on Friday with the ticker “UBER.”


Company: cnbc, Activity: cnbc, Date: 2019-05-09  Authors: leslie picker, lora kolodny, ali balikci, anadolu agency, getty images, alex kraus, bloomberg
Keywords: news, cnbc, companies, needs, prices, 45, companies, share, uber, ubers, company, billion, losses, ipo, range, car, end, low


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Oil drops 1.4% to 5-week low, settling at $61.40, as US-China trade war intensifies

Flames emerge from a pipeline at the oil fields in Basra, southeast of Baghdad, Iraq, October 14, 2016. Oil prices tumbled on Tuesday as renewed doubts over U.S.-China trade talks stoked concerns over global growth, but U.S. sanctions on Iran and Venezuela tightened supply and helped to stem losses. U.S. President Donald Trump on Sunday said he would raise tariffs on $200 billion worth of Chinese goods from 10-25% by Friday. U.S. West Texas Intermediate crude futures settled 85 cents lower at $6


Flames emerge from a pipeline at the oil fields in Basra, southeast of Baghdad, Iraq, October 14, 2016. Oil prices tumbled on Tuesday as renewed doubts over U.S.-China trade talks stoked concerns over global growth, but U.S. sanctions on Iran and Venezuela tightened supply and helped to stem losses. U.S. President Donald Trump on Sunday said he would raise tariffs on $200 billion worth of Chinese goods from 10-25% by Friday. U.S. West Texas Intermediate crude futures settled 85 cents lower at $6
Oil drops 1.4% to 5-week low, settling at $61.40, as US-China trade war intensifies Cached Page below :
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Oil drops 1.4% to 5-week low, settling at $61.40, as US-China trade war intensifies

Flames emerge from a pipeline at the oil fields in Basra, southeast of Baghdad, Iraq, October 14, 2016.

Oil prices tumbled on Tuesday as renewed doubts over U.S.-China trade talks stoked concerns over global growth, but U.S. sanctions on Iran and Venezuela tightened supply and helped to stem losses.

U.S. President Donald Trump on Sunday said he would raise tariffs on $200 billion worth of Chinese goods from 10-25% by Friday. The comments dragged on both Asian and U.S. stock markets.

U.S. West Texas Intermediate crude futures settled 85 cents lower at $61.40 per barrel, dropping 1.4% to the weakest closing price since March 29.

Brent crude oil futures fell $1.31, or 1.8%, $69.93 per barrel around 2:30 p.m. ET (1830 GMT), on pace for the lowest settle since April 4.


Company: cnbc, Activity: cnbc, Date: 2019-05-07
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Gold slides to one-week low as dollar revives post-Fed

Gold prices dropped to a one-week low on Wednesday as the dollar rebounded after U.S. Federal Reserve reduced expectations of a rate cut this year, with the safe-haven metal also pressured as the central bank signaled strong economic growth. Spot gold slipped 0.6% to $1,276.36 per ounce as of 5:02 p.m., after falling as much as 0.8% to a session low of $1,272.74 earlier, its lowest since April 24. A stronger dollar makes gold, which yields no interest, expensive for holders of other currencies.


Gold prices dropped to a one-week low on Wednesday as the dollar rebounded after U.S. Federal Reserve reduced expectations of a rate cut this year, with the safe-haven metal also pressured as the central bank signaled strong economic growth. Spot gold slipped 0.6% to $1,276.36 per ounce as of 5:02 p.m., after falling as much as 0.8% to a session low of $1,272.74 earlier, its lowest since April 24. A stronger dollar makes gold, which yields no interest, expensive for holders of other currencies.
Gold slides to one-week low as dollar revives post-Fed Cached Page below :
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Gold slides to one-week low as dollar revives post-Fed

Gold prices dropped to a one-week low on Wednesday as the dollar rebounded after U.S. Federal Reserve reduced expectations of a rate cut this year, with the safe-haven metal also pressured as the central bank signaled strong economic growth.

Spot gold slipped 0.6% to $1,276.36 per ounce as of 5:02 p.m., after falling as much as 0.8% to a session low of $1,272.74 earlier, its lowest since April 24.

U.S. gold futures settled 0.1% lower at $1,284.20 an ounce.

The U.S. central bank held interest rates steady and signaled little appetite to adjust them any time soon, taking heart in continued job gains and economic growth and the likelihood that weak inflation will edge higher.

The dollar bounced back up following the announcement, having declined for the previous three sessions. A stronger dollar makes gold, which yields no interest, expensive for holders of other currencies.

“The fears of a possible rate hikes were gone, that was positive for gold, then the press conference started and all the stuff came out all at once that shook up traders thoughts,” said George Gero, managing director at RBC Wealth Management.

The labor market remains strong and the economic activity rose at a solid rate in recent weeks, the Fed said in a policy statement. That weighed on gold, which is often used an alternative for political and financial risks.

“That was quite a quick reversal for gold, it had to do with the lack of inflation according to Powell, less worries about Brexit and on the report that there could be a deal with China, which rattled gold traders,” Gero added.

The United States and China are nearing a trade deal, Politico reported on Wednesday after U.S. Treasury Secretary Steven Mnuchin said the two countries completed “productive” talks in Beijing.

“We have economic numbers that are fairly well supported, equity markets are strong, gold doesn’t tend to perform particularly well in these situations as opportunity cost is associated with holding the zero-yielding asset,” said Bart Melek, head of commodity strategies at TD Securities in Toronto.

U.S. private employers added 275,000 jobs in April, well above economists’ expectations and the most since last July, a report by a payrolls processor showed on Wednesday.

Among other metals, silver fell to a more than four-month low of $14.57, while platinum prices dropped 2.8% to $861.50, its lowest in nearly a month.

Palladium slipped 2.8% to $1,349.50 per ounce, after touching its lowest level since Jan. 25 at $1,309.67.


Company: cnbc, Activity: cnbc, Date: 2019-05-01
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BlackRock’s Rieder says Fed shouldn’t be too concerned about low inflation

BlackRock’s Rick Rieder said Wednesday the Fed is unnecessarily concerned about low inflation and is more likely to raise interest rates before it cuts them. Rieder, BlackRock’s global CIO of fixed income, said the way the Fed discusses weaker inflation Wednesday afternoon following its two-day meeting could impact markets. “They should target nominal GDP,” he said, noting that first-quarter real GDP was 3.2% and core inflation was 1.6%. “If you’re running at a nominal GDP that is above trend wi


BlackRock’s Rick Rieder said Wednesday the Fed is unnecessarily concerned about low inflation and is more likely to raise interest rates before it cuts them. Rieder, BlackRock’s global CIO of fixed income, said the way the Fed discusses weaker inflation Wednesday afternoon following its two-day meeting could impact markets. “They should target nominal GDP,” he said, noting that first-quarter real GDP was 3.2% and core inflation was 1.6%. “If you’re running at a nominal GDP that is above trend wi
BlackRock’s Rieder says Fed shouldn’t be too concerned about low inflation Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2019-05-01  Authors: patti domm
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BlackRock's Rieder says Fed shouldn't be too concerned about low inflation

BlackRock’s Rick Rieder said Wednesday the Fed is unnecessarily concerned about low inflation and is more likely to raise interest rates before it cuts them.

Rieder, BlackRock’s global CIO of fixed income, said the way the Fed discusses weaker inflation Wednesday afternoon following its two-day meeting could impact markets. The futures market is pricing in a partial rate hike for 2019, and some investors believe the Fed could have an “insurance” interest rate cut later in the year to make sure the economy doesn’t lose traction.

“I don’t agree,” said Rieder. “I still think there’s a possibility they get one more rate hike in. But I just think they’re not going to do anything for an extended period of time, and I don’t think they need to.”

“I think this is Goldilocks for the Fed. I think they can go away,” he said.

The Fed releases its statement at 2 p.m. ET, just ahead of Fed Chairman Jerome Powell’s press briefing at 2:30 p.m. ET.

“I think the key is how much they downgrade inflation. I think the press conference is important. I think the statement is important. I also think this event on Friday is important in terms of how they’re thinking about where inflation is relative to growth,” said Rieder, referring to a Hoover Institution conference Friday, where Fed policy will be discussed.

Some market pros are hoping to hear more details from Powell on how worried the Fed is about the lack of inflation and at what point it would consider cutting interest rates.

Rieder said he does not believe inflation measures have the same meaning they once did. “We live in an environment where core goods are going to deflate, just because of where technology and globalization have moved to,” he said.

Instead, he believes the Fed should track GDP.

“They should target nominal GDP,” he said, noting that first-quarter real GDP was 3.2% and core inflation was 1.6%. “If you’re running at a nominal GDP that is above trend with inflation staying low, it’s terrific for the population at large. The whole concept of you having to drive inflation higher, why? As long as GDP is buoyant and it is.”

As for the rates outlook, Rieder said he believes the 10-year Treasury yield will be locked in a range for a longer period of time.

“I could see the 10-year moving back to 2.65, 2.70,” he said. But with the easy policy of other global central banks, like the European Central Bank and Bank of Japan, long-end rates should not move much higher.

“I don’t think you’ll see 3% 10-year this year. One of the things that would have to drive it is global growth would have to pick up more,” he said.

Rieder, who is also lead portfolio manager for BlackRock’s Global Allocation Fund, the firm’s largest mutual fund, sees a good environment now for stocks.

“I think equities are going to [be] higher. I think you have a dynamic now if you keep the discount rate on hold, the Fed has functionally given global guidance. With growth picking up and the equity buybacks are still high, what people are beginning to realize is there aren’t enough financial assets in the world relative to demand,” he said. As long as rates stay stable, he said stocks should go higher.


Company: cnbc, Activity: cnbc, Date: 2019-05-01  Authors: patti domm
Keywords: news, cnbc, companies, blackrocks, rate, rieder, inflation, concerned, global, low, shouldnt, gdp, rates, interest, think, fed, important


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Nissan slashes profit outlook to near-decade low

Falling profit has been a headache since before Ghosn was first arrested in November on allegations of financial misconduct. Nissan has struggled to reduce costly sales incentives in the United States. 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 Nis


Falling profit has been a headache since before Ghosn was first arrested in November on allegations of financial misconduct. Nissan has struggled to reduce costly sales incentives in the United States. 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 Nis
Nissan slashes profit outlook to near-decade low Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2019-04-24  Authors: keith bedford, bloomberg, getty images
Keywords: news, cnbc, companies, biggest, vehicle, low, ghosn, neardecade, profit, nissan, forecast, outlook, market, slashes, renault, sales, united


Nissan slashes profit outlook to near-decade low

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.


Company: cnbc, Activity: cnbc, Date: 2019-04-24  Authors: keith bedford, bloomberg, getty images
Keywords: news, cnbc, companies, biggest, vehicle, low, ghosn, neardecade, profit, nissan, forecast, outlook, market, slashes, renault, sales, united


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Lululemon CEO: ‘We have very low brand awareness with men,’ but that business will double by 2023

Lululemon, known for its sports bras and yoga pants for women, still has some work to do to win men over. “We have very low brand awareness with men,” CEO Calvin McDonald told analysts during a meeting in New York on Wednesday. “The opportunity isn’t just to be known,” he said, “but also being understood” as a brand that men — not just women — can shop. At the end of last year, only about 21% of Lululemon’s business was coming from men’s, with 70% stemming from women’s. With bigger ambitions to


Lululemon, known for its sports bras and yoga pants for women, still has some work to do to win men over. “We have very low brand awareness with men,” CEO Calvin McDonald told analysts during a meeting in New York on Wednesday. “The opportunity isn’t just to be known,” he said, “but also being understood” as a brand that men — not just women — can shop. At the end of last year, only about 21% of Lululemon’s business was coming from men’s, with 70% stemming from women’s. With bigger ambitions to
Lululemon CEO: ‘We have very low brand awareness with men,’ but that business will double by 2023 Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2019-04-24  Authors: lauren thomas, matt winkelmeyer, getty images
Keywords: news, cnbc, companies, women, lululemon, sales, double, mens, men, awareness, brand, business, pants, low, known, lululemons, ceo, told, 2023


Lululemon CEO: 'We have very low brand awareness with men,' but that business will double by 2023

Lululemon, known for its sports bras and yoga pants for women, still has some work to do to win men over.

“We have very low brand awareness with men,” CEO Calvin McDonald told analysts during a meeting in New York on Wednesday. “The opportunity isn’t just to be known,” he said, “but also being understood” as a brand that men — not just women — can shop.

At the end of last year, only about 21% of Lululemon’s business was coming from men’s, with 70% stemming from women’s. Lululemon recently signed a deal with former Eagles quarterback Nick Foles to become its first men’s ambassador, as it makes strides to raise awareness among male consumers.

With bigger ambitions to rival the likes of Nike, Adidas and Under Armour, Lululemon is targeting a doubling of its men’s sales by 2023, meaning revenues in that category will eclipse $1 billion annually.

Chief Product Officer Sun Choe told analysts men have reacted exceptionally well to Lululemon’s “commuter” products — items like jogger pants that are designed to be worn around town to run errands, but also can be dressed up in an office setting. And so she said there will be a lot more of that on shelves this year and next, while Lululemon is also “taking cues from streetwear trends happening out there” as it designs new clothing.

“Guys don’t know Lululemon can be a brand for them,” Choe said. “But we have a ton of newness in the pipeline.”

Nike, bringing in $36.4 billion in sales in 2018, holds 18.3 percent of the overall U.S. sportswear market, which includes apparel and footwear, according to data compiled by Euromonitor. Adidas is second with 6 percent, Under Armour with 4.1 percent, Skechers with 2.6 percent and Lululemon with 1.9 percent as of the end of 2018, according to the firm.

Lululemon also on Wednesday said it soon plans to start making its own footwear, as it laid out a five-year growth plan with the goal of growing total sales annually by a low-teens percentage rate.

“Lululemon put out exciting targets and ones focused on new and existing categories alike,” Nomura Instinet analyst Simeon Siegel said.

Lululemon shares were up Wednesday afternoon less than 1%. The stock has soared more than 80% over the past 12 months.


Company: cnbc, Activity: cnbc, Date: 2019-04-24  Authors: lauren thomas, matt winkelmeyer, getty images
Keywords: news, cnbc, companies, women, lululemon, sales, double, mens, men, awareness, brand, business, pants, low, known, lululemons, ceo, told, 2023


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