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Fed to Consider a Pause as Fallout From SVB Roils Markets




(Bloomberg) — Federal Reserve officials face their biggest challenge in months as they weigh whether to continue raising interest rates this week to cool inflation, or amid market turmoil fueled by recent bank failures should take a break.

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Ahead of the Silicon Valley bank collapse and its aftermath, Fed policymakers were poised to hike rates by as much as 50 basis points after a slew of data suggested the economy was much stronger than officials had been at the start of the year had accepted.

Amid financial market volatility, many Fed watchers are now expecting a smaller quarter-point hike, and some say the Federal Reserve will be on pause altogether after a two-day meeting that begins Tuesday.

The decision follows a 50 basis point rate hike by the European Central Bank on Thursday. President Christine Lagarde said the ECB remains committed to fighting inflation while closely monitoring bank tensions.

Also eagerly awaited at the Fed meeting is an update to the economic forecast summary — a quarterly report that includes participants’ forecasts for everything from inflation to interest rates — and Chair Jerome Powell’s post-meeting press conference.

Amid the turmoil in the banking sector, Powell is likely to face questions about the central bank’s oversight of SVB and other troubled companies.

He also needs to exercise caution when discussing the likely future direction of interest rates. Before the banking problems surfaced, Fed officials had hinted that interest rates would need to rise above 5% this year and stay there until inflation fell back towards its 2% target.

Heightened uncertainty about how bank capitalization issues — exacerbated by the Fed’s rapid rate hikes and impact on Treasury yields — will impact the broader economy could limit Powell’s ability to tighten much more going forward.

What Bloomberg Economics Says…

“The FOMC faces its most challenging policy decision in recent memory on March 22nd. Market expectations have shifted sharply – from a 50 basis point hike to a pause – as fears of bank contagion eclipsed inflation worries. We expect the Fed to hike interest rates by 25 basis points and raise the ceiling to 5% from 4.75%. Reaccelerating inflation keeps the pressure going higher.”

— Anna Wong, Chief US Economist. For a full analysis click here

Elsewhere, 12 other central banks set policy over the coming week. Economists are forecasting rate hikes in the UK, Switzerland, Norway, Nigeria and the Philippines, while Brazil and Turkey are likely to hold. Meanwhile, traders betting on the Bank of Canada rate path will get a new inflation readout.

Click here to see what happened last week and below is our rundown of what’s coming in the global economy.


On Monday, the People’s Bank of China is likely to report that banks have left interest rates unchanged as the economy gradually recovers.

In Tokyo, a summary of sentiment from the Bank of Japan meeting earlier this month will shed more light on the reasons why monetary policy should be kept stable ahead of Kazuo Ueda’s arrival at the helm in April.

Reserve Bank of Australia official Chris Kent could offer an update on Monday on political stance and any concerns over financial market contagion. Those remarks will likely prove more timely than the RBA’s March meeting minutes, due Tuesday.

Early trade numbers from South Korea offer a pulse check on global conditions.

Japan’s inflation figure on Friday is expected to echo earlier data that indicated a slowdown in prices, helped largely by newly subsidized utility bills.

Hong Kong and Taiwan central banks are due to announce interest rates on Thursday.

Europe, Middle East, Africa

The Fed may be the dominant central bank decision this week, but several others will also draw investor attention.

The Bank of England is at the heart of Europe. Officials are awaiting the latest UK inflation reading on Wednesday, which may show price growth is still near double digits. Most economists are predicting a quarter-point hike in interest rates next day, although a minority see no change as financial tensions still simmer.

Here’s a quick rundown of the other decisions that are due:

  • Thursday’s Swiss National Bank meeting is a quarterly meeting and has some catching up to do so is widely expected to increase by up to 50 basis points. The result was overshadowed by Credit Suisse Group AG, the ailing bank that has offered a lifeline to stem the global turmoil.

  • The same day in Norway officials are expected to hike rates by another quarter point to extend the cycle of monetary tightening in the oil-rich economy.

  • An Icelandic decision is due on Wednesday, with another big rate hike on the horizon.

Looking south, central banks will also be very active. Here is a short summary:

  • Nigeria could hike interest rates on Tuesday to stem inflation, which is near an 18-year high, and to encourage investment.

  • In Angola on the same day, officials could cut benchmark borrowing costs for the second time this year as the Kwanza remains steady, commodity prices ease and a downward slump in price growth is likely to continue.

  • In Morocco, the central bank will most likely pause monetary tightening on the day as food prices start to ease.

  • And in Turkey, officials are expected to hold rates steady on Thursday. Any signs of future policy will be crucial as the country heads into May’s elections, which will see President Recep Tayyip Erdogan face the toughest challenge of his two decades in power.

After Thursday’s ECB meeting, which ended with a half-pint hike but no future guidance, more than a dozen of its policymakers are set to speak in the coming days. President Lagarde is likely to draw the most attention with her testimony before the European Parliament on Monday.

More clues to the background of the banking system could be available when her ECB colleague Andrea Enria, the euroregion’s top regulator, addresses the same body of lawmakers the next day.

Lagarde is also among the officials set to take the stage at Wednesday’s conference of the ECB and its observers in Frankfurt, and several others are scheduled to appear elsewhere throughout the week.

Meanwhile, purchasing managers’ indices in the eurozone and the UK will give an indication of industry strength as China reopens and the German Council of Economic Experts will issue an updated growth outlook.

Latin America

A busy week in Brazil begins with the central bank’s survey of market expectations for inflation to remain above target through 2025.

Banco Central do Brasil is all but certain to hold interest rates at 13.75% for a fifth straight meeting, although policymakers could adopt a dovish tone in the statement following the decision.

After minimal disinflation in the last three mid-month consumer price readings, analysts are expecting a steeper deceleration for mid-February and second-quarter numbers on base effects, before picking up in the second half.

Chile’s fourth-quarter manufacturing report may show that the Andean country narrowly avoided sliding into a technical recession, in part due to untapped fiscal liquidity and the impact of China’s reopening.

In Argentina, four consecutive negative readings on its monthly economic activity indicator point to a quarterly contraction in production heading for a challenging 2023.

In Mexico, retail sales weakness seen since May is likely to have continued into January, while slumping demand from the US, the country’s largest export market, can be expected to weigh on January GDP proxy data.

Early consensus is for mid-month inflation to be near a 1-year low – albeit still more than double the 3% target – while the slightly stickier headline reads a fall from November’s two-decade high of 8.66 % extends Banxico forecasts.

–Assisted by Robert Jameson, Malcolm Scott, Sylvia Westall and Stephen Wicary.

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©2023 Bloomberg LP


TikTok wants to distance from China but the government’s getting involved




China and US flags can be seen near a TikTok logo in this illustrative image taken on July 16, 2020.

Florence Lo | Reuters

BEIJING — China says it would “strongly oppose” a forced sale of TikTok, highlighting the government’s involvement in the social media giant, which is trying hard to distance itself from authorities in Beijing.

The Commerce Ministry said on Thursday that TikTok was in the process of being sold or spun off from its Beijing-based parent company ByteDance Chinese Technology Exports Law — Requiring export permits for certain technologies due to national security concerns. ByteDance also owns Douyin, the Chinese version of TikTok, which is popular in the country.

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Reported Medias Pro

“The Chinese government would make a lawful decision,” spokesman Shu Jueting said in Chinese, translated by Reported Medias.

Shu was speaking at the ministry’s weekly press conference, hours before TikTok CEO Shou Zi Chew testified before a US House of Representatives committee.

Lawmakers questioned Chew for more than five hoursand wanted clarity on TikTok’s ability to operate independently of Chinese influences on its parent company.

ByteDance did not immediately respond to a request for comment on the Chinese Ministry of Commerce’s remarks.

Influencer Jason Linton on TikTok: It was life-changing

The poll did not appear to exonerate US lawmakers.

“At the end of the day, it was clear from the statement that Mr. Chew reports to the CEO of ByteDance. ByteDance controls TikTok,” Cameron Kelly, a visiting fellow at the Brookings Institution, told Reported Medias.Squawk Box Asia“Friday. Kelly was General Counsel at the US Department of Commerce from 2009 to 2013.

Kelly said the evidence that ByteDance has legal control over TikTok reinforces US lawmakers’ doubts about how well the app can demonstrate its independence through restructuring.

TikTok has a “Project Texas” plan to store American user data on US soil — to prove the company’s claims that mainland China authorities have no access to it.

Beijing … now doubly dares Congress and the administration to ‘save my day’.

Daniel Russell

Asia Society Policy Institute

“I don’t see a closure as a ban or a full divestment [of TikTok] is needed. But I think you need to separate that legal control,” Kelly said, noting that this could be done through a trust structure.

But the Commerce Department’s claim for control of a TikTok sale or spin-off suggests Beijing wants to be involved.

“The Chinese government’s public statement to block sales of TikTok in the US has little to do with protecting Chinese algorithms and technology and much to give Washington a taste of its own medicine,” said Daniel Russel, vice president of International Security and Diplomacy, Asia Society Policy Institute said in a statement.

“Beijing after I heard it [U.S. Commerce] Secretary Raymond’s complaint that banning TikTok would upset voters under 35 is now doubly bold for Congress and the government to ‘save my day,'” Russel said.

The US has tightened restrictions on American companies and individuals working with Chinese companies on critical technology for high-end semiconductors.

When asked about the Commerce Department’s comments Thursday, TikTok’s CEO said the app is not available in mainland China and is based in Los Angeles. But he said the company used the expertise of some of ByteDance’s Chinese employees for “engineering projects”.

Chew also told US lawmakers that China-based employees were employed by its parent company ByteDance may still have access to some US databut that new data will stop flowing once the company completes its plan for the Texas project.

Official Chinese commentators have previously emphasized this China-based companies should comply with local laws and regulations when doing business abroad.

It’s not immediately clear how China’s export control law, enacted in December 2020, could apply to TikTok.

Different types of exports are managed by different governmental organizations, “each of which has a separate regulatory system,” the EU Chamber of Commerce in China said in its latest position paper. It called for more clarity about the roles of the various bodies involved in the implementation of the export control law.

What’s next for TikTok?

The US and China have increasingly invoked national security as a reason for controlling technology.

“To be fair, there really are real national security risks involved [TikTok] — and that’s one reason banning the app from government phones and military phones makes sense,” said Glenn Gerstell, senior advisor at the Center for Strategic and International Studies on Reported Medias.Street Signs Asia“Friday. Gerstell served as General Counsel of the National Security Agency from 2015 to 2020.

“As for the general public, I don’t see any strategic value in China in understanding what a teenager’s dance moves are in Minneapolis. So the general public ban makes no sense,” he said.

TikTok has more than 150 million users in the US — or about half the country’s population.

It’s unclear whether the US will ultimately force ByteDance to sell TikTok or ban use of the app in the country. The hugely popular app is already banned from federal government devices.

“We see a 3-6 month timeframe for ByteDance and TikTok to work out a sale to a US tech player with a less likely and extremely complex spin-off,” said Dan Ives, analyst at Wedbush Securities, in a note.

“If ByteDance fights this forced sale, TikTok will likely be banned in the US by the end of 2023.”

— Reported Medias’s Lauren Feiner contributed to this report.

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Equities mixed aReported Mediaser central bank rate decisions




Stock markets were mixed on Friday as concerns over the health of the global banking system dragged US lenders’ shares down more than 14 percent this week.

The FTSE All-World stock index fell 0.1 percent during Asian trade on Friday but rose 1.6 percent on the week. Technology stocks in Asia initially followed the Nasdaq Composite higher on hopes that the US Federal Reserve’s monetary tightening cycle is nearing its end.

Hong Kong’s Hang Seng Tech Index rose as much as 2.3 percent on Friday before gaining just 0.1 percent. Other benchmarks in the region posted modest losses, including a 0.3 percent decline for China’s CSI 300. Gains for technology stocks in Asia followed a 1 percent increase for the Nasdaq Composite Index on Thursday.

Futures sent the FTSE 100 stock index down 0.6 percent at the London open, while the S&P 500 was expected to rise 0.2 percent.

The broader S&P 500 returned just 0.3 percent, with financial stocks struggling to recover aReported Mediaser the collapse of the US Silicon Valley bank Rescue of the Swiss lender Credit Suisse from competitor UBS.

The KBW Nasdaq Bank index ended Thursday’s session down 1.7 percent, even aReported Mediaser comments from US Treasury Secretary Janet Yellen that regulators “stand ready to take additional action where warranted” to address the issue to ensure safety of bank deposits. The US banking index has lost almost 30 percent in the past two weeks.

The US Federal Reserve continued to hike interest rates by 0.25 percentage points on Wednesday. The Bank of England also raised interest rates by 0.25 percentage points on Thursday.

Citigroup strategist Dirk Willer said it was “too early to say” whether stress in the banking sector had become large enough to significantly affect the US business cycle. But he added that the Fed has “become more cautious, as has the ECB” amid heightened uncertainty.

“We remain negative on risky assets as bank stress tightens credit and reinforces Citi’s call for a US recession [the second half] 2023,” Willer said.

In foreign exchange markets, the dollar index – which tracks the value of the greenback against a basket of other currencies – fell 0.1 percent, while US 10-year Treasury yields fell 0.04 percentage point to 3.385 percent.

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ARK Buys the Wells Dip With $17.7 Million COIN Purchase




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ARK Invest bought COIN low and sold it high this week.

On Tuesday, Cathie Wood’s fund sold 160,887 shares of COIN for $13.5 million when the stock was trading at around $83 per share. A little over 48 hours later, ARK bought the drop, buying 268,928 shares of COIN as the stock fell to close at $66.30 in the US on Thursday.

According to an email sent Thursday evening US time, 230,599 of those shares went to the ARK Innovation ETF (ARKK), while 38,329 of those shares went to the ARK Next Generation Internet ETF (ARKW).

Over the course of those two days Coinbase released that it received a Wells Notice from the Securities and Exchange Commission warning a company that the SEC plans to take enforcement action against it.

A Wells note means that the SEC has completed an investigation and believes the evidence gathered is substantial enough to warrant enforcement action. It does not guarantee enforcement action will be taken, and Coinbase has until March 29 to notify the SEC if it plans to challenge the enforcement action.

The The SEC also announced this on Wednesday that it is suing Justin Sun, the Tron Foundation, the BitTorrent Foundation and Rainberry (née BitTorrent) for selling unregistered securities and manipulating the market through wash trading. Internet personality is Jake Paul also sued for his alleged illegal promotion of Sun-Linked Crypto.

in one last twitter sectionCoinbase CEO Brian Armstrong said the company will become more politically involved and will ask its US-based users to vote for “pro-crypto candidates.”

“What we’re going to do is put out content where people can contact their congressman, donate to pro-crypto candidates, show up in town halls, and get your voice heard,” he said. “We will elect pro-crypto candidates in this country to ensure our success is assured.”

Despite the plunge caused by Wells, COIN is still up 97% year-to-date.

ARK also announced that it has purchased 320,557 shares of Block (SQ) with 275,554 of those shares going to ARKK.

Jack Dorsey’s fintech payments company, which has some crypto exposure, is also down 14% as of Thursday’s close notable short Hindenburg Research attacked it in a scathing report for “wildly” inflating user counts.

Block says the report is inaccurate and intends to “cooperate with the SEC and consider legal action against Hindenburg Research.”

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