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US accuses couple of laundering $4.5 billion in bitcoin tied to 2016 hack

ALEKSI RAISA-UNSPLASH

WASHINGTON/NEW YORK — The US Justice Department said on Tuesday it has unraveled its biggest-ever cryptocurrency theft, seizing a record-shattering $3.6 billion in bitcoin tied to the 2016 hack of digital currency exchange Bitfinex and arresting a husband-and-wife team on money laundering charges.

Ilya “Dutch” Lichtenstein, 34, and his wife, Heather Morgan, 31, New Yorkers who were arrested in Manhattan Tuesday morning, spent the illegal proceeds on items ranging from gold and non-fungible tokens to a $500 Walmart gift card, prosecutors said.

The couple had active public profiles, with Morgan known as rap singer “Razzlekhan,” a pseudonym that she said on her website referred to Genghis Khan “but with more pizzazz.”

It was the Justice Department’s biggest financial seizure, Deputy Attorney General Lisa Monaco said, adding in a statement that it shows cryptocurrency is “not a safe haven for criminals.”

Mr. Lichtenstein and Ms. Morgan face charges of conspiring to commit money laundering as well as to defraud the United States. The case was filed in a federal court in Washington, D.C.

At their initial appearances in federal court in Manhattan on Tuesday afternoon, US Magistrate Judge Debra Freeman set bond at $5 million for Mr. Lichtenstein and $3 million for Ms. Morgan and demanded that their parents post their homes as security for their return to court.

The pair is accused of conspiring to launder 119,754 bitcoin stolen after a hacker broke into Bitfinex and initiated more than 2,000 unauthorized transactions. Justice Department officials said the transactions at the time were valued at $71 million in bitcoin, but with the rise in the currency’s value, the value now is over $4.5 billion.

A key clue may have come from the 2017 bust of an underground digital market used to launder a portion of the funds. US officials said some of the money was transferred to AlphaBay, an anything-goes version of eBay hosted on the dark web.

When the site was taken down, it likely allowed authorities to access AlphaBay’s internal transaction logs and connect them to a cryptocurrency account in Mr. Lichtenstein’s name, according to digital currency tracking company Elliptic.

Bitfinex said in a statement it was working with the Department of Justice to “establish our rights to a return of the stolen bitcoin.”

‘PROTECT YOUR BUSINESS FROM CYBERCRIMINALS’

Mr. Lichtenstein and Ms. Morgan also tried to launder money via a network of currency exchanges or claimed that the money represented payments to Morgan’s startup, the Department of Justice said.

In addition to her rap singer profile, Morgan had sidelines in the painting, fashion design, and writing worlds, where she pitched herself as a kind of corporate coach. One of her recent pieces was titled, in part, “Tips to Protect Your Business from Cybercriminals” and featured an interview with a cryptocurrency exchange owner about how to prevent fraud.

Ms. Morgan, wearing a white hoodie at her court appearance, frequently glanced back at her parents, who were seated in the audience of the courtroom. Both she and Mr. Lichtenstein, who holds dual US-Russian citizenship, nodded as Ms. Freeman warned them of severe consequences if they tried to flee.

They will both be placed on house arrest, with electronic monitoring, and will be barred from engaging in cryptocurrency transactions pending trial, Ms. Freeman said. A judge in Washington, where further hearings will be held, could later set different conditions, she said.

Prosecutors sought to have both detained ahead of trial, arguing they posed a flight risk. But Ms. Freeman said she was swayed by defense lawyer Anirudh Bansal’s argument that both Mr. Lichtenstein and Ms. Morgan had known they were under investigation since November and nonetheless remained in the United States.

Tuesday’s criminal complaint came more than four months after Monaco announced the department was launching a new National Cryptocurrency Enforcement Team, which comprises a mix of anti-money laundering and cybersecurity experts.

Cyber criminals who attack companies, municipalities and individuals with ransomware often demand payment in cryptocurrency.

In one high-profile example last year, former partners and associates of the ransomware group REvil caused a widespread gas shortage on the US East Coast when it used encryption software called DarkSide to launch a cyber attack on the Colonial Pipeline.

The Justice Department later recovered some $2.3 million in cryptocurrency ransom that Colonial paid to the hackers.

Cases like these demonstrate that the Justice Department “can follow money across the blockchain, just as we have always followed it within the traditional financial system,” said Kenneth Polite, assistant attorney general of the department’s Criminal Division. — Reuters

Discovery of Omicron in deer raises concern over possible new variants Use file pic of coronavirus

NEW YORK — The discovery of the Omicron variant in white-tailed deer in New York has raised concerns that the species, numbering 30 million in the United States, could become hosts of a new coronavirus strain, a lead researcher said on Tuesday.

Blood and some nasal swab samples from 131 deer captured on New York’s Staten Island revealed that nearly 15% had virus antibodies. The finding suggested that the animals had previous coronavirus infections and were vulnerable to repeated reinfections with new variants, researchers led by Pennsylvania State University scientists said.

“Circulation of the virus in an animal population always raises the possibility of getting back to humans, but more importantly it provides more opportunities for the virus to evolve into novel variants,” said Suresh Kuchipudi, a Penn State veterinary microbiologist.

“When the virus completely mutates, then it can escape the protection of the current vaccine. So we’d have to change the vaccine again,” Kuchipudi said.

The discovery — the first time Omicron was detected in a wild animal — comes as a surge in coronavirus disease 2019 (COVID-19) infections fueled by the variant are abating among the US human population.

While there is no evidence that animals are transmitting the virus to humans, most coronavirus infections were reported in species that had close contact with a person with COVID-19, according to the US Department of Agriculture.

In August, the US government said it found the world’s first cases of COVID-19 in wild deer in Ohio, expanding the list of animals known to have tested positive for the disease.

The finding was based on samples collected from deer months before the heavily mutated variant Omicron emerged to replace the previously dominant Delta variant in people in countries around the world.

The USDA had previously reported COVID-19 in animals including dogs, cats, tigers, lions, snow leopards, otters, gorillas and minks. — Reuters

Peso climbs as oil prices drop

THE PESO rebounded versus the greenback on Wednesday amid a correction in global oil prices and gains in the local stock market.

The local unit closed at P51.34 per dollar on Wednesday, appreciating by 16 centavos from its P51.50 finish on Tuesday, based on data from the Bankers Association of the Philippines.

The peso opened Wednesday’s session stronger at P51.43 versus the dollar. Its weakest showing was at P51.445, while its intraday best was at P51.32 against the greenback.

Dollars exchanged dropped to $992.1 million on Wednesday from $1.005 billion on Tuesday.

The peso closed stronger following a decline in international oil prices following a reported resumption of the US and Iran’s negotiations on a nuclear deal, a trader said in a Viber message.

Reuters reported that oil prices decreased for a third session on Wednesday. Brent crude futures slipped by 8 cents or 0.1% to $90.70 a barrel by 0825 GMT, while US West Texas Intermediate crude declined by 0.2% or 18 cents to $89.18 a barrel.

Both contracts dropped by about 2% on Tuesday as Washington renewed indirect talks with Iran to revive a nuclear deal which could lift US sanctions on Iranian oil and in turn boost supply.

Meanwhile, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort in a Viber message said the peso appreciated on upbeat sentiment due to gains in the local stock market. The benchmark Philippine Stock Exchange index gained 44.25 points or 0.59% to close at 7,502.48 on Wednesday. The broader all shares index likewise increased by 22.40 or 0.57% to 3,951.58.

For Thursday, Mr. Ricafort gave a forecast range of P51.25 to P51.45 versus the dollar, while the trader expects the local unit to move within P51.25 to P51.50.

Meanwhile, the dollar stayed in a holding pattern on Wednesday, a day before the release of US consumer price data that may offer new clues on the pace of Federal Reserve policy tightening.

The dollar index — which gauges the greenback against six major peers, including Europe’s single currency — was also little changed at 95.587, after bouncing off a 2-1/2-week low of 95.136 reached Friday. It touched the highest since June 2020 at 97.441 at the end of last month.

The dollar index is “in a holding pattern while markets weigh up the prospect of an abrupt Fed policy tightening against the ECB’s (European Central Bank) hawkish backflip,” Westpac strategists wrote in a client note.

The dollar briefly touched a one-month high versus the yen on Wednesday, boosted by a climb in Treasury yields to multi-year peaks overnight.

The dollar hit 115.69 yen before pulling back to last trade about flat at 115.50.

The Aussie added 0.17% to $0.7156, while sterling added 0.07% to $1.3555. — LWTN with Reuters

PSEi tracks Wall St.’s rise ahead of inflation data

PHILIPPINE STAR/KRIZ JOHN ROSALES

STOCKS advanced on Wednesday to track Wall Street on bargain hunting due to rate hike fears ahead of the release of latest US inflation data.

The 30-member Philippine Stock Exchange index (PSEi) rose 44.25 points or 0.59% to end at 7,502.48 on Wednesday, while the broader all shares index gained 22.40 points or 0.57% to close at 3,951.58.

“Philippines shares rode on the rebound of Wall Street as investors continued to bargain hunt ahead of Thursday’s key consumer price index report,” Regina Capital Development Corp. Head of Sales Luis A. Limlingan said in a Viber message.

First Metro Investment Corp. (FMIC) Head of Research Cristina S. Ulang said foreign buying continued on Wednesday “as the bond rout has spread from the US to Europe, pushing investment flows into cheaply valued Asian equities with good macro and corporate earnings growth prospects like the Philippines.”

Net foreign buying was at P428.86 million on Wednesday, higher than the P191.24 million recorded on Tuesday.

“The positive spillovers from Wall Street also helped in the climb,” Philstocks Financial, Inc. Senior Research Analyst Japhet Louis O. Tantiangco said in a Viber message.

Asian shares advanced on Wednesday with tech stocks particularly catching a lift following a strong session on Wall Street, while US treasury yields held near multi-year highs ahead of closely watched inflation data this week.

Barring any big surprises, the consumer price index should cement expectations the US Federal Reserve will raise interest rates next month, with a strong print offering further support to those tipping a larger 50 basis point rise.

MSCI’s broadest index of Asia-Pacific shares outside Japan added 1% to its highest in two weeks, helped by a 3% gain in Hong Kong-listed tech stocks.

Japan’s Nikkei gained 0.9%.

The Dow Jones Industrial Average rose 1.06% to end at 35,462.78 points. The S&P 500 gained 0.84% to 4,521.52. The Nasdaq Composite climbed 1.28% to 14,194.46.

US Treasury yields held firm in Asian trading, after touching multi-year highs the day before as did yields in the euro zone.

“Market rose as it started pricing in the election spending kick benefiting consumption around 60% of the economy and corporate earnings with the start of the campaign season,” FMIC’s Ms. Ulang added.

Most sectoral indices went up on Wednesday, except for holding firms, which dropped 38.21 points or 0.53% to 7,170.02.

On the other hand, property rose 77.23 points or 2.34% to 3,364.52; services advanced 26.01 points or 1.31% to 2,012.13; mining and oil gained 52.55 points or 0.48% to 10,801.36; industrials climbed 37.40 points or 0.34% to end at 10,848.84; and financials inched up 3.46 points or 0.19% to 1,754.84.

Value turnover jumped to P8.41 billion on Wednesday with 975.43 million shares switching hands from the P6.99 billion with 1.07 billion issues traded the previous day.

Advancers beat decliners, 112 against 89, while 58 names closed unchanged. — MCL with Reuters

Choose your own audio adventure

PIXABAY

The Philippines could easily become a hub for interactive fiction, across both audiobooks and audio-based games, according to Johan Strömberg, chief executive officer of Wanderword, a Swedish interactive mobile content company.

“The Philippines is ripe for an explosion in interactive fiction. The country has been an early adopter and leader in both SMS and social. This digital savvy will lend itself well to works in this genre,” Mr. Strömberg said in a statement.

Interactive fiction was pioneered decades ago by choose-your-own-adventure books and choice-based video games. The genre resurfaced recently in “Bandersnatch,” a highly rated movie under Black Mirror, a sci-fi anthology series produced by Netflix in 2018.

To bring interactive fiction into the country, publishing house Bookshelf PH will produce an in-house line of audiobooks through Fabella, an editing product developed by Wanderword that will let Filipino writers and content creators author and deploy interactive audio content to Amazon Alexa, Google Home, and smartphones — as well as the web.

Fabella’s basic features allow creators to plot out a choose-your-own-adventure story, while its more advanced features can incorporate hit points or level checks, according to Kyle C. Nate, Bookshelf PH deputy editorial director.

“It may be helpful to have a programming background, but it’s still possible to learn with Fabella’s documentation. The Bookshelf PH team is also happy to help any author or publisher who wants to experiment with Fabella,” she said via e-mail.

However, one caveat is that the baked-in text-to-speech voices for narrating the book or game are generally optimized for English.

“Content creators in the Philippines would have to tell their interactive audio content in English or use external voice actors if they wish to still tell it in Filipino or another local dialect,” said Ms. Nate.

Community-building and social media publicity is also the local market’s strength — since a story can take different paths, readers naturally discuss the branches they took and the ending they arrived at across social media.

Monette G. Quiogue, Bookshelf PH executive creative director, said in a statement: “These kinds of interactive audiobooks put the player in the role of the protagonist, where they can actively shape the course of the story rather than just read what happens. Such interactivity is an immersive experience like no other.”

Bookshelf PH is open to collaborations with self-published authors, freelance writers, students, and brands that author books. Interested parties can visit their website, or e-mail hello@bookshelf.com.ph. — Brontë H. Lacsamana

‘No to the IMF’: thousands protest in Argentina against debt deal

BUENOS AIRES – Thousands of Argentines marched through the streets of Buenos Aires on Tuesday to protest against a likely deal with the International Monetary Fund (IMF) to revamp more than $40 billion of debt the country cannot pay back.

The protesters paraded through the capital with banners saying “no to paying the IMF” and “no to an IMF deal“, a sign of rising tension in the South American nation over the tentative agreement struck late last month.

Argentina and the IMF announced a breakthrough in talks in late January to revamp a failed 2018 loan, which would see debt payments pushed back but involve pledges to meet certain economic targets agreed with the lender.

That agreement still needs details ironed out and approval from both Argentina‘s Congress and the IMF board.

“No to the government’s deal with the IMF,” said Celeste Fierro, a protest leader, wearing a T-shirt reading “scams are not paid”.

“They want us to pay with more (fiscal) adjustments, with more precariousness and taking more out of us, that is why we cannot allow the submission of our people to the designs of the IMF.”

IMF chief Kristalina Georgieva said last week that while an agreement had been reached in principle with Argentina on a new standby loan, “hard work” still lay ahead.

In Argentina, splits have appeared in the ruling Peronist coalition over the deal, with one prominent lawmaker stepping down from his position in Congress in opposition to it.

Juan Carlos Giordano, a representative for a leftist group in the march, said that the debt deal was akin to making working class people foot the bill and that the funds should be used to pull people out of poverty.

“The aim is to defend wages, defend work so that the money goes to combat social ills,” he said, blaming the previous government of conservative Mauricio Macri for taking on the IMF debt.

“We are marking a path. The path of no submission, no to resignation, and no to the IMF.” – Reuters

Meta, Chime file lawsuit against alleged phishing scam on Facebook, Instagram

BYCGZR-FREEPIK AND RAWPIXEL.COM-FREEPIK

Facebook parent Meta Platforms said on Tuesday it had filed a joint lawsuit with digital banking company Chime against two Nigeria-based individuals who engaged in phishing attacks to deceive people and gain access to their online financial accounts.

The lawsuit, which is the first joint complaint between Meta and a financial services company, alleged that the defendants used Facebook and Instagram accounts to impersonate Chime and lure people to fake branded phishing websites with the aim of obtaining their Chime account login information and withdrawing funds.

In the suit, which was filed in the U.S. District Court for the Northern District of California, Meta said the defendants used a network of computers to control more than 800 impersonating Instagram accounts and five Facebook accounts, in order to conceal their activity and evade technical enforcement measures.

Reuters could not immediately reach the defendants for comment.

“Impersonation scams are a serious challenge, and this action represents a major step forward in cross-industry collaboration against this abuse,” Meta‘s director of platform enforcement and litigation Jessica Romero said in a blog post.

Fintech company Chime was launched by former Visa Inc executive Chris Britt and Comcast Corp alumnus Ryan King in 2012. Reuters exclusively reported last month that Chime had asked Goldman Sachs to help it with IPO preparations.

Meta said it had taken several previous actions against the defendants since June 2020 for violating its terms, including disabling their accounts, blocking impersonating domains on its platforms and sending cease and desist letters. – Reuters

U.S. December trade data reveals massive shortfall in China’s ‘Phase 1’ purchases

STOCK PHOTO | Image by Ally Thomas from Pixabay

WASHINGTON – U.S. goods exports to China fell in December, cementing a massive shortfall in Beijing’s two-year purchase commitments under the “Phase 1” trade deal negotiated by former President Donald Trump’s administration.

The U.S. Census Bureau said on Tuesday that the United States’ 2021 goods trade deficit with China rose by $45 billion, or 14.5%, to $355.3 billion, the largest since a 2018 record of $418.2 billion.

The 2020 gap was $310.3 billion, a 10-year low driven by coronavirus pandemic lockdowns.

The global U.S. trade deficit in 2021 surged 27% to a record $859.1 billion as businesses restocked inventories to meet robust demand.

 

NO EXTRA PURCHASES

The data showed China by far missed its commitments to purchase an additional $200 billion worth of U.S. farm and manufactured goods, energy and services above 2017 levels – the year before a bitter trade war embroiled the world’s two largest economies.

The purchase commitments were the centerpiece of Trump’s Phase 1 trade deal with China, which launched in mid-February 2020 and halted a threatened escalation of tariffs.

The deal also called for China to grant increased U.S. market access to its agricultural biotechnology and financial services sectors and mandated some intellectual property protection improvements.

An analysis of final 2021 Census trade data compiled by economist Chad Bown of the Peterson Institute for International Economics showed China met just 57% of its full two-year goods and services targets.

Beijing’s purchases of the goods, energy and services targeted in the Phase 1 agreement were not even enough to return to China’s baseline 2017 level of purchases of U.S. imports after retaliatory tariffs had eroded them in 2018 and 2019, he said.

“Put differently, China bought none of the additional $200 billion of exports Trump’s deal had promised,” Bown said in his analysis.

 

China exceeded the 2017 baseline in agricultural purchases, but only reached 83% of the $73.9 billion two-year farm goods target, Bown’s analysis showed.

Services exports to China, which had been a bright spot for U.S. trade, fell sharply as the pandemic slashed Chinese tourism and business travel to the United States and cut the flow of Chinese students to U.S. universities, reaching only 52% of the target.

“We have engaged the PRC (People’s Republic of China) on its shortfalls for months, but have not seen real signs towards making good on the purchase commitments and our patience is wearing thin,” Adam Hodge, a spokesperson for the U.S. Trade Representative’s office, said in an e-mailed statement.

“Regardless of how these negotiations conclude, the fact remains that the Phase One Agreement did not address the core problems with the PRC’s state-led economy,” Hodge said, adding that the Biden administration would “shape the environment around China” by building U.S. competitiveness, diversifying markets and limiting the impact of China’s “harmful practices.”

Liu Pengyu, a spokesperson for China’s embassy in Washington, said China has been working on implementation of the agreement “despite the impact of COVID-19, global economic recession and supply chain disruptions.”

“The Phase 1 deal benefits China and the U.S. and the whole world,” Liu added.

Beijing has sought the removal of tariffs on hundreds of billions of dollars of goods that were left in place by the Phase 1 deal.

The agreement contains a clause that the two parties “project that the trajectory of increases” in China’s purchases “will continue in calendar years 2022 through 2025” without specific targets.

Former USTR chief of staff Jamieson Greer, who helped negotiate the Phase 1 deal, said that clause could be used to pursue “retrospective enforcement for what’s been missed.”

“It’s in the interest of the administration to pursue enforcement,” said Greer, a trade lawyer with King and Spalding.

“With a few kind of narrow exceptions, we haven’t really seen that much enforcement” on trade matters from the Biden administration, he added. – Reuters

Global COVID response program ‘running on fumes’ amid budget shortfall

A global initiative to get COVID-19 tests, treatments and vaccines to poorer nations has only received 5% of the donations sought to deliver on its aims this year, according to the World Health Organization (WHO) and other aid groups.

The Access to COVID-19 Tools (ACT) Accelerator budgeted $23.4 billion for its efforts from October 2021 to September 2022, of which it hoped $16.8 billion would come in the form of grants from richer countries.

However, so far it has had just $814 million pledged, leaders of the initiative told a media briefing on Tuesday. In addition to the WHO, the project is backed by organizations including the Coalition for Epidemic Preparedness Innovations, The Global Fund, and the Bill & Melinda Gates Foundation.

“That’s just a minuscule 5% of what we require. It is time to awaken the conscience of the world,” said the WHO’s global ambassador for health financing, Gordon Brown, a former British prime minister.

On Wednesday, a number of world leaders are set to support publicly the push for more funding, calling for the investment to end the emergency phase of the COVID-19 pandemic this year.

The ACT-Accelerator hub encompasses the COVAX initiative, which has focused on equitable access to vaccines. It also involves providing tests and treatments to low and middle-income countries, as well as personal protective equipment (PPE) for healthcare workers.

Bruce Aylward, a senior WHO official who acts as coordinator for the initiative, said it was stuttering due to a lack of funds.

“The global response is running on fumes,” he said.

The lack of funding has been apparent since the start of the pandemic. The gap for the project’s previous budget was $14.5 billion. Partners said the majority of funding so far had gone into COVID-19 vaccines, leaving the other goals – tests, treatments, and PPE – short.

Even so, the initiative has fallen well short of its goal to deliver 2 billion COVID vaccines in 2021, with only 10% of people in low-income countries having received at least one dose of a vaccine, compared to almost 68% in richer countries, according to WHO data.

Brown called for countries to fund the initiative under a “fair share” model based on the size of their own economies, which he said resembled how nations commit to funding United Nations peacekeeping forces. – Reuters

Marcos Jr.’s path to Philippine presidency muddied by lawsuits

FACEBOOK.COM/BONGBONGMARCOS

Ferdinand “Bongbong” Marcos Jr. may have a decisive lead in the Philippine presidential race, but his path to obtain the country’s highest office remains uncertain three months before the election.

The Commission on Elections, whose four remaining members were appointed by President Rodrigo Duterte, has yet to decide on four disqualification petitions against the late dictator’s son which all cite his conviction nearly three decades ago for failing to file tax returns.

The petitioners, some of whom were arrested and tortured during Ferdinand Marcos’s military rule in the 1970s and 1980s, argue that the tax conviction permanently bars his son from public office. Marcos’s camp says he’s qualified to run, describing the cases as “pathetic stunts” that interfere with the right of Filipinos to freely choose leaders. His Chief of Staff Vic Rodriguez said Marcos’s focus is now on nation-building and unifying the country.

Still, Marcos said last week that he’s concerned about the possibility of being disqualified even if he wins the presidential elections. “I take everything seriously, I worry about everything, but I don’t let it distract me from the campaign,” he said in a television interview.

No matter what happens with the Marcos disqualification petitions, the losing party can appeal before the Supreme Court, which could take months to decide. Here’s how the scenarios could play out:1) Marcos cleared before electionsThis would clear any doubts about Marcos’s bid for the presidency. He is well ahead of all his competitors, with a December opinion survey showing Vice President Leni Robredo — the opposition leader who defeated Marcos in 2016 — trailing by 33 points in second place.One petition, similar to the remaining four, has already been thrown out by a division of the Election Commission. It disagreed with the petitioners’ argument that Marcos made false representations in his certificate of candidacy showing he’s eligible to run despite a 1995 tax conviction. They are planning to appeal this ruling before the entire poll body, and the case could go all the way to the Supreme Court.In the 2016 race, Senator Grace Poe, who was a presidential front-runner, was initially disqualified by the poll body for not being a natural-born citizen and failing to meet a residency requirement. The Supreme Court overturned this decision two months before the elections, but Poe eventually lost to Duterte.2) Marcos disqualified before election

This scenario would open up the race to a range of candidates currently well behind Marcos. While another candidate with the same surname and from the same party can legally take his place — possibly his sister, Imee Marcos — it’s unclear if his supporters would stick around.Many of them may shift over to Manila Mayor Isko Moreno, who recently praised President Duterte, or former police chief Senator Panfilo Lacson, according to Jean Franco, a professor from the University of the Philippines.Those two men have emphasized discipline and strong leadership in their campaigns, which Marcos supporters have tended to associate with the late dictator’s rule. Duterte, who maintains high popularity, has yet to endorse any presidential candidate.Still, a large block of voters could remain loyal to the Marcoses even if he’s disqualified. “Marcos has been successful in saying that this is just political persecution, that people are doing this because they’re afraid of him winning the elections,” Franco said.3) Marcos wins election, then gets disqualified

A protracted legal battle over Marcos’s disqualification cases could eventually benefit the president’s daughter, Sara Duterte, who’s leading the vice-presidential race. Election Commission spokesman James Jimenez said in a briefing in January that the vice-president would have to take over if an elected president gets disqualifed.Sara Duterte’s camp has declined to comment on the issue although she said in a statement tweeted by state TV that the speculation of her possibly replacing Marcos as president was “exceptionally unpleasant.” “In reality, both of us are yet to win the elections. It is putting the cart before the horse,” she added.Some analysts see this scenario as unlikely, as she had a good chance of succeeding her father if she ran for president against Marcos. Still, it could set Sara Duterte up for a lengthy run as president: She could finish out Marcos’s remaining time in office and then run again in the next election, potentially ruling for longer than a single six-year term normally allows.4) Marcos wins election, cases later dismissed

Much depends on the extent to which current President Rodrigo Duterte would want leverage over Marcos. Past Philippine presidents have faced trials after leaving office, with former president Gloria Arroyo pardoning her predecessor Joseph Estrada in 2007 after he was convicted of plunder.The president has faced allegations of illegal activity particularly over his drugs war, with an International Criminal Court prosecutor last year pausing a probe into the policy. In the past, he has repeatedly denied wrongdoing on the drugs war, and recently said that the accusation before the international court about the killings was “incredible.”Either way, Duterte will play a key role: He currently can appoint three new election commissioners, and he’s already picked 11 out of 14  judges who would hear any case that makes its way to the Supreme Court. Duterte’s spokesman didn’t immediately respond to a request for comment.“As soon as he’s out of the door, he needs to cover himself,” said Sol Iglesias, assistant professor of political science at the University of the Philippines.If Marcos solidifies his hold on power, however, the poll body and the top court could dismiss the cases on the back of a landslide at the polls, said Victor Manhit, a managing director at strategic advisory firm BowerGroupAsia and former deputy secretary in the Philippine Senate.“When he is the head of government these commissioners and courts will simply say: it’s the voice of the people,” Manhit said. “They’ll hide behind that.” — Bloomberg

Manufacturing growth eases in Dec.

REUTERS

By Bernadette Therese M. Gadon, Researcher

FACTORY PRODUCTION grew at a slower pace in December but remained in the positive territory for the ninth straight month despite the supply chain disruption in the aftermath of Typhoon Odette.   

Preliminary results of the Philippine Statistics Authority’s Monthly Integrated Survey of Selected Industries (MISSI) showed factory output, as measured by the volume of production index (VoPI), went up by 17.9% year on year in December.

This was slower than November’s revised 25.8% growth and a turnaround from the 14.8% contraction recorded in December 2020.

Philippine factory output growth eases in December

December was the ninth consecutive month that the VoPI remained in the positive territory or since April’s 152.1% surge.

This brought average factory output growth last year to 50.3%, reversing the 40.5% decline in 2020.

The PSA attributed December’s growth to year-on-year increases in half of the 22 industry divisions, led by manufacture of wood, bamboo, cane, rattan articles, and related products which jumped by 122.6%.

Other industries that showed growth included machinery and equipment except electrical (to 50% from 40.7%), electrical equipment (49.6% from 44.9%), and coke and refined petroleum products (47.6% from 84.8%).

Meanwhile, the following industries registered declines in December: basic pharmaceutical products and pharmaceutical preparations (-30.2% from -10.5% in November), beverages (-14.6% from -0.8%), and tobacco products (-14.5% from -20.4%).

In comparison, IHS Markit’s Philippines Manufacturing Purchasing Managers’ Index (PMI) slightly increased to a nine-month high of 51.8 in December from 51.7 in November. A reading above 50 marks an improvement for the manufacturing sector while anything below indicates deterioration.

The capacity utilization of these factories averaged 67.3% in December, slightly down from 67.8% in November. Of the 22 sectors, 20 averaged a capacity utilization rate of at least 50%.

Analysts said December’s growth was due to base effects after factory production nearly grounded to a halt in 2020 amid the strict lockdown restrictions imposed to contain the spread of the coronavirus disease 2019 (COVID-19).

“Base effects appear to still play a part in the recent report with the recovery magnified from the sharp fall in the previous year. In the coming months, we do expect these growth rates to moderate further but remain in expansion as the economy reopens gradually,” ING Bank N.V. Manila Senior Economist Nicholas Antonio T. Mapa said in an e-mail.

Security Bank Corp. Chief Economist and Assistant Vice-President Robert Dan J. Roces said in a separate e-mail interview that December saw most economic sectors perform strongly, thanks to the further relaxation of mobility curbs in Metro Manila and other parts of the country.

“December was a strong month for most of the economy with mild community quarantines and above pre-pandemic mobility, and the slower output may be attributed to some effects coming from Typhoon Odette but also due to a slight seasonal pullback,” he said.

In a Viber phone interview, Philippine Chamber of Commerce and Industry (PCCI) President George T. Barcelon said that the easing manufacturing growth seen in December is “normal.”

“People don’t want to carry too much inventory moving into the new year,” Mr. Barcelon said. He added that the supply chain has not yet stabilized, noting that incoming shipments of raw materials were disrupted.

In mid-December, Typhoon Odette (international name: Rai) swept through parts of the Visayas and Mindanao, leaving damage to agriculture and infrastructure worth P13.3 billion and P17.19 billion, respectively.

For January, analysts are looking at a modest output, due to the reimposition of tighter restrictions amid the surge of the Omicron variant in the country. However, they expect manufacturing to pick up again by February.

Metro Manila and other areas were placed under Alert Level 3 in January, but are currently under a looser Alert Level 2.

“The Omicron surge in January may have only a modest impact on manufacturing activity and we expect a quick recovery by February as mobility restriction have been relaxed somewhat,” Mr. Mapa said.

“For January, it was reported that the manufacturing sector’s output and new orders contracted given the resurgence of Omicron as well as the lingering impact of Odette, on top of remaining raw material shortages that led manufacturers to raise selling prices thus the MISSI in January may show that underperformance,” Mr. Roces said.

Manufacturing PMI reading in January hit the 50 mark that denotes no change from previous month. IHS Markit traced this to Typhoon Odette’s aftermath as well as the fresh surge in COVID-19 cases.

“For February, we expect manufacturing to revert to an uptrend on the back of a pickup in manufacturing activity as mobility improves given the easing of quarantine restrictions in the capital region and as the sector’s capacity utilization expands amid a deceleration in coronavirus new infections,” Mr. Roces added.

Mr. Barcelon said he views this year with “guarded optimism,” hoping new COVID-19 cases will continue to drop.

The Department of Health reported 3,574 new cases on Feb. 8, bringing the total coronavirus cases in the country to 3.62 million. Active cases, meanwhile, were tallied at 105,550.

Sa ngayon, pababa ng pababa ’yung infection eh so that’s a good thing. Pero kailangan ma maintain natin hanggang umabot ng middle or end of February and if that is sustained at a lower rate, that is good (At present, new infections have trended lower so that’s a good thing. But we still need to maintain this until mid- or end-February and if that is sustained at a lower rate, that is good),” Mr. Barcelon said.

BSP weighs impact of soaring oil prices on inflation outlook

REUTERS

By Luz Wendy T. Noble, Reporter

THE PHILIPPINE central bank is closely monitoring the impact of the recent rally in global oil prices on domestic inflation, Bangko Sentral ng Pilipinas (BSP) Governor Benjamin E. Diokno said.

“We continue to monitor global crude oil prices to the extent that they affect inflation and growth prospects. Recent surge in oil prices could affect inflation forecasts adversely only if it is persistently high,” Mr. Diokno said in a text message.

Crude oil prices have continued to climb this year, amid resurgent demand and supply disruptions. Brent crude hit a seven-year high of $94 a barrel during Monday’s session, but closed lower at $92.69.

In January, Mr. Diokno said the BSP’s inflation forecast for 2022 and 2023 would hold unless world crude prices settle above $95 a barrel during the period.

The BSP expects inflation to be within target for 2022 and 2023 at 3.4% and 3.2%, respectively.

Mr. Diokno said present oil prices are due to “short supply, higher demand, partly due to global economic rebound as well as severely harsh winter.”

“It’s hard to predict how oil prices would look like this spring or summer. As policy makers, we monitor, assess risks and act accordingly. We continue to gather data and assess various scenarios,” he said.

Mr. Diokno said geopolitical uncertainty arising from the Russia-Ukraine crisis may also affect oil supply and oil price movements.

“First, it could incentivize some countries — for example, US and Saudi Arabia — to increase oil outputs. Second, higher oil prices accompanied by higher interest rates and currency depreciation could result to world recession; in turn, these could result in lower demand for oil,” he said.

In the Philippines, prices of gasoline, diesel, and kerosene have increased by P5.70, P7.95, and P7.20 per liter as of Feb. 1 year to date.

“Oil prices is only one of the variables that affect inflation. Food prices, housing, other utilities contribute more to the consumer price index (CPI) than oil prices,” Mr. Diokno said.

Headline inflation reached 4.5% in 2021, surpassing the 2-4% target range of the central bank and much quicker than the 2.6% in 2020.

In a letter addressed to President Rodrigo R. Duterte explaining why the target was breached, Mr. Diokno said beyond target inflation in 2021 was mainly due to low supply of staple food items and the spike in oil prices.

“The rise of global oil prices will affect supply of goods and services and it will come from the cost of inputs for the production of these said goods and services,” UnionBank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion said in a Viber message.

“The broader reopening of most advanced and emerging economies may even increase the demand for energy to produce and cope up with an also rising demand,” he added.

Mr. Asuncion said inflation is projected to average 3.5% this year, based on preliminary data and in the absence of more details used for the CPI with a 2018 base by the Philippine Statistics Authority. A 4% reading is also “not unthinkable” by the second half of the year if recovery gains traction, he added.

Asian Institute of Management economist John Paolo R. Rivera said some industries, such as transportation and manufacturing, will bear the brunt of higher oil prices.

“Oil prices are huge explanatory factor for inflation as most industries are dependent on oil. Increase in oil prices increase their production cost, which they will pass to consumers,” Mr. Rivera said in a Viber message.

Headline inflation in January slowed to 3% from 3.6% in December. It was the first month that a 2018 base year was used for the CPI.

The Monetary Board will have its first policy review on Feb. 17.

Despite elevated inflation in 2021, the central bank has kept rates untouched for more than a year as it focused on keeping its support for the economy.

The BSP on Tuesday said its quarterly inflation report will be turned into a monetary policy report which will be released a day after the policy reviews in February, May, August, and November.

“The shift to the monetary policy report further strengthens the BSP’s commitment towards greater transparency under the Inflation Targeting framework. The increased disclosure and communication by the BSP of its policy decisions should further help to anchor inflation expectations going forward,” the BSP said.