Home Blog Page 9045

Del Monte Pacific shuts facilities in 4 US locations

DEL MONTE Pacific Limited (DMPL) is shutting several factories in the United States as part of a restructuring program that seeks to bring down costs.

In a statement posted on its website, the canned fruit manufacturer said it is closing facilities in four locations owned by US subsidiary Del Monte Foods, Inc.

The facilities include those in Sleepy Eye in Minnesota and Mendota in Illinois, which will stop production at the end of the current peak season. The company will also divest from its facilities in Cambria, Wisconsin and from its manufacturing assets in Crystal City, Texas.

DMPL will transfer production in these locations to other facilities within the US. The company looks to fully utilize the capacity of its existing plants after the divestment.

“This decision has been difficult and has come after careful consideration. This restructuring is a necessary step for us to remain competitive in a rapidly changing marketplace,” DMPL Managing Director and Chief Executive Officer Joselito D. Campos, Jr said in a statement.

“Our asset-light strategy will lead to more efficient and lower cost operations,” he added.

The facilities are part of Del Monte Foods’ 10 plants in the US, which sells products under brands Fruit Naturals, Orchard Select, SunFresh, and Fruit Refreshers. The company also has two plants in Mexico.

In the Philippines, DMPL operates a 26,000-hectare pineapple plantation in Mindanao, dubbed as the largest fully integrated pineapple operation in the world. It also has a beverage bottling plant and frozen fruit processing facility in the country.

DMPL earlier postponed the P17.5-billion initial public offering of local unit Del Monte Philippines, Inc., due to market volatility. The company sought to raise money to prepay or repay the group’s existing debt.

In its fiscal year ending April 2019, DMPL reported a net profit attributable to the parent of $20.32 million, versus an attributable loss of $36.49 million the year before. Revenues, however, slipped 11% to $1.95 billion.

DMPL is listed on both the main board of the Singapore Stock Exchange and the Philippine Stock Exchange.

Shares in DMPL were down 3.9% or 24 centavos to close at P5.91 each at the local bourse Tuesday. — Arra B. Francia

WhatsApp in talks to launch mobile payments in Indonesia

JAKARTA — Facebook Inc.’s messaging service WhatsApp is in talks with multiple Indonesian digital payment firms to offer their mobile transaction services, in a bid to tap the nation’s fast growing e-commerce sector, people familiar with the matter said.

Indonesia could become the second country worldwide where WhatsApp introduces such services, as it awaits regulatory approval from India, its biggest market by users, that has been delayed due to local data storage rules.

But unlike in India where it plans to offer direct peer-to-peer payment services, WhatsApp will simply serve as a platform in Indonesia supporting payments via local digital wallets due to tough licensing regulations, the sources told Reuters.

The Indonesia model could become a template for WhatsApp to adopt in other emerging markets to get around regulations on foreign players creating their own digital wallets, the sources said.

Indonesia, home to 260 million people and Southeast Asia’s largest economy, is one of the top-five markets globally for WhatsApp, with over 100 million users.

The nation is set to see its e-commerce industry tripling to $100 billion by 2025, according to some estimates, but it also has some of the region’s strictest digital payments regulations.

WhatsApp is in advanced talks with several digital payments firms including ride hailer Go-Jek, mobile payments firm DANA, backed by China’s Ant Financial, and fintech start-up OVO, which is owned by Indonesian conglomerate Lippo Group and is also backed by ride hailing company Grab, the sources said.

Deals with the three firms are expected to be finalized shortly, the people said, declining to be named as the talks are private.

WhatsApp has also approached state-owned Bank Mandiri, which operates a digital wallet, they said.

The Indonesia plan comes after Facebook CEO Mark Zuckerberg announced earlier this year that it would be rolling out WhatsApp payments to “some countries.”

“As Mark has said earlier this year… we are looking to bring digital payments to more countries,” a Facebook spokeswoman told Reuters.

“WhatsApp is in conversations with financial partners in Indonesia about payments, however the discussions are in early stages and we do not have anything further to share at this stage.”

Go-Jek declined to comment. DANA, OVO and Bank Mandiri did not immediately respond to requests for comments.

A spokeswoman for the Mandiri-backed e-wallet LinkAja said she could not confirm any talks with WhatsApp.

The service was originally planned to start at the end of the year, but two sources said they expected it to be delayed by several months, as WhatsApp would not want to launch in Indonesia before India.

One source said WhatsApp would need to get a nod from regulator Bank Indonesia before proceeding. Bank Indonesia did not respond to requests from comment. — Reuters

OCBC in talks with Singtel about Singapore virtual bank license

OVERSEA-CHINESE Banking Corp. (OCBC) is in talks with companies including Singapore Telecommunications Ltd. about seeking one of the city-state’s planned virtual bank licenses, according to people familiar with the matter.

Singapore’s second-largest bank would take a minority stake in any virtual-banking joint venture and sees it as a way to tap new customers and markets, the people said, requesting anonymity because the talks are confidential. For example, Singtel might have clients for its phone services that don’t bank with OCBC, one of the people said.

Banks worldwide face increasing competition from telcos and technology firms that are getting into financial services including payments and lending. But some are partnering, including in Hong Kong where Standard Chartered Plc tied up with PCCW Ltd. earlier this year to create a virtual bank.

OCBC’s discussions are preliminary ahead of more details on the conditions for the new license applications which the Monetary Authority of Singapore (MAS) is expected to issue later this month, the people said. The eventual choice of partners may change depending on licensing conditions, they added.

“We are open to forging new partnerships and ventures that allow us to serve new segments and new markets,” OCBC’s Head of Digital and Innovation Pranav Seth said in an emailed reply to questions, while declining to comment on any talks on a virtual license application.

A Singtel representative declined to comment. The company’s Chief Executive Officer Chua Sock Koong said earlier this month that her company is studying the prospects for a virtual license.

The Monetary Authority of Singapore said in June it plans to issue as many as five new digital bank licenses to non-bank firms as part of efforts to strengthen competition in financial services. The UK and Hong Kong are among major economies that have allowed licenses for virtual banks, creating a new generation of rivals for traditional lenders.

The MAS’s initiative adds to the digital units that local lenders have been allowed to set up since 2000. The central bank said it will award up to two licenses for new retail banks and as many as three for lenders to small and medium-sized enterprises.

Of the big three domestic lenders, OCBC is the only one that doesn’t have a pure-play digital bank, though it has been using technology to facilitate services such as robo-investment advice and instant online account opening for SMEs. DBS Group Holdings Ltd. operates a digital bank in India and Indonesia, while United Overseas Bank Ltd. opened one in Thailand earlier this year.

In Hong Kong, Standard Chartered Plc holds a 65% stake in one of the territory’s new virtual banks, with PCCW, HKT Trust & HKT Ltd. and Ctrip Financial Management (Hong Kong) Co. owning the balance. — Bloomberg

Microsoft, Nvidia team up for Minecraft visuals

MICROSOFT Corp. said on Monday it will use chipmaker Nvidia Corp.’s real-time ray tracing technology to provide the software company’s Minecraft video game players more realistic graphics on personal computers.

Real-time ray tracing, or the ability for the chip to simulate how light rays will bounce around in a visual scene, helps video games and other computer graphics more closely resemble shadows and reflections in the real world.

Last week, Nvidia posted quarterly results ahead of Wall Street targets and said its profitability was getting a boost from new high-end graphics chips for video gamers.

“I think we’ve put all of the pieces in place to bring ray tracing into the future of games. The number of blockbuster games that have adopted RTX is really snowballing,” Nvidia Chief Executive Officer Jen-Hsun Huang said on a post-earnings call.

Other games which would have the same graphic technology are Activision Blizzard’s Call of Duty: Modern Warfare, Ubisoft Toronto’s Watch Dogs: Legion and Tencent NExT Studios’ Synced: Off Planet, Nvidia said on Monday.

Minecraft, a construction game in which players can build nearly anything imaginable, block by block, in a digital, Lego-like world, spread like wildfire since its full release in 2011 by developer Mojang, which was bought by Microsoft in 2014.

In May this year, Microsoft said 176 million versions of the game have been sold since its launch. — Reuters

Alliance Select profit plunges in Q2

EARNINGS of Alliance Select Foods, International, Inc. fell 98.5% in the second quarter of 2019, due to lower prices for raw fish and challenges in the salmon market.

In a regulatory filing, the listed seafood company reported a net income attributable to the parent of $14,427 in the April to June period, lower than $986,095 in the same period a year ago.

This came amid a 4% decline in net sales to $23.498 million for the quarter.

In the first half, Alliance Select’s attributable profit lost 99.7% to $7,269, while net sales went down 10% to $43.094 million.

The company explained that sales from the tuna segment alone dropped by 8% due to the lower market price of raw fish. It was further weighed down by manpower challenges.

“We continue to play the long game. In the first half, we succeeded in fortifying our operations, mainly progressing and expanding our worker programs and ensuring that our factory continues to operate at optimal capacity,” Alliance Select President Raymond K.H. See said in a statement.

Sales of salmon also fell 14% due to issues in securing a particular salmon specie requirement.

At the same time, selling and administrative expenses went down 3% due to lower sales from the salmon business.

Moving forward, Alliance Select remains optimistic about further investing in the country. The company said it looks to complete its $2-million investment in facility and machinery upgrades within the year, which should improve products and efficiencies for the firm.

Incorporated in 2003, Alliance Select’s operations are located in General Santos City. It has subsidiaries in Indonesia, New Zealand, and the United States, while exporting its canned tuna products to Europe, North America, Asia, Africa and South America, and the Middle East.

Shares in Alliance Select were unchanged at 69 centavos each at the stock exchange on Tuesday. — Arra B. Francia

Vegan sea urchin will soon start showing up on sushi counters

THE meat-free movement is finding its way into strange and exotic dishes.

The latest example: imitation uni. Usually, the orange innards of sea urchins served in sushi restaurants are harvested from spiky creatures that live on seabeds. The delicacy requires much labor to collect and keep fresh. That makes it one of the most expensive items on menus; a 100-gram box of top-grade uni from Japan’s northern island of Hokkaido can easily fetch 5,000 yen ($47).

Although Beyond Meat Inc. and Impossible Foods Inc. are grabbing headlines these days, vegan seafood is considered the next frontier in plant-based foods due to sustainability concerns. Good Catch, based in Newton, Pennsylvania, sells crab-free crabcakes and fish-free tuna. San Francisco-based Wild Type is developing lab-grown salmon. At stake is a piece of a vegan market that’s projected to exceed $24 billion by 2026.

Japan already consumes 80% of the world’s uni supply, and demand will only climb thanks to sushi’s growing global popularity. That’s why Fuji Oil Holdings Inc., maker of processed foods such as chocolate and soy products, developed the world’s first imitation uni, using flavored vegetable oils and soy-based ingredients.

Uni is an acquired taste. The small textured orange lumps are the gonads of male and female sea urchins that produce sperm and eggs. Connoisseurs seek out uni for its fresh-from-the-sea aroma; the best uni is firm until it’s eaten, and dissolves into a creamy texture on the tongue. It’s typically dolloped atop sushi rice, then wrapped with seaweed. Uni can also be mixed in with pasta, or spread over small pieces of toast, like caviar.

Fuji Oil’s version of uni is treated more like an ingredient meant to be used in a variety of dishes. Even so, one Tokyo sushi restaurant expressed an interest in trying it out. “We’d have to taste it first, but yes, we’d consider it,” said Yuki Haga, a sushi chef at Gonpachi.

Restaurants may eventually have little choice but to add plant-based seafood to their menus. Overfishing is becoming a serious concern, as a rising global population consumes fish faster than it can be pulled out of the sea. Even with farm-raised fish, which account for more than half of consumption, it’s not enough.

Fuji Oil, which also makes vegan tuna flakes, got its start in the post-war years, becoming the first food company in Japan to extract palm oil. The Osaka-based company provides everything from the soy milk used in Starbucks lattes in Japan to meatless burgers for fast-food chains. The company’s goal is to make “milk that’s tastier than milk, butter that’s tastier than butter,” said Hiroshi Shimizu, Fuji Oil’s chief executive officer.

Plant-based food isn’t just a business opportunity — US retail sales of plant-based foods climbed 20% to $3.3 billion last year — but an answer for an impending global food crisis, according to the United Nations. Earlier this month, the Intergovernmental Panel on Climate Change warned that rising temperatures are putting the world’s food supply at risk.

Now one of Japan’s biggest providers of compound fats and proteins for chocolate bars and puddings, Fuji Oil is projected to see its sales climb 42% to 426 billion yen in the fiscal year to March. After more than doubling from 2014 through 2018, the stock is down 21% this year as higher cocoa prices and costs from a recent merger erode margins. Fuji Oil has a valuation of about 246 billion yen.

“High-end restaurants could be the next target clientele for Fuji Oil, with their vegan uni,” said Norikazu Shimizu, an analyst at IwaiCosmo Securities Co. — Bloomberg

Bankers push hedging as trade war hits yuan

SHANGHAI — In a Shanghai room packed with small businesses ranging from furniture makers to garment exporters, Zhu Yuan, a currency expert at Bank of Communications, explains why Chinese companies need to build their defenses against currency volatility.

“Currency swings are now largely at the mercy of geopolitics and Sino-US relations. The yuan’s value is getting nearly impossible to predict,” he told members of the city’s chamber of commerce.

“Relatively volatile yuan fluctuations have exposed enterprises to big currency risks.”

The yuan has fallen about 11 percent against the dollar since Washington announced its first hefty tariffs on Chinese imports 17 months ago.

The latest jolt came early this month, when authorities surprised markets by letting the yuan slide through the psychological support level of 7 to the dollar to decade lows, unsettling Chinese firms such as exporters and heavy borrowers of foreign debt.

Company executives listened with rapt attention as Zhu drew parallels with a house on sale to explain the basics of one hedging tool, a currency option. It’s like putting down a deposit, he said, so that one has the right to buy the property in three months at a fixed price, no matter how prices change.

With no quick end to the trade war in sight, Chinese bankers, consultants and exchange operators are milking the opportunity to sell risk-mitigating tools that they claim will allow company bosses to sleep better at night.

“As the yuan cracks seven, uncertainty ahead will only increase,” said Zhu Jianhua, a senior executive at commodities importer Shanhan Resources.

Currency volatility is relatively new for Chinese businesses. Until 2015, when Beijing adopted a more market-driven currency policy, the heavily managed yuan had been on an almost uninterrupted decade-long firming trend against the dollar.

Beijing’s trade war with Washington since 2018 has spawned increased uncertainty and volatility.

At the end of 2018, only 230 China-listed companies — less than 7% of total — were engaged in hedging, as per their disclosures to the exchange. Analysts say that partly explains why earnings in China, and hence share prices, are more volatile than those in the United States.

According to an estimate by Industrial Bank Co, daily average trading in onshore yuan derivatives accounted for just 0.05% of the country’s total import and export volumes in 2016. That compares with 0.9% in the United States, and 0.88% in Japan.

THE BUSINESS OF RISK
As the yuan’s latest slide sparked fears the trade war could be broadening into a currency war, China’s central bank urged companies to take precautions.

“We hope that companies don’t expose themselves to currency risks too much,” the People’s Bank of China said in a statement on Aug. 5, hours after the yuan broke through the 7-mark.

It stressed companies should use derivatives to manage actual business risks, rather than making currency bets.

Seizing on concerns among Chinese trading firms and manufacturers, Zheshang Bank started promoting an online trading platform for yuan options. The lender ran advertisements saying yuan volatility could easily “reverse a company’s fortune,” “wipe out its profit,” and “cause financial losses.”

Liu Wencai, a former official at China’s financial futures exchange and author of the book “the wisdom of risk-hedging,” set up his own consultancy D-union in March to help companies manage market uncertainty.

“The trade war has boosted currency volatility, which has led to a burst in demand for risk-hedging,” said Liu, who sees huge potential in a country where hedging expertise and tools are scarce.

In addition to embracing onshore hedging tools, an increasing number of Chinese firms are starting to access overseas derivative markets, which are often more liquid and less costly.

The Hong Kong Exchanges and Clearing Ltd. (HKEX) has seen rapid growth in the trading of futures and options involving the US dollar and CNH, or offshore yuan.

In 2018, as Sino-US trade tensions intensified, HKEX’s USD/CNH futures trading volume more than doubled from a year earlier to almost 1.8 million contracts, and has been rising this year. Average daily volume in June represented a 173% increase from 2017, HKEX said on its website.

The Singapore Exchange has also launched USD/CNH futures and options. — Reuters

Google cuts some Android phone data for wireless carriers

NEW YORK/SAN FRANCISCO — Alphabet Inc.’s Google has shut down a service it provided to wireless carriers globally that showed them weak spots in their network coverage, people familiar with the matter told Reuters, because of Google’s concerns that sharing data from users of its Android phone system might attract the scrutiny of users and regulators.

The withdrawal of the service, which has not been previously reported, has disappointed wireless carriers that used the data as part of their decision-making process on where to extend or upgrade their coverage. Even though the data were anonymous and the sharing of it has become commonplace, Google’s move illustrates how concerned the company has become about drawing attention amid a heightened focus in much of the world on data privacy.

Google’s Mobile Network Insights service, which had launched in March 2017, was essentially a map showing carriers signal strengths and connection speeds they were delivering in each area.

The service was provided free to carriers and vendors that helped them manage operations. The data came from devices running Google’s Android operating system, which is on about 75% of the world’s smartphones, making it a valuable resource for the industry.

It used data only from users who had opted into sharing location history and usage and diagnostics with Google. The data were aggregated, meaning they did not explicitly link any information to any individual phone user. It included data relating to a carrier’s own service and that of competitors, which were not identified by name.

Nevertheless, Google shut down the service in April due to concerns about data privacy, four people with direct knowledge of the matter told Reuters. Some of them said secondary reasons likely included challenges ensuring data quality and connectivity upgrades among carriers being slow to materialize.

Google spokeswoman Victoria Keough confirmed the move but declined to elaborate, saying only that changing “product priorities” were behind it. Google’s notice to carriers when it shut down the service did not specify a reason, two of the four people told Reuters.

“We worked on a program to help mobile partners improve their networks through aggregated and anonymized performance metrics,” Ms. Keough said. “We remain committed to improving network performance across our apps and services for users.”

CLOSER SCRUTINY
The loss of Google’s service is the latest example of an internet company opting to end a data-sharing service rather than risk a breach or further scrutiny from lawmakers. The European Union’s General Data Protection Regulation, introduced last year, prohibits companies sharing user data with third parties without users’ explicit consent or a legitimate business reason.

US and European lawmakers have stepped up their focus on how tech companies treat user data after a series of large-scale data security failures and the revelation that Facebook Inc. improperly shared data on 87 million of its users with political consultancy Cambridge Analytica.

In April, Google shut down its Video Checkup service from its YouTube operation, which it launched in mid-2017 to let customers in Malaysia compare their provider’s streaming capability in a specific spot with other carriers. YouTube spokeswoman Mariana De Felice cited “relatively low user engagement” with Video Checkup for its retirement, which has not been previously reported.

Facebook has begun reviewing data deals with app developers and the four big US wireless carriers recently stopped selling data on customers’ real-time locations to marketers and other firms.

WALKING TIGHTROPE
Internet companies now walk a tightrope in trying to generate revenue or improve their services by supplying user data to other companies because they risk compromising — or appearing to compromise — data privacy. And companies including Google and Facebook have curtailed access to data by outside companies over the past two years.

Google’s Mobile Network Insights service was not the only source of detailed customer data used by carriers to determine where cell tower upgrades are needed, but it was useful because of the sheer volume of Android phones in the market.

It was an “independent reference from the horse’s mouth, so you couldn’t get any better than this,” said Mushil Mustafa, a former employee at Dubai-based carrier du. “But the carriers have investment in other tools, obviously.”

Facebook offers a similar service, called Actionable Insights. Facebook appears committed to continuing the service but declined to comment when asked.

Data-sharing arrangements between tech companies became common over the past decade as the use of smartphones and apps exploded, but what data is collected and how it is shared is not always clear to users.

Companies often are not explicit about their data sharing. Google’s data policy that Android users agree to states that it may collect and share network connection quality information. Wireless carriers had not been specifically mentioned as recipients.

As users demand greater transparency, what constitutes a violation of consumer trust is not clear.

Facebook’s Actionable Insights service for carriers also includes information about users’ gender, age and other characteristics collected from its apps, which helps carriers spot demographic trends to target their marketing, but it does not tie data to specific individuals.

“We have publicly announced this program and carefully designed it to protect people’s privacy,” said Facebook spokesman Joe Osborne, in a statement.

Google said it shared neither aggregated nor individualized data on user demographics and app usage. The company rejected requests to give equipment vendors any data, it said. — Reuters

Dining Out (08/22/19)

Pan chicken


Until Oct. 15, Pancake House is offering a box of eight of its Classic Pan Chicken for the marked down price of P545. This comes with a free 1.5-liter bottle of Coca-Cola. The offer is valid for take-out transactions in participating Pancake House stores nationwide. For more information, visit facebook.com/PancakeHousePhilippines.

Upsized coffee

Tim Hortons will upsize your coffee until this October. There are two options: for every P300 purchase of Tim Hortons products (combo or a selection of beverages), PLDT MVP Rewards cardholders are entitled to a free coffee drink upsize when they present their PLDT MVP Rewards card; JCB Cardholders will also receive a free drink upsize upon using their JCB card for every P200 purchase of combos or any beverage. This promo is available in all branches.

Mooncakes


In the spirit of the mid-autumn festival, TWG Tea refines the classics with the Moon Route Tea Mooncake Collection, a fresh seasonal line-up of mooncakes accented with its signature teas. The set of four traditional mooncakes is composed of cakes infused with Singapore Breakfast Tea, Chocolate Tea, Mistral Tea, and Matcha. The set of four snowskin mooncakes, on the other hand, is accented with novel flavors: Moon Route Tea, Geisha Blossom Tea, Earl Grey Fortune, and Lemon Bush Tea. TWG Tea’s set of four tea-infused traditional and snowskin mooncakes retails at P2,050 and P2,488, respectively. Each mooncake in an individual gift box retails at PhP398 for tea-infused traditional mooncake, and PhP498 for tea-infused snowskin mooncake. Available at all TWG Tea Salons until September.

More mooncakes

No. 8 China House at Grand Hyatt Manila presents mooncakes, pralines, and special pastries developed by Master Chef Carson Luo. Enjoy a 10% discount when you order this August. Visit bit.ly/GHMMooncake2019 for more information. For bulk orders and further inquiries, call 838-1234 or e-mail manila.grand@hyatt.com.

Shares may decline on recession, US-China fears

LOCAL SHARES may edge lower in the remainder of the week due to lingering recession fears and concerns over the United States-China trade war.

The benchmark Philippine Stock Exchange index (PSEi) dropped 0.64% or 51.44 points to close at 7,886.91.

So far, the main index is up 1.17% for the week compared to its 7,795.98 close last Friday. Foreign investors logged net sales of P534.4 million in the past two days.

“Overall, the market is still clouded with uncertainty. Most of our narratives today are in favor of the negative from the US-China trade war, to consequently, the recession fears on major economies abroad,” Philstocks Financial, Inc. Research Associate Japhet Louis Tantiangco said in a text message.

“Given such, we see a downward bias for the local market for the rest of the week.”

Trade negotiations between US and China remain stalled. On Tuesday, US Commerce Secretary Wilbur Ross announced Washington’s decision to grant Chinese tech giant Huawei Technologies Co., Ltd. a 90-day trade extension. The temporary reprieve gives US firms more time to pivot away from Huawei products.

This came amid US President Donald J. Trump’s statement that he does not want to do business with the company, claiming it is a national security threat.

Meanwhile, Mr. Trump said on Tuesday his administration was considering potential tax cuts on wages as well as profits from asset sales, and sought to play down market anxieties that the world’s top economy could be heading for a recession.

Recession fears were stoked last week when bond investors briefly demanded a higher interest rate on 2-year Treasury bonds than for 10-year Treasury bonds, a potential signal of lost faith in near-term economic growth.

Mr. Trump dismissed fears of a slowdown, extolling low unemployment and a rising stock market over his tenure.

Meanwhile, Papa Securities Corp. Sales Associate Gabriel Jose F. Perez said the market may take cues from US markets.

“With the holiday and a lack of clear catalysts for the rest of the week, movement for Thursday and Friday should be influenced by US markets,” Mr. Perez said in an e-mail.

Wall Street indices were down on Tuesday as investors placed their funds on less risky assets on fears of the US recession and how the US Federal Reserve plans to go about monetary policy.

The Dow Jones Industrial Average shed 0.66% or 173.35 points to 25,962.44. The S&P 500 index slumped 0.79% or 23.14 points to 2,900.51, while the Nasdaq Composite retreated 0.68% or 54.25 points to 7,948.56.

Fed Chairman Jerome Powell is scheduled to speak at the central bank’s annual conference in Jackson Hole, Wyoming this Friday. Ahead of his speech, Federal Reserve Bank of San Francisco President Mary Daly said she sees “solid domestic momentum that points to a continued economic expansion.” — Arra B. Francia with Reuters

Fed’s Daly says she doesn’t see a recession on horizon

THE US ECONOMY doesn’t appear to be headed toward a recession, Federal Reserve Bank of San Francisco President Mary Daly said.

“When I look at the data coming in, I see solid domestic momentum that points to a continued economic expansion,” Daly wrote Tuesday in a post on Quora.com, citing data on labor markets and consumer spending.

“But considerable headwinds, like weaker global growth and trade uncertainties, have emerged — and they’re contributing to this fear we see in the markets that a downturn is right around the corner,” she said. “So one thing I’m looking closely at is whether the mood gets so out of sync with the data that the fear of recession becomes a self-fulfilling prophecy.”

Fed officials cut interest rates on July 31, marking the first reduction since the financial crisis 10 years ago, and signaled more easing may be coming. Fed Chair Jerome Powell is set to speak Friday at the central bank’s annual conference in Jackson Hole, Wyoming, and investors will be listening to see whether he ratifies expectations for further moves in coming months.

So far, easier Fed policy has not been enough to allay concerns about the prospects for the economy. Daly’s comments echo those of White House advisers including Larry Kudlow and Peter Navarro, who took to television over the weekend to downplay recession fears after a volatile week in financial markets — which included the largest single-day decline of the year for the Dow Jones Industrial Average.

“I do believe this was an appropriate recalibration of policy in response to the headwinds we’re facing — along with inflation rates that continue to come in under our 2% target,” Daly said. “However, I should stress that my support for this cut is based around my desire to see our economic expansion continue — not because I see an impending downturn on the horizon.” — Bloomberg

Peso seen weakening on Fed meet minutes

THE PESO may decline as the market looks for hints from the US central bank.

THE PESO will likely end on a weaker note today after the release of the minutes of the US Federal Reserve’s July policy meeting.

On Tuesday, the local unit finished at P52.29 versus the greenback, climbing two centavos from its P52.31-per-dollar close on Monday, after the US government granted Huawei Technologies Co., Ltd. another 90-day extension to buy American-made components to service its existing customers.

Local financial markets were closed on Wednesday in observance of Ninoy Aquino day.

“The local currency might weaken [today] amid expectations of dovish cues from the minutes of the July Fed meeting,” a trader said via e-mail.

Aside from the July Fed minutes release, another trader said: “All eyes will be on manufacturing PMIs [today] both in the US and in the euro zone,” referring to the manufacturing purchasing managers’ index that measures business condition’s improvement or deterioration.

Minutes from the Federal Open Market Committee’s most recent meeting in July, when the US central bank cut rates for the first time since the 2008 financial crisis, are due on Wednesday.

“The minutes are going to set up a foundation of what to expect, and then Jackson Hole will provide clarity as to whether the Fed is finally coming to the party with potential monetary policy support,” said IG Markets analyst Kyle Rodda.

Traders are also waiting for the US central bank’s Jackson Hole seminar later this week and a Group of Seven summit this weekend for clues on what additional steps policy makers may take to boost economic growth.

Signalling a possible escalation in the trade war, US President Donald Trump said on Tuesday he had to confront China over trade even if it caused short-term harm to the US economy because Beijing had been cheating Washington for decades.

Mr. Trump’s remarks came hours before his government announced approval of a sale of fighter jets to Taiwan, a move sure to draw Beijing’s ire and further dim prospects for a quick trade deal.

The first trader sees peso ranging from P52.20 to P52.40 versus the dollar today, while the second trader expects the local unit to trade between P52.10 and 52.50. — M.T. Amoguis with Reuters