Day: September 21, 2021

The US Federal Reserve may increase its near-term inflation forecast at the conclusion of its September meeting this Wednesday, an expert told Anadolu Agency on Tuesday.

“The surge in inflation is due to the pandemic, and the Fed is appropriately looking through it,” Mark Zandi, chief economist at Moody’s Analytics, said in an email interview.

“Demand has surged as the economy has reopened with the distribution of vaccines early this year, and the supply side of the economy has been slower to kick in given the disruptions created by the pandemic. Inflation will moderate as the pandemic winds down,” he wrote.

The US consumer price index (CPI) rose 5.3% in August on an annual basis, after climbing 5.4% in June and July.

In August, the CPI was up 0.3% from the previous month, while it was up 0.5% in July from the month before, according to latest figures from the US Labor Department.

Meanwhile, the producer price index (PPI) soared 8.3% in August annually, after jumping 7.8% in July. In August, the PPI rose 0.7% from the previous month, after rising 1% in July.

However, the Fed’s inflation estimates were far below those levels – 3.4% for 2021, and 2.1% for 2022, according to projections made at the conclusion of its June meeting.

Record number of open jobs

Fed Chair Jerome Powell has repeatedly said in recent months that the bank would allow inflation to climb above its target of 2% for some time, until a full recovery in the labor market is achieved, before any change in monetary policy.

The labor market, however, still remains weak after the world’s largest economy added just 235,000 jobs in August, less than one-third of the expected 750,000.

“One month of soft jobs growth is not enough for the Fed to change this script. However, if it looks like (if) there will be a string of weak job gains, then the Fed would likely delay (tapering)” Zandi said, adding that this seems unlikely given the record number of open job positions.

Job openings in the US rose 749,000, or 6.9%, from its previous high to a new record of 10.9 million in July, according to the latest Labor Department survey.

Openings climbed the most in education and health services, followed by professional and business services, and leisure and hospitality, said the survey.

Tapering

The prospect of the Fed starting to reduce accumulating new assets on its balance sheet, a process known as tapering, remains another hot topic for global markets and investors.

Powell said on Aug. 17 that the Fed is in the process of putting away its emergency tools, which was viewed as a hint that Federal Open Market Committee (FOMC) members would soon decide to begin unrolling the central bank’s $120 billion monthly asset purchase program.

“Chair Powell has already strongly signaled that the Fed will begin tapering quantitative easing in the next few months. I don’t think the FOMC members will debate too strongly over which month,” said Zandi.

“The Fed would like to begin tapering quantitative easing before the end of this year, and will stick to this script unless it looks like the recovery is faltering,” he explained.

Rate hikes

The Fed on Wednesday will release its projections for economic growth, unemployment, inflation, and the federal funds rate.

The latter is another question for investors, who are wondering whether the Fed might make an earlier rate hike late next year, instead of two rate hikes of 0.25% in 2023, which it previously said according to projections released on June 16.

“I think the FOMC members will continue to signal that the first rate hike will be in early 2023,” said Zandi.

“This is likely when the economy will have returned to full employment and it is clear that inflation is settling back in closer to its 2% through-the-business cycle inflation target,” he added.

Source: Anadolu Agency

French rail transport manufacturer Alstom has agreed to a €300 million ($351 million) agreement to build commuter trains for the city of Melbourne amid a major diplomatic row between France and the Australian, US, and UK governments over a new global security pact, according to a company statement.

The 93-year-old company, based in the northern Paris suburb of Saint-Ouen, inked a deal on Monday with the second-largest city Down Under for manufacturing 25 six-car X’trapolis trains.

Alstom, also the company behind France’s high-speed AGV and TGV trains as well as the Eurostar, makes passenger transport along with signaling equipment and locomotives.

The new trains are to be built in the town of Victoria with at least 60% of the materials coming from local suppliers. The town of Ballarat, just near Melbourne, is home to an Alstom plant.

The diplomatic discord afoot however started last week after an announcement by the US, UK, and Australia on the formation of an alliance, with Australia receiving a new set of nuclear-powered submarines from the US and UK allies. The announcement was led by US President Joe Biden from the White House, with Australian Prime Minister Scott Morrison and British Prime Minister Boris Johnson tuning in virtually.

The new pact, dubbed AUKUS, will discard the Future Submarine Program that France currently has in place with Australia to build diesel-powered submarines. The contract is worth some €56 billion ($66 billion). Australia will assemble eight nuclear-powered submarines with its new allies, the US and UK.

French government officials were immediately taken aback by the announcement, issuing a press release on Thursday with their dismay over what they called “unprecedented challenges” being faced in the Indo-Pacific region.

Since then, Foreign Minister Jean-Yves Le Drian has given multiple TV interviews excoriating the alliance, calling it everything from “regrettable” to “duplicitous.”

On Sunday, French government spokesman Gabriel Attal called the matter a “major breach of confidence.”

Biden on Sunday requested a phone call with French President Emmanuel Macron for later in the week to ease the tensions that have erupted over the new tri-country pact.

On Friday night, France also recalled its ambassadors to the US and Australia from Washington and Canberra to discuss the issue.

Source: Anadolu Agency

The Organization for Economic Co-operation and Development (OECD) on Tuesday lowered its global economic growth forecast for 2021 by 0.1 percentage points.

The world gross domestic product (GDP) is projected to rise by 5.7% this year, according to OECD’s latest Interim Economic Outlook.

“Global GDP has now surpassed its pre-pandemic level, but output and employment gaps remain in many countries, particularly in emerging-market and developing economies where vaccination rates are low,” it said.

Noting that the global economic recovery is projected to continue but remain uneven, the OECD said the world economy is expected to grow by 4.5% in 2022, revised up from the previous projection of 4.4%.

The OECD highlighted that growth prospects in the advanced economies will increase with the backing of a strong rebound in Europe, the likelihood of additional fiscal support in the US next year, and lower household saving.

The eurozone economy is foreseen to expand by 5.3% in 2021 and 4.6% in 2022, both were revised upward.

In the US, the GDP will go up by 6% this year and 3.9% next year, the OECD said while keeping its projections for the Chinese economy unchanged at 8.5% and 5.8%, for 2021 and 2022, respectively.

The economic growth forecast for Turkey was revised upwards by 2.7 percentage points as its GDP is expected to rise 8.4% in 2021. The country’s economy will boost 3.1% next year, it said.

Source: Anadolu Agency

Global financial markets have been rattled by risks surrounding China’s second-largest property developer Evergrande Real Estate Group on Monday, and the upcoming US Federal Reserve meeting that will conclude on Wednesday.

Having $300 billion in liabilities, Evergrande was in danger of being unable to issue payments on loan interest due Monday, which could cause millions of its customers to lose their deposits.

Investors are worried whether Evergrande would default on its debt, which could then spill over to other Asian financial and real estate markets before turning to a global event, just like the US subprime mortgage crisis in 2007 led to a global financial meltdown a year after.

Evergrande is likely to default without seeing any direct support from the Chinese government, S&P Global Ratings said Monday.

“We believe Beijing would only be compelled to step in if there is a far-reaching contagion causing multiple major developers to fail and posing systemic risks to the economy,” the global rating agency said in a note. “Evergrande failing alone would unlikely result in such a scenario.”

Amid fear and uncertainty, Tokyo’s Nikkei 225 stock exchange posted its largest single-day decline, 660.34 points, in the last three months, as it shed 2.17% to close Tuesday at 29,839 points — its lowest level since Sept. 6.

Asia Dow, which includes blue-chip companies in the region, slid 1.54% from Monday through Tuesday.

The Hang Seng, the benchmark for blue-chip stocks trading on the Hong Kong stock exchange, posted the most decline in Asia by diving 821 points, or 3.3%, to 24,099 on Monday. The index showed some recovery Tuesday by climbing 0.51%.

Singapore index fell by 0.96% and the Indian Sensex benchmark lost 0.9% on Monday, as they also bounced back on Tuesday by gaining 0.71% and 0.88%, respectively.

Risks and fears have also hit the cryptocurrency market on Monday.

Bitcoin, the world’s largest crypto by market cap, plummeted a whopping 9%, while some altcoins dove as much as 30%. The total market value of the global crypto market lost around $200 billion in a single day.

Fed rate hike, tapering fears

Risks in global financial markets were coupled with the upcoming meeting of the US Federal Reserve that will start on Tuesday and end late Wednesday.

The Fed signaled on June 16 that it can make two rate hikes, by 0.25% each, in 2023. The central bank, however, may carry one of those to late 2022, and possibly signal two or three more rate hikes for 2023.

The bank’s decision of tapering, the process to reduce accumulating new assets on its balance sheet, is a much more heated topic in the near term.

The Fed Chair Jerome Powell said on Aug. 17 that the bank is in the process of putting away its emergency tools, and this was viewed as a hint that the bank would soon decide to begin unrolling its massive $120 billion monthly asset purchase program.

While some experts believe tapering would start in early 2022, when the bank would unroll $15 billion in each of its eight meetings, some analysts warn that the process could start as early as next month.

An earlier start of tapering would result in less liquidity, which global markets had an abundance in the past 18 months since COVID-19 was declared a pandemic by the World Health Organization.

The risk and worries surrounding less liquidity, however, caused massive losses in European and American markets on Monday.

The STOXX Europe 600, which includes around 90% of the market capitalization of the European market in 17 countries, fell 1.67%.

London’s FTSE 100 lost 0.86%, and Germany’s DAX index fell 2.3%. While the French CAC 40 lost 1.7%, Spain’s IBEX was down 1.2%, and Italy’s FTSE MIB was the worst performer of Monday with a decline of almost 2.6%.

All European indices were on a positive territory with more than 1% daily gains each, as they were trying to recover from their losses in the previous session.

Major indices in US stock exchanges also had daily losses of around 2% apiece on Monday.

The blue-chip Dow Jones industrial average dove 614.41 points, or 1.8%, to 33,970.47 and marked its biggest single-day loss since July 19, according to official figures.

The S&P 500 plummeted 1.7%, or 75.26 points, to 4,357.73 — its worst one-day performance since May 12.

The tech-heavy Nasdaq declined the most by falling 330 points, or 2.19%, to 14,713.90 by the final bell.

US futures were pointing out to a strong opening for the three indices later Tuesday.

Global financial markets, however, will await the Evergrande crisis to resolve and the Fed meeting to conclude before settling down and reaching their previous high levels.

Source: Anadolu Agency

Turkey’s largest technology and aviation event TEKNOFEST is hosting this year’s Istanbul International Inventions Fair (ISIF), an annual exhibition on commercialization of patents, inventions, and new products.

The fair was opened by Mustafa Varank, the Turkish industry and technology minister, on Tuesday.

Addressing the event, Varank said the fair’s 6th edition includes 254 inventions, 72 of which are from 20 foreign countries.

He said Turkey rose to 41st place in the Global Innovation Index – an annual ranking of countries by their capacity for, and success in innovation – the best ranking in the country’s history.

“Thanks to the works in the recent period and the Turkish Exporters’ Assembly’s strong cooperation with our ministry, we climbed 10 places [in the index],” he said.

According to the report, Turkey is among the countries which are “systematically catching up,” and “have the potential to change the global innovation landscape for good.”

“Turkey makes a big jump into the top 50 and continues to systematically catch up. It also hosts two leading science and technology clusters, Istanbul and Ankara,” it said.

The six-day TEKNOFEST at Istanbul’s Ataturk Airport, which began earlier in the day, will continue till Sunday.

Source: Anadolu Agency

Turkey showed off its locally made aircraft during the country’s largest technology and aviation event TEKNOFEST, said Selcuk Bayraktar, chairman of the Turkish Technology Team Foundation, the event organizer, on Tuesday.

The helicopters Atak and Gokbey, unmanned aerial vehicles (UAVs) Akinci and Bayraktar TB2, and training plane Hurkus took part in air shows, Bayraktar told reporters.

These vehicles were designed indigenously and uniquely, including their electronic parts, software, mechanical parts, and aerodynamic profile, he stressed.

This was the first time that UAVs and aircraft put on a show together for TEKNOFEST, Bayraktar said.

Mentioning the event’s competitions in several different areas, such as UAVs, jet engines, and smart cities, Bayraktar said there was a team which competed at the event in years past which went on to develop its technology and then hit $1 million in annual revenues.

Telling how the event broke a record by hosting 1.7 million visitors in 2019, he said this year’s festival also saw massive interest and attendance.

In 2020, the event was held virtually due to the pandemic.

He also said TEKNOFEST offers a better experience for visitors this year.

Source: Anadolu Agency