With interest rates hardening, Carlsberg should pour that Indian IPO now

Probably the best beer in the world may just be the coolest Indian IPO this summer. But if Carlsberg A/S wants to maximize the valuation of its planned stock offer, it had better rush it across the counter. Happy hour could be over soon. With the US Federal Reserve signalling two more interest-rate hikes this year, the Indian market’s thirst for new paper – up 77 per cent so far in 2018 from last year – could dry up. 

Pedigreed consumer stocks, such as the country’s third-largest-selling beer, are still likely to see buyers, but capturing anywhere near the 73 times price-earnings multiple of United Breweries Ltd., which makes India’s most-popular Kingfisher brand, will need all the froth the Danish brewer can muster. That’s largely a question of timing. But Carlsberg doesn’t appear to be fully ready. Bloomberg News has reported that it’s still meeting arrangers, and a transaction isn’t certain.

US Federal Reserve officials discuss 'slightly steeper' future rate hikes

US Federal Reserve officials signalled that the central bank may have to accelerate the pace of future rate hikes amid stronger economic growth and inflation, according to the minutes of the Fed's latest monetary policy meeting.

"A number of participants indicated that the stronger outlook for economic activity, along with their increased confidence that inflation would return to two per cent over the medium term, implied that the appropriate path for the federal funds rate over the next few years would likely be slightly steeper than they had previously expected," said the minutes of the Fed's March 20-21 meeting released on Wednesday.

At that meeting, the Fed raised its target range for the federal funds rate to 1.5-1.75 per cent, the first rate hike of 2018, reports Xinhua.

It was also the first meeting led by Fed Chairman Jerome Powell, who took the helm of the central bank in February.

What to make of US Fed chairman Jerome Powell's hawkish testimony

Jerome H Powell, the newly minted Chairman of the US Federal Reserve (US Fed) came out as a clear hawk in his first testimony before the Congress on Tuesday.
Powell said that his expectations for domestic economic growth have increased since the beginning of the year, citing the passage of the $1.5 trillion tax cut, lifting of the debt ceiling and stronger global growth.
Our take on his testimony:
1. Clearly hawkish
His talons became visible when he answered a Democrat’s question as to what would cause the US Fed to hike more than three times that the central bank’s guidance currently calls for?
Powell said that each of the Federal Open Market Committee (FOMC) member would take the developments since the December meeting into account and write down ‘new rate paths as we go into the March meeting, and I wouldn’t want to prejudge that.’
2. Personal views take front seat
When the Fed Chair testifies, he speaks for the Federal Reserve, not for himself. But, Powell gave his personal views many times. This is a big break from the past like Janet Yellen, Ben Bernanke or Alan Greenspan.

US Fed rate hikes not needed till mid-2018 as inflation is low: Prez Evans

Sluggish price increases in the United States give the Federal Reserve room to hold off on interest rate increases until at least mid-2018, Chicago Federal Reserve President Charles Evans said on Wednesday.

"If we get to that point and have more confidence that inflation is moving up sustainably, then further rate increases would be warranted," Evans, who does not have a vote on rates this year but participates in the central bank's policy debates, said in a speech at a banking conference.

Evans did have a vote on the Fed's policy-setting committee last year and dissented in the Fed's decision to raise rates in December because of his concerns over low US inflation rates, which have been persistently below the Fed's 2 percent target in recent years. Investors expect the Fed will raise rates in March and policymakers in December signaled three hikes would be warranted this year.

S&P, Dow move higher as bank stocks climb again

The S&P 500 and the Dow indexes rose in morning trading on Wednesday as bank stocks added to gains following strong economic data and encouraging comments from Federal Reserve officials that sealed the case for a December rate increase.
JPMorgan climbed 1.9 percent and Bank of America rose 2.2 percent, making the S&P financial index the biggest gainer among S&P 500 sectors.

Fed chair nominee Jerome Powell said on Tuesday the case for a December rate hike was coming together and also hinted at lighter bank regulation, while Fed chair Janet Yellen said on Wednesday that a strengthening economy will warrant continued rate increases.

"Economic data has been very strong and the economy looks as good now as it ever has," said Randy Frederick, vice president of trading and derivatives for Charles Schwab in Austin, Texas.

The second revision of third-quarter gross domestic product showed growth increased at a 3.3 annual rate, up from the previously reported 3 percent.

The Fed's preferred gauge of inflation, the personal consumption expenditures (PCE) price index excluding food and energy, rose 1.4 percent in the third quarter, in line with the forecast by economists polled by Reuters.

Investors are keeping a keen eye on progress on US tax bill. Senate Republicans on Tuesday rammed forward the bill, which corporate America is hoping will slash business tax rates, in an abrupt, partisan committee vote that set up a full vote by the Senate as soon as Thursday.
READ MORE

Gold climbs ahead of US Fed Reserve meet, pick for Janet Yellen replacement

Gold climbed briefly back above $1,280 an ounce on Wednesday as caution ahead of this week's confirmation of the new Federal Reserve chair and a policy statement from the bank prompted some to close out bets on falling prices.

Fed Governor Jerome Powell is widely tipped to take over from incumbent Janet Yellen at the head of the U.S. central bank next year. He is seen as a less hawkish and therefore more gold friendly choice than his main challenger John Taylor, a Stanford University economist.

A statement at the end of the Fed's latest policy meeting due later will also be closely watched for clues on the outlook for U.S. interest rates. While the bank is expected to leave rates unchanged, investors will be watching for any indications that it will press ahead with another increase next month.

Spot gold was up 0.5 percent at $1,278.11 an ounce at 1035 GMT, having earlier peaked at $1,280.87. Its upward move accelerated after it broke through its 100-day moving average at $1,275 an ounce, a key chart level.

The metal has fallen for the last two weeks as the dollar has strengthened, taking it to a three-week low on Friday. While prices have recovered, they remain within a less than $15 an ounce range so far this week as traders await clarity on U.S. monetary policy.
READ MORE

Trump's fed chair choice down to Powell, Taylor: Source

President Donald Trump's search for the next chair of the US Federal Reserve has come down to Fed Governor Jerome Powell and Stanford University economist John Taylor, Politico on Thursday cited one source as saying, while another counselled caution.

Trump has said he was considering both Powell and Taylor, but that he also liked Yellen very much. Politico cited an unnamed source who talks regularly to Trump as saying the only finalists were Powell and Taylor.

Another unnamed senior source Politico described as very close to the process said it was not safe to assume Trump will nominate Powell or Taylor for the top spot at the central bank, saying he "changes his mind about it every day."
READ MORE

Trump met former Fed governor Kevin Warsh on potential Fed chairman job

President Donald Trump met with former Federal Reserve Governor Kevin Warsh to discuss potentially being nominated as Fed chairman, a source familiar with the meeting said on Friday.

The White House would not confirm the topic of the conversation, saying only that the president met on Monday with Warsh at the White House.

Trump is considering a variety of choices to replace current Fed Chair Janet Yellen, whose term on the Fed expires on Jan. 31.
READ MORE

US Fed's Vice Chair Stanley Fischer announces resignation

US Federal Reserve Vice Chair Stanley Fischer, a veteran central banker who helped set the course for modern monetary policy, said on Wednesday he will step down from his position in the middle of October.

In a letter to President Donald Trump, Fischer, 73, said he was resigning for personal reasons and that the effective date would be on or around October 13.

"It's been a privilege to serve on the Federal Reserve board and most especially to work alongside Chair Yellen," Fischer said, citing the improvements in the economy and financial system in recent years.

Fischer's term as vice chair was set to expire next year but his early departure gives Trump an opportunity to further shape the central bank sooner than expected.
READ MORE

Trump's 3% target for US growth quite challenging in coming years: Yellen

It would be "quite challenging" for the United States to reach the 3 percent growth target set by President Donald Trump, Federal Reserve Chair Janet Yellen told a Senate panel on Thursday in a hearing focused on regulatory reform and a discussion of lagging productivity.

Trump has pledged to boost annual growth to 3 percent, the average for much of the last 70 years, and predicated an earlier tax plan on reaching that figure.

The Fed, the Congressional Budget Office and others feel that an ageing population and lagging productivity mean the economy's potential has downshifted to around 2 percent growth or less - a fact that has profound effects on national wealth as the slower pace compounds over time.

"I think it is something that would be wonderful if you could accomplish it," Yellen said at a Senate committee hearing. "I think it would be quite challenging," and require a broad set of changes from tax reform to an improved education system that adds to labour productivity.

Yellen's appearance before the Senate Committee on Banking, Housing and Urban Affairs covered much of the same ground as her session with a House committee on Wednesday where she said the Fed's plans for further gradual rate increases and a slow drawdown of its balance sheet remain on track.
READ MORE