South Korean Economy Shrinks Unexpectedly in 1st Quarter

South Korea’s economy unexpectedly shrank in the first quarter, marking its worst performance since the global financial crisis, as government spending failed to keep up the previous quarter’s strong pace and as companies slashed investment. 

The shock contraction reinforced financial market views that the central bank is likely to make a U-turn on policy, shifting to an easing stance and possibly cutting interest rates to counter declining business confidence and growing external risks.

A worse-than-expected downturn in the memory chips sector hit first quarter capital investment, while slumping exports amid the Sino-U.S. trade dispute erased gains from private consumption, the Bank of Korea said Thursday.

Gross domestic product (GDP) in the first quarter declined a seasonally adjusted 0.3 percent from the previous quarter, the worst contraction since a 3.3 percent drop in late 2008 and sliding from 1 percent growth in October-December, the Bank of Korea said Thursday.

None of the economists surveyed in a Reuters poll had expected growth to contract. The median forecast was for a rise of 0.3 percent.

Government spending

“Government spending failed to keep up the bumper boost of the fourth quarter, especially for construction investment, while a drop in business investment was worse than expected due to a downturn in the chips sector,” a BOK official said, adding there was also a strong base effect after solid fourth-quarter growth.

The grim data came a day after the Moon Jae-in government unveiled a 6.7 trillion won ($5.9 billion) supplementary budget to tackle unprecedented air pollution levels and boost weak exports.

Capital investment tumbled 10.8 percent, the worst reading since 1998, while construction investment inched down 0.1 percent, the BOK said.

Exports fall

Exports fell 2.6 percent quarter-on-quarter, a sharper drop than the 1.5 percent decline in the previous three months.

Private consumption gained by 0.1 percent because of a rise in demands for durable goods.

From a year earlier, Asia’s fourth-largest economy grew 1.8 percent in the January-March quarter, compared with 2.5 percent growth in the poll and 3.1 percent in the final quarter of 2018.



Facebook Beats Profit Estimates, Sets Aside $3B for Privacy Penalty

Facebook on Wednesday blew away Wall Street profit estimates in the first quarter as it kept a lid on the costs of making its social networks safer, and set aside $3 billion to cover a settlement with U.S. regulators, calming investors who had worried about the outcome of a months-long federal probe.

Shares of the world’s biggest online social network jumped more than 10% after hours.

The U.S. Federal Trade Commission has been investigating revelations that Facebook inappropriately shared information belonging to 87 million of its users with the now-defunct British political consulting firm Cambridge Analytica.

The probe has focused on whether the sharing of data and other disputes violated a 2011 agreement with the FTC to safeguard user privacy. Facebook set aside $3 billion to cover anticipated costs associated with the settlement, but said the charges could reach as high as $5 billion.

Civil penalty

If the settlement is in that range, it would be the largest civil penalty paid to the agency, said David Vladeck, a former FTC official now at Georgetown Law School.

“Everyone expected there would be a substantial civil penalty in this case,” said Vladeck. “There’s no question that Facebook is going to have to settle this matter. Investors want this behind them.”

The accrual cut the company’s net income in the first quarter to $2.43 billion, or $0.85 per share.

Excluding the $3 billion it set aside, Facebook would have earned $1.89 a share, up from $1.69 the year prior and easily beating analysts’ average estimate of $1.63 per share, according to IBES data from Refinitiv.

Total first-quarter revenue rose 26% to $14.9 billion from $12.0 billion last year, compared to analysts’ average estimate of $15.0 billion.

Shares rise 

Shares of Facebook rose 10% to $200.50 in after-hours trade, demonstrating the company’s resilience despite a series of scandals over improperly shared user data and propaganda that made it the target of political scrutiny across the globe.

The company’s shares lost a third of their value last year, after executives first warned about costs associated with its drive to improve safety and slowing growth in revenue and operating margin.

Total expenses in the first quarter were $11.8 billion, up 80% compared with a year ago. The operating margin fell to 22% from 46% a year ago, but would have been 42%  without the one-time expense.

“This is a strong report suggesting that advertisers still see value in Facebook’s platform, as they did before the controversies and scandals erupted,” said Haris Anwar, senior analyst at financial markets platform

Expenses will grow

Executives have forecast that expenses will grow 40% to 50%  in 2019, but say they expect the downward trend to taper off after this year as revenue from new ways of pushing ads and facilitating transactions offset the security spending.

Monthly and daily users of the main Facebook app compared to last quarter were both up 8% to 2.38 billion and 1.56 billion, respectively.

Estimates were for 2.4 billion monthly users and 1.6 billion daily users, according to Refinitiv averages.





Microsoft Surges Toward Trillion-Dollar Value as Profits Rise

Microsoft said profits climbed in the past quarter on its cloud and business services as the U.S. technology giant saw its market value close in on the trillion-dollar mark.

Profits in the quarter to March 31 rose 19 percent to $8.8 billion on revenues of $30.8 billion, an increase of 14 percent from the same period a year earlier.

Microsoft shares gained some 3% in after-hours trade, pushing it closer to $1 trillion in value. 

It ended the session Wednesday with a market valuation of some $960 million, just behind Apple but ahead of Amazon.

In the fiscal third quarter, Microsoft showed its reliance on cloud computing and other business services which now drive its earnings, in contrast to its earlier days when it focused on consumer PC software.

“Leading organizations of every size in every industry trust the Microsoft cloud,” chief executive Satya Nadella said in a statement.

Commercial cloud revenue rose 41% from a year ago to $9.6 billion, which now makes up nearly a third of sales, Microsoft said.

Some $10.2 billion in revenue came from the “productivity and business services” unit which includes its Office software suite for both consumers and enterprises, and the LinkedIn professional social network.

The “more personal computing” unit which includes its Windows software, Surface devices and gaming operations generated $10.6 billion in the quarter.



Trump’s Fed Pick Moore Draws Fire From Democrats; Republicans Silent

Stephen Moore, the economic commentator that U.S. President Donald Trump has said he will nominate to the Federal Reserve Board, is drawing new fire from top Democrats for his comments denigrating, among other targets, women and the Midwest.

But Republicans, whose 53 to 47 majority in the U.S. Senate gives them the final say on whether Moore’s pending nomination is confirmed, have not weighed in since news surfaced this week documenting Moore’s long history of sexist remarks, some of which he says were made jokingly.

As a Fed governor, Moore would have a say on setting interest rates for the world’s biggest economy. Some economists and Democratic lawmakers have questioned his competence, citing his support for tying policy decisions to commodity prices and his fluctuating views on rates. This week though, it is his comments about gender and geography that are drawing criticism.

“What are the implications of a society in which women earn more than men? We don’t really know, but it could be disruptive to family stability,” Moore wrote in one column in 2014.

In 2000, he opined that “women tennis pros don’t really want equal pay for equal work. They want equal pay for inferior work.” The New York Times among others has documented many other instances where he expressed similar viewpoints.

It’s just added evidence that Moore is unfit for the Fed job, vice chair of the joint economic committee Carolyn Maloney told Reuters.

“Those include his reckless tendency to politicize the Fed as well as his bizarre and sexist comments about women in sports that came to light this week,” she said.

Republicans, she said, “should also take note that Moore has said capitalism is more important than democracy. That’s a dangerous comment that further confirms my belief that Moore shouldn’t be allowed on the Fed Board.”

Maloney earlier this month sent a letter urging Republican Senator Mike Crapo and Democratic Senator Sherrod Brown to oppose Moore’s nomination. Crapo and Brown are the chair and vice chair, respectively, of the Senate banking committee, which would be Moore’s first stop in any confirmation hearings.

Senators Elizabeth Warren and Charles Schumer, both Democrats, have also publicly criticized Moore as well as businessman Herman Cain, who withdrew his name from consideration for the Fed this week amid mounting objections.

Cain said he stopped the process because he realized the job would mean a pay cut and would prevent him from pursuing his current business and speaking gigs.

The Senate banking panel’s 13 Republican members, contacted by Reuters about their views on Moore’s suitability for the Fed role after his derisive commentary about women came to light, all either did not respond or declined to comment.

But Brown on Wednesday blasted Moore for comments he made in 2014 calling cities in the Midwest, including Cincinnati, the “armpits of America.” Brown demanded an apology.

“It would be your job to carefully consider monetary and regulatory policies that support communities throughout the country” even those you apparently consider beneath you,” Brown wrote in a letter to Moore. “Based on your bias against communities across the heartland of our country, it’s clear that you lack the judgment to make important decisions in their best interest.”




Boeing Reports Lower Profits Amid 737 MAX Crisis

Boeing reported lower first-quarter profits Wednesday as the global grounding of its 737 MAX plane following two crashes hit results.

The US aerospace giant reported $2.1 billion in profits, down 13.2 percent from same period a year ago.

Revenues dipped 2.0 percent to $22.9 billion, due to a tumble in commercial plane revenues following the suspension of 737 MAX deliveries.

Boeing also withdrew its full-year profit forecast, citing uncertainty surrounding the 737 MAX.

The aerospace giant has been under scrutiny since the March 10 crash of an Ethiopian Airlines jet, which came on the heels of an October Lion Air crash. Together the crashes claimed 346 lives.

Boeing said it is “making steady progress” on a fix to the jet’s anti-stall system that is thought to be a factor in both accidents.

The company has conducted more than 135 test flights of the fix and is working with global regulators and airlines, it said in a news release.

“Across the company, we are focused on safety, returning the 737 MAX to service, and earning and re-earning the trust and confidence of customers, regulators and the flying public,” said Chief Executive Dennis Muilenburg in a press release.

The company announced earlier this month it was cutting monthly production of the 737 by about 20 percent.

Boeing shares were up 1.3 percent at $379.07 in pre-market trading.



В уряді очікують подальшого зниження ціни на газ для населення

У Кабінеті міністрів України очікують подальшого зниження ціни на газ для населення.

Як заявив на засіданні уряду прем’єр-міністр Володимир Гройсман, 24 квітня спливає термін, протягом якого НАК «Нафтогаз України» мав знайти рішення для зниження ціни на газ для населення – згідно з динамікою світових ринків.

«У понеділок, 22 квітня, «Нафтогаз» мене почув. Вони зменшують з 1 травня ціну на тисячу кубів. Думаю, це буде не останнє зниження, адже ринки показують (відповідну динаміку)», – цитує Гройсмана прес-служба уряду.

Він також нагадав, що питання ціни газу стало «другим попередженням» для менеджменту «Нафтогазу».

«Перша епопея була з контрактом, друга – з цінами на газ, третьої не буде. Якщо менеджери НАК не зрозуміють, що вони найняті державою, аби ефективно управляти компанією, а не гратися з народом, наслідок буде один – зміна менеджменту «Нафтогазу», – сказав прем’єр.

Тим часом, 24 квітня у команді Володимира Зеленського, який, за даними ЦВК, перемагає на виборах президента України, закликали «НАК «Нафтогаз України» і Кабінет міністрів провести відповідні консультації з МВФ та, замість запланованого підвищення, вийти на відповідне пониження ціни газу для населення із 1 травня».

При цьому ще два дні тому, 22 квітня, в уряді повідомили, що узгодили з «Нафтогазом України» механізм зниження ціни на газ для населення і теплової генерації з 1 травня – до рівня 8247 гривень за тисячу кубометрів.

Згідно з урядовим рішенням, ухваленим на засіданні 3 квітня, якщо кон’юнктура газового ринку демонструє зниження цін на газ для промисловості, «Нафтогаз» зобов’язаний продавати газ для населення за ціною, що визначається як середньоарифметична ціна газу, за якою державна компанія пропонує паливо промисловим споживачам за умови передоплати.

У березні прем’єр-міністр України Володимир Гройсман заявив, що доручить Міністерству фінансів і «Нафтогазу» почати переговори із Міжнародним валютним фондом, щоб запобігти росту тарифів на газ для населення в майбутньому.

Підвищення цін на газ було однією з умов схвалення МВФ та іншими глобальними фінансовими організаціями нових програм співпраці з Україною.

У грудні 2018 року МВФ затвердив нову програму фінансової підтримки України на суму 3,9 мільярда доларів США.



На міжбанку стрімко зростає гривня

Валютний ринок продовжує зміцненням гривні реагувати на спокійне завершення президентських виборів в Україні. Опівдні 24 квітня Національний банк України оприлюднив довідкове значення курсу на рівні 26 гривень 59 копійок за долар. Це на 10 копійок менше за офіційний курс на 24 квітня.

Пропозиція долара суттєво переважає попит, відзначає сайт «Мінфін», який відстежує перебіг торгів на міжбанківському валютному ринку.

«НБУ вже виходив на торги в «анонімному» форматі через Matching і купив не менш як 15 мільйонів доларів за ціною 26,59-26,595 гривні. Учасники ринку чекають на продовження купівлі валюти регулятором, і багато клієнтів впевнені в тому, що цими інтервенціями Нацбанк утримає долар від просідання нижче рівня в 26,50 гривні», – вказують експерти.

Почесний президент Київської школи економіки, заступник голови Ради НБУ Тимофій Милованов заявив Радіо Свобода, що курс гривні до долара та інших світових валют від результатів виборів «зараз ще не залежить».

«Це буде залежати від економічної політики, яка буде впроваджуватися. Думаю, що ринки, економіка і люди в цілому придивляться до того, які будуть перші призначення, перші політичні, економічні рішення нової команди, хто буде в цій команді», – вказав фахівець.

Свого пікового значення 28 гривень 39 копійок за курсом НБУ впродовж останнього року долар сягнув 30 листопада 2018 року. На 12 березня 2019 року офіційний курс становив 26 гривень 31 копійку, це найвищий курс гривні від липня 2018 року.