Friday, December 11, 2015

Musk, other tech chiefs back artificial intelligence startup with US$1 billion

Musk, other tech chiefs back artificial intelligence startup with US$1 billion

[SAN FRANCISCO] Some of the most prominent executives in the technology industry, including Tesla Motors Inc CEO Elon Musk, are backing a non-profit artificial intelligence research company with funding of US$1 billion.
The effort announced on Friday, known as OpenAI, joins a number of other initiatives by prominent companies like Google, Apple and IBM to tap advanced computer technology to solve problems such as recognizing faces or translating languages. "Our goal is to advance digital intelligence in the way that is most likely to benefit humanity as a whole, unconstrained by a need to generate financial return," a blog post on OpenAI's website said.
Predicting that human-level artificial intelligence will eventually arrive, the backers argued that it was vital to have a research institution like OpenAI in place to seek "a good outcome for all over its own self-interest." Musk has been critical of the possible harm from artificial intelligence, telling Massachusetts Institute of Technology students that "If I had to guess at what our biggest existential threat is, it's probably that," according to a report in the Guardian.
He will be co-chair of the non-profit with technology venture capitalist Sam Altman, who has backed Reddit.
OpenAI's list of donors include PayPal Holding Inc co-founder Peter Thiel, LinkedIn Corp co-founder Reid Hoffman and Musk himself.
The venture's research director is Ilya Sutskever, a former research scientist at Google, and its chief technology officer is Greg Brockman.
While the backers have ponied up a vast sum, OpenAI said it expects to spend a "tiny fraction" of the US$1 billion in the next few years.
Other backers include Amazon.com Inc's cloud unit Amazon Web Services, Indian IT giant Infosys and Greg Brockman, former chief technology officer of payments startup Stripe.
REUTERS

Watch for China consumer strength in Saturday economic data

Watch for China consumer strength in Saturday economic data

[BEIJING] China's latest economic health check is forecast to underscore the two-speed nature of the nation's growth, with robust consumer spending and ailing industrial production.
Retail sales probably increased to the best level of the year in November, rising 11.1 per cent from a year earlier according to the median economist estimate in a Bloomberg survey. Industrial production remained near a six-year low, increasing 5.7 per cent from a year earlier, while fixed-asset investment for the January through November period slowed to the weakest pace since 2000, projections showed before the National Bureau of Statistics releases the data Saturday at 1:30 p.m. in Beijing.
"It's a phasing out of the old economy and a phasing in of the new economy," said Larry Hu, head of China economics at Macquarie Securities Ltd in Hong Kong. "We'll continue to see very weak growth in sectors like steel, coal and power generation. Consumption will definitely grow faster than industry." Economists are looking for signs stimulus, including six interest-rate cuts since November 2014 and expanded government spending, is starting to arrest the slide in growth. Premier Li Keqiang's target for full-year expansion of about 7 per cent is already at risk after output increased 6.9 per cent in the third quarter. Gross domestic product grew 7 per cent in the first half of 2015 and 7.3 per cent in 2014.
China's broadest measure of new credit rebounded in November, official data showed Friday, signalling that monetary measures are having an impact. Aggregate financing rose to 1.02 trillion yuan (S$222 billion) in November, according to the People's Bank of China. That compared with the median forecast of 970 billion yuan in a Bloomberg survey.
With the full-year expansion heading toward the slowest rate in a quarter century, policy makers are striving to engineer a shift toward greater consumption and services-driven growth without triggering a steeper economic slump. New growth engines from online shopping to Internet banking are for now struggling to pick up the slack as output tumbles from old drivers including heavy industries, residential construction and exports.
"The service part of the Chinese economy is performing quite well," Chris Hall, co-head of Asian equity research at BlackRock Inc in Hong Kong, told reporters Thursday, adding that he expects the shift toward a more consumer-led economy to boost technology, health care and telecommunications companies. "There are some good signs there." One of those good signs was the online shopping frenzy seen on Nov 11, when Alibaba Group Holding Ltd flexed its e-commerce muscle by logging a record 91.2 billion yuan in sales during its Singles' Day promotion. That was up 60 per cent on last year.
By contrast, industrial output in October matched the weakest gain since the global credit crisis with a 5.6 per cent increase. Economists forecast investment in fixed assets excluding rural regions slipped to a fresh low of 10.1 per cent growth in the January through November period.
"Overcapacity will continue to weigh on industrial production," Australia & New Zealand Banking Group Ltd economists led by Liu Li-Gang wrote in a report. "While high-end manufacturing could continue to outperform, the overall trend remains weak."
BLOOMBERG

Gold rebounds on dollar, still set for weekly fall

Gold rebounds on dollar, still set for weekly fall

[NEW YORK] Gold prices bounced on Friday, erasing earlier losses as the dollar and US Treasury yields fell, but was still on track for a seventh weekly drop in eight as investors positioned themselves for a likely US rate rise next week.
A rate increase at the Federal Reserve's policy meeting on Dec. 15-16 would be the first in nearly a decade and could dent demand for non-interest paying gold. "Temporary short squeezes could disturb the long-term downward trend but we still expect prices around US$1,000 next week," ABN Amro analyst Georgette Boele said.
Spot gold, lower initially, was up 0.7 per cent to US$1,078.76 an ounce at 2:20 p.m. EST (1920 GMT). It was on track for a 0.7 per cent decline for the week. "The euro/US dollar bounce and 10-year US Treasuries easing today have helped lift gold prices, and trump the weakness in oil and expectations for a rate hike next week,"said Suki Cooper, precious metals analyst for Standard Chartered Bank in New York.
The dollar fell 0.4 per cent against key world currencies. China's yuan fell to a 4-1/2-year low after the International Monetary Fund approved its inclusion in its basket of reserve currencies on Nov 30. The drop raised concerns that its weakness could weigh on the global economy.
Meanwhile, gold prices ignored weak crude oil prices, which flirted with 11-year lows. Weakness in oil prices could trigger fears of deflation, a bearish factor for gold, which is often used as a hedge against oil-led inflation. "What we are likely to see in the next three months is the discussion moving from the rate hike to the pace of rate tightening cycle," ETF Securities strategist Martin Arnold said. "A broad range between the high US$1,080s to US$1,030 is where we are going to see gold in the first quarter, starting towards the lower end of the range in a knee-jerk reaction to the Fed's move and then grinding higher throughout Q1." Options data shows that investors have boosted bets that the gold price will soon drop to US$1,000 an ounce while assets in SPDR Gold Trust, the top bullion exchange traded fund, are at their lowest since September 2008.
Other precious metals were weak, with silver falling to the lowest since August 2009 at US$13.76 per ounce.
Silver and platinum were headed for a seventh weekly loss in eight weeks, with spot platinum down 0.8 per cent to US$842 an ounce.
Palladium was up 0.6 per cent to US$541.56 an ounce.
REUTERS

Oil price fall sinks Wall Street stocks

Oil price fall sinks Wall Street stocks

[NEW YORK] Another plunge in oil prices sent Wall Street stocks tumbling again Friday, dragging down other sectors in a bearish turn ahead of next week's landmark Federal Reserve meeting.
Even the positive reviews of the mega-merger of two venerable US industrial blue chips, Dow Chemical and DuPont, were not enough to support their shares in a determined sell-off of the market.
The Dow Jones Industrial Average fell 309.54 points (1.76 per cent) to 17,265.21.
The broad-based S&P 500 lost 39.86 (1.94 per cent) at 2,012.37, while the tech-rich Nasdaq Composite Index dropped 111.71 (2.21 per cent) to 4,933.47.
The Friday fall left all three with heavy losses for the week: The Dow was down 3.3 per cent, the S&P 3.8 per cent, and the Nasdaq 4.1 per cent.
The crude oil price story continued to dominate, after the International Energy Agency warned that global inventories "are set to keep building at least until late 2016." In reaction London's Brent contract dropped 4.5 per cent to US$37.93 a barrel and New York's WTI fix lost 3.1 per cent at US$35.62 a barrel.
On the New York Stock Exchange, Dow members Chevron and ExxonMobil lost 3.2 per cent and 1.8 per cent, respectively, and Schlumberger fell 2.3 per cent.
Dow Chemical and DuPont both gave up much of the sharp gains that came Wednesday when news leaked they were negotiating a merger that will create a global chemicals and materials giant worth US$130 billion.
The all share-swap deal will power the new DowDupont past Germany's BASF as the world's leading chemicals group when it is completed, expected late next year.
Dow Chemical ended 2.8 per cent lower and Dow member DuPont gave up 5.5 per cent.
Elsewhere on the Dow blue-chips roster, Goldman Sachs sank 3.1 per cent and Nike 1.8 per cent.
Other banks lost as well: Bank of America fell 2.7 per cent and Citigroup 2.9 per cent.
Among tech shares, Alibaba lost 5.4 per cent after announcing it would buy Hong Kong's leading English-language newspaper.
AFP

Even after liftoff, Fed is still the elephant in the bond market

Even after liftoff, Fed is still the elephant in the bond market

[NEW YORK] The Federal Reserve is expected to raise US interest rates next week - but that doesn't mean it's disappearing from the bond market, and its ongoing presence there should hold down mortgage rates and corporate borrowing costs for years.
The Fed meets next Wednesday and Thursday. While it will begin to raise rates, it has signaled it will maintain its balance sheet, which includes US$2.5 trillion in US government debt as a way of ensuring it has ample cash to support the economy.
More than US$200 billion worth of Treasuries in the Fed's portfolio are maturing in 2016, but the central bank is expected to reinvest those proceeds, rather than let them mature and roll off. It will likely wield considerable influence on longer-term Treasuries yields, mitigating negative effects from the rise in short-term rates, analysts and investors said.
Another US$1.1 trillion in Treasuries will mature through 2020. "With the reinvestment process in the market, it will cap rates. It won't drive them down, but it would prevent them from rising too quickly," said Gemma Wright-Casparius, senior portfolio manager at Vanguard, the largest US mutual fund company in Malvern, Pennsylvania, with over US$3 trillion in assets.
The Fed's vast holdings stem from three rounds of bond purchases, or quantitative easing, which expanded its Treasuries ownership fivefold from the end of 2008.
The Fed's purchases will come at a time when the federal government has hinted it may scale back its longer-term borrowing in 2016. A Reuters poll on Dec. 4 showed brokerages that deal directly with the Fed generally do not expect the central bank to start cutting its balance sheet for at least 12 months. "Sources of demand including Fed reinvestments along with net issuance declining would keep long-end yields contained,"said Gene Tanuzzo, portfolio manager at Columbia Threadneedle in Minneapolis, which has US$471 billion in assets.
While the pace of the Fed rate rises is still up in the air, the benchmark 10-year Treasuries yield will likely firm to 2.50 per cent by the end of 2016, according to fund managers interviewed. If the Fed were not to reinvest in Treasuries, analysts projected the 10-year yield would shoot up to 3 per cent.
On Friday, the 10-year yield was at 2.17 per cent.
AUCTION "ADD-ONS"
Investors anticipate the Fed will share its plans on replenishing its Treasuries holdings at the end of its Dec. 15-16 meeting, when it is expected to raise short-term rates. "The Fed would want to do it with minimal market impact," said John Bellows, portfolio manager at Western Asset Management Co. in Pasadena, California, which has US$446 billion in assets."They need to do it earlier rather than later." In the minutes of the July FOMC meeting, most Fed policy-makers "thought that it might be best either to wind down reinvestments or to manage them in a manner that would smooth the decline in the balance sheet in a predictable way." Fund managers expect the Fed will request the US Treasury to issue more debt for its holdings in the form of "add-ons" at the Treasury's monthly auctions, which are additional sales of debt only made to the Fed.
Auction "add-ons" are seen as the least disruptive to the bond market because the central bank is not competing with private investors for supply.
The Treasury currently holds six auctions on coupon-bearing Treasuries issues each month, in addition to a sale of Treasury Inflation-Protected Securities.
The central bank might also consider conducting open market operations like it did during "Operation Twist" where it announced what type of longer-term Treasuries it would like to buy.
Investors remain somewhat cautious on whether the Fed will achieve its goal of holding down long-term rates through its Treasuries reinvestment. "There are still unknowns how this will work," said Michael Arone, chief investment strategist at State Street Global Advisors' US Intermediary Business in Boston, which has US$2.4 trillion in assets. "This is contributing to the Fed's desire to move at a very slow pace."
REUTERS

Two credit ratings agencies warn of UK 'Brexit' risk

Two credit ratings agencies warn of UK 'Brexit' risk

[LONDON] Two credit rating agencies said on Friday that Britain risked a hit to its creditworthiness and possibly a downgrade due to Prime Minister David Cameron's decision to hold a vote on whether to leave the European Union.
Shortly after the International Monetary Fund said the referendum could hurt Britain's growth prospects, Standard & Poor's said it was keeping its outlook for Britain's top-notch rating at negative, while Fitch affirmed a rating that was one notch weaker.
S&P reiterated its decision in June to put the country on notice that it faced a one-in-three chance of a downgrade in the next two years, and Fitch said a vote to leave would be"moderately negative" and could trigger a move by Scotland to leave the United Kingdom.
S&P challenged one of the main arguments of supporters of a British exit from the EU, saying immigration had been positive overall for the economy over the past decade.
It repeated its view that the referendum represented a risk to Britain's large financial services sector, its exports, and the wider economy. If Britain quit the EU, it could jeopardise its ability to fund a large deficit in its balance of payments. "In a worst-case scenario, a Brexit could also harm the sterling's role as a global reserve currency, removing what has been a significant support for our 'AAA' rating on the UK since the start of the global financial crisis," it said.
S&P said it expected Britain's government would reach a compromise with the rest of the EU on reforms of the bloc in the first half of next year and both agencies said most voters in Britain would reject a so-called 'Brexit' in the referendum.
But S&P noted that the 'leave' campaign was better funded and organised than the 'remain' campaign, raising the risk of a vote to leave the EU.
S&P's chief European sovereign rating officer told Reuters in October that Britain's credit rating could be cut by as much as two notches if it leaves the EU.
Fitch said the outcome of Britain leaving the European Union was highly uncertain, and would hinge on lengthy, complex talks. "The implications for the rating would depend on several factors, including the impact on medium-term growth and investment prospects, the UK's external position, and the risk of triggering a second referendum on Scottish independence,"Fitch said.
A separate plan to devolve powers to Scotland and Wales could distract the government from fixing some fundamental problems in the economy such as a shortage of new housing which would hurt Britain's competitiveness, S&P said on Friday.
REUTER
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Going underground: Moscow renovates its subterranean world of kiosks

Going underground: Moscow renovates its subterranean world of kiosks

[MOSCOW] Selling everything from underwear to dried fruit to teacups, tiny glass-windowed kiosks packed with goods line Moscow's network of long, gloomy pedestrian underpasses.
But now the city's government has replaced the old, haphazardly-built kiosks with new purpose-built units and is trying to turn the underpasses into smarter shopping arcades for busy Muscovites.
The underground renovations are part of a broader push over the past few years that authorities say is aimed at turning the sprawling metropolis into a more liveable city, with kilometres of pavements replaced and parks done up.
Every day, thousands of people walk through the underpass in the Ulitsa 1905 Goda district near central Moscow, passing its 20 kiosks, each measuring just 8 sq m.
"I often pick up small practical things here for my flat, because it's between my office and where I live," says Marina Ryabikova, a 38-year-old lawyer who says she's always pressed for time.
Moscow, a city of 12 million, is intersected by massive highways and the underpasses allow people to walk safely and also escape the snow and rain.
In the 1990s, after the liberalisation of the economy, almost 22,000 kiosks sprang up in Moscow's underpasses, providing a speedy alternative to queueing up in large stores.
Elderly ladies began selling hand-knitted wool socks and mittens in underpasses, which were also hang-outs for young people wanting to drink beer or grab a pie.
But since Sergei Sobyanin took over as the city's mayor in 2010, with the backing of the Kremlin, thousands of old-style kiosks have been destroyed, prompting the ire of many Muscovites.
After a year of major renovations, the city has installed 459 purpose-built kiosks, all of them registered with the mayor's office, says Nikolai Tsvetkov who is in charge of the city's underpasses.
"The working conditions (for traders) have got more comfortable," he says, explaining that each underpass has running water, electricity and toilets and meets security and hygiene standards.
"Many of the underpasses hadn't been repaired for a long time, they were very dilapidated because of the never-ending flow of people. The authorities needed to intervene," he says.
Yana Chernyshenko, who spends almost eight hours a day selling lingerie at her small store in Ulitsa 1905 Goda, says her new kiosk has "bigger windows" and is "more practical for the customers." But the upgrade has come at a cost and not everyone is happy.
In the underpass close to Smolenskaya metro station in central Moscow, around half of the kiosks are still empty, while the others are struggling to stay open, complains a trader called Anna.
"I used to be friends with a lot of the traders, but they have left," she says.
"Before, it was the opposite problem - there were too many of us."
In order to market the new facilities, the mayor's office is auctioning off the right to run a kiosk at a specific location.
But tenants must now pay rent which is least eight times higher than what they used to pay the private owners of old-style kiosks.
"This was a real loss that the city could claw back," explains Mr Tsvetkov.
Some kiosks were put out to tender at a very high rent due to their central location and did not find any takers.
And many people who previously owned kiosks found themselves unable to take part in the new tenders.
"There are people who have been working 20 years and now they are 45 or 50, and suddenly they no longer have a store, because it's too expensive or too complicated," explains Olga Kosets, a municipal lawmaker and president of the Business People association, which protects the rights of small and medium-sized businesses.
"What will they do now?"
Clearly angry, she compared the changes to the 1917 Revolution: "You raze the old world to make a new one." Although the overhaul had "imposed some order on the chaos of the underpasses," Ms Kosets says that ultimately, it is the shoppers who are losing out.
"The price of basic foods has gone up. Now that they have destroyed all the kiosks, there is no longer any competition. Customers can't just pop in for a bottle of water any more," she told AFP.
The sight of empty kiosks is worrying, she admits.
"I'm very scared that big fast-food chains will take over our underpasses." "Then Moscow will lose a little of its soul."
AFP

Canada tightens housing rules in bid to cool market boom

Canada tightens housing rules in bid to cool market boom

[OTTAWA] Canada's newly elected Liberal government said on Friday it will force people who want to buy more expensive houses to provide a bigger down payment, in a bid to cool parts of a hot housing market some fear is developing into a bubble.
Finance Minister Bill Morneau told reporters he was acting to contain risks in the major cities of Toronto and Vancouver, where prices have continued to surge even as an oil price slump and a mild recession in the first half of the year slowed activity in other parts of the country.
But he rejected talk of a bubble, saying the mortgage rule changes, along with other measures announced on Friday, would ensure stability. "This is going to help create stability for the overall market by targeting pockets of risk," he said, adding that the steps would affect only around 1 per cent of the market.
Home prices in Canada have risen in recent years, fuelled in part by low borrowing costs. While the Bank of Canada has expressed concern about rising household debt, it also cut interest rates twice this year in response to tumbling energy prices.
With debt-to-income levels at record highs, some fear an eventual interest rate rise will be too much for those who have over-extended themselves.
The new measures will increase the downpayment to 10 per cent from 5 per cent for the portion of the home price that is above C$500,000 (S$515,362). For homes worth C$1 million or more, the required downpayment will remain 20 per cent.
The regulations will come into effect Feb 15, 2016, and will not affect Canadians already holding mortgages.
REUTER
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