Fed's Brainard urges patience in raising rates amid global risk

Federal Reserve Governor Lael Brainard said the central bank shouldn't raise interest rates prematurely because foreign risks are clouding the US outlook, taking a more cautious view than some of her colleagues as investors bet the central bank will delay liftoff until 2016. 

PHOTO: BLOOMBERG

OCT 13, 20157:39 AM

[WASHINGTON] Federal Reserve Governor Lael Brainard said the central bank shouldn't raise interest rates prematurely because foreign risks are clouding the US outlook, taking a more cautious view than some of her colleagues as investors bet the central bank will delay liftoff until 2016.

"Risk management considerations counsel a stance of waiting to see if the risks to the outlook diminish," Ms Brainard said Monday in Washington. "Although the outlook for domestic demand is good, global forces are weighing on net exports and inflation, and the risks from abroad appear tilted to the downside."

Fed officials last month opted to delay a rate rise to wait for more information about how slowing growth in China impacts the US outlook. Economic projections prepared for the meeting show that 13 of 17 of the central bankers saw a rate rise as warranted this year. 

Ms Brainard declined to say if she favoured raising rates this year or next, though her comments were more downbeat than recent remarks by other officials.

Fed Chair Janet Yellen and Dudley Fed Vice Chair Stanley Fischer said on Sunday that the US may be strong enough to merit an interest-rate increase by year-end, while cautioning that officials are monitoring slower domestic job growth and international developments to decide the precise timing of liftoff.

New York Fed President William C. Dudley said on Friday that he remained in the 2015 liftoff camp, provided his outlook remained on track. Ms Yellen herself said on Sept 24 that she expected a rate rise this year would be warranted.

Investors are skeptical the Fed will see enough momentum in the economy to act this year.

They have cut their bets the Fed will move and now see a roughly 40 per cent chance of a move by the December FOMC, based on pricing in federal funds futures, compared to more than 60 per cent ahead of last month's meeting. The probability assumes the effective fed funds rate after liftoff will be 0.375 per cent.

Policy makers want to be reasonably confident that inflation is rising toward their 2 per cent target before raising rates for the first time since 2006. Their forecasts assume continued solid US growth and labour-market improvement, which could be eroded if a weaker global economy saps US exports or puts more downward pressure on prices.

"There is a risk that the intensification of international crosscurrents could weigh more heavily on US demand directly, or that the anticipation of a sharper divergence in US policy could impose restraint through additional tightening of financial conditions," Ms Brainard said.

'CAREFULLY NURTURE'

Those downside risks "make a strong case for continuing to carefully nurture the US recovery - and argue against prematurely taking away the support that has been so critical to its vitality," she said.

Ms Brainard also said labour-market improvements aren't "a sufficient statistic for judging the outlook for inflation," and highlighted that price pressures have been stubbornly low, even when counting in a drag from energy prices that Fed officials expect will be transient.

The Fed's preferred price gauge rose just 0.3 per cent in the year through August, and hasn't touched the committee's 2 per cent goal since 2012.

"Although the balance of evidence thus suggests that long- term inflation expectations are likely to have remained fairly steady, the risks to the near-term outlook for inflation appear to be tilted to the downside," Ms Brainard said, citing "the persistently low level of core inflation and the recent decline in longer-run inflation compensation, as well as the deflationary crosscurrents emanating from abroad."

Chicago Fed President Charles Evans said earlier Monday in Chicago that he favored delaying liftoff until mid-2016, though the pace of tightening after raising rates was more important than the timing of the first move.

Atlanta Fed chief Dennis Lockhart, at a separate event in Orlando, Florida, argued that the improving domestic economy justified a move in 2015. Both are voting members of the policy-setting Federal Open Market Committee. Ms Brainard, as a member of the board in Washington, has a permanent vote.

BLOOMBERG

    
 

Haze choking Asia may get worse as El Nino delays seasonal rain

The choking haze that has blown across Southeast Asia from burning rainforests in Indonesia may get worse and last several more weeks as an unusually strong El Nino keeps away seasonal rain that would quench the fires. 

PHOTO: AFP

OCT 13, 20156:52 AM

[SYDNEY] The choking haze that has blown across Southeast Asia from burning rainforests in Indonesia may get worse and last several more weeks as an unusually strong El Nino keeps away seasonal rain that would quench the fires.

An intensifying El Nino will probably push back the start of the eastern monsoon until late October or early November, said Robert Field, an associate research scientist at the NASA Goddard Institute for Space Studies at New York's Columbia University. Heavy rain will be the biggest help in clearing the atmosphere and extinguishing illegally-lit fires on the islands of Sumatra, Borneo and New Guinea.

"Barring a major turnaround in fire-fighting and prevention, burning will continue until the start of the wet season in southern Sumatra and southern Kalimantan" on Borneo, Mr Field said in an e-mail.

Indonesia has enlisted help from its neighbors to fight the fires, with Malaysia and Singapore sending aircraft to carry out water bombing in Sumatra, the country's disaster agency said on Oct 10.

The last big El Nino was in 1997, when at least 40,000 fires in Indonesia destroyed an area the size of Costa Rica and released an estimated 1 gigaton of carbon into the atmosphere - the equivalent of more than 10 per cent of the world's annual fossil fuel emissions at the time.

As the El Nino brewed, and the region descended into a financial crisis, the lung-clogging smoke remained over Indonesia and neighboring countries like Singapore and Malaysia for three months, hurting the health, property and livelihoods of 75 million people, and causing more than 16,400 infant and fetal deaths.

This year, about 125,000 people have suffered haze-linked ailments, Indonesia's disaster relief agency said this month. A pollution index reached 1,990 in Palangkaraya in central Kalimantan at the end of September, more than five times the level considered hazardous, according to the country's Meteorology, Climatology and Geophysics Agency.

"The main challenge, El Nino, is quite severe, exceeding 1997-1998," said Luhut Panjaitan, Indonesia's coordinating minister for law and security. "The dry season is worse and that makes it difficult to extinguish the fires." While the smoke largely dispersed over Singapore and parts of Malaysia last week, the respite may be brief. Malaysia's Department of Environment counted 10 districts out of 52 on Monday afternoon where air quality was "good," down from 12 on Friday afternoon. Singapore's 24-hour air quality index rose into the "unhealthy" range on Monday for the first time in five days.

"If the burning continues through October and November, emissions from biomass burning - mostly drained peatlands- could rank among the highest on record for Indonesia," said Allan Spessa, a research fellow in the department of environment, earth and ecosystems at the Open University in Milton Keynes, England.

The fires in Indonesia, which are mostly lit to clear land, are extremely difficult to extinguish because of peat below the soil surface, which burns like coal and can smolder for months. Borneo's peat reserves store the equivalent of about nine years' worth of global fossil fuel emissions.

Twelve companies and 209 individuals are suspected of causing the blazes, with a Singaporean company also under investigation, Badrodin Haiti, Indonesia's chief of police, told reporters in Jakarta on Monday. Haiti didn't name the companies.

Fires on Sumatra blackened 1,400 square kilometers in a single week in June, an area the size of Long Island in New York. Across the archipelago, they have released more greenhouse gases than the amount of carbon dioxide Germany emits in a year, according to Guido van der Werf, a scientist tracking forest fires and carbon emissions at VU University in Amsterdam.

"And we are only halfway through the fire season," he said in a report last month.

Scientists predict this El Nino, a global weather phenomenon characterized by a warming of the ocean surface in the equatorial Pacific, will rank among the most severe since at least the mid-20th century, and set a record in 2015 for the hottest global temperature.

BLOOMBERG

    
 

New warehouse blast hits Tianjin: China state media 

A warehouse explosion hit Tianjin on Monday night, Chinese state media reported, just two months after a massive blast in the eastern port city left more than 160 dead. 

PHOTO: AFP

OCT 13, 20156:48 AM

[BEIJING] A warehouse explosion hit Tianjin on Monday night, Chinese state media reported, just two months after a massive blast in the eastern port city left more than 160 dead.

The blast came at a warehouse storing "alcohol materials" in Beichen District's Xiditou Township, official news service Xinhua said.

Police received a report of an explosion at 9.46pm local time (1346 GMT), but by the early hours of Tuesday morning the fire had been put out and no casualties had yet been reported, it said.

The explosion became a trending topic on the Sina Weibo social media platform early on Tuesday, with users posting what they said were images of the blast.

A total of 165 people died as a result of the explosions of August 12 at a hazardous goods storage facility, which devastated a swathe of Tianjin, authorities say, including nearly 100 firefighters.

The explosions and their aftermath raised a host of questions in China about industrial safety, as well as the enforcement of residential zoning regulations, government transparency and the adequacy of firefighter training.

AFP

    

Campaign to keep Britain in EU warns exit would weaken country

OCT 12, 20159:56 PM

[LONDON] Supporters and opponents of Britain's European Union membership squared off for battle ahead of a referendum due by 2017, with the campaign to stay in becoming the last to launch on Monday.

"Britain Stronger in Europe" is being led by businessman Stuart Rose, who highlighted the economic and diplomatic benefits of Britain remaining in the 28-member bloc and warned of the dangers of leaving.

"Do we choose to be stronger in an economy that creates opportunity into the future and the power to shape events?" he said in a speech.

"Or do we choose to be weaker by taking a leap into the unknown, less able to influence global developments that may risk our economy and may compromise our safety?"

Mr Rose, a Conservative lawmaker in Britain's upper house of parliament and the former boss of department store Marks and Spencer, described the referendum as Britain's most important vote in a generation.

The vote could be held as early as next year and could profoundly affect British politics and the country's place as one of Europe's economic hubs.

Britain's membership of the EU has proven a divisive issue in the past, and has often led to damaging rows within the ruling Conservative Party.

The "In" campaign will include three former prime ministers, former Labour minister Peter Mandelson, and businesswoman and Conservative House of Lords member Karren Brady among other prominent figures.

The launch of "Britain Stronger in Europe" follows the rolling out of two campaigns for the country to leave the EU.

"Vote Leave", including members of both the Conservative party and the main opposition Labour party, launched last week, while "Leave.EU" - led by the UK Independence Party (UKIP) - was unveiled in September.

UKIP leader Nigel Farage has played down reports of rifts within the camp advocating a so-called "Brexit", saying the two campaigns are "complementary".

He also dismissed the benefits of EU membership laid out by Mr Rose.

"He argued that we are stronger in the world, have more influence and more clout. Has he forgotten that the United Kingdom no longer even has a seat on the World Trade Organization and that Brussels now wants a single EU seat on the UN Security Council?" "The EU has a star spangled banner. He's welcome to it. I prefer the Union Jack."

Prime Minister David Cameron, who leads the Conservative government, in 2013 promised to hold the vote amid pressure from UKIP and the eurosceptic wing of his own party.

Those campaigning to leave say Britain will be better able to control its borders, write its own laws and will be free of the economic crises that have roiled the EU in recent years.

But Mr Cameron has vowed to renegotiate Britain's membership before putting it to the vote, and is lobbying for more powers for London and the ability to opt out of closer political integration.

"What matters is that there is a proper and reasoned debate," the prime minister's spokeswoman said at a regular briefing on Monday.

"It will be an important choice facing our country and we need to consider it carefully." Legislation paving the way for the vote is being debated by the House of Lords, parliament's upper chamber, having passed its first hurdle in June, although several other stages remain.

Polls indicate a narrow gap between those who want Britain to stay in the EU and those who want to leave.

A poll in September put the anti-EU camp ahead for the first time since November 2014.

According to the poll by Survation, 43 per cent said they would vote to leave the EU, compared to 40 per cent who would stay, with 17 undecided.

AF
P

LTA receives 8 proposals on harnessing self-driving vehicle technology

By

Jacquelyn Cheokjaccheok@sph.com.sg@JacCheokBT  

Singapore has received a "good mix" of eight local and international proposals on how self-driving vehicle technology can be harnessed for mass transport or shared transport services. 

ST PHOTO: ALPHONSUS CHERN

OCT 12, 201511:36 AM

SINGAPORE has received a "good mix" of eight local and international proposals on how self-driving vehicle technology can be harnessed for mass transport or shared transport services, following a Request for Information call in June, the Land Transport Authority (LTA) announced in a Facebook post on Monday.

LTA is now evaluating them and will work with the most promising proposers to translate the proposals into trial programmes.

It plans to begin trials in one-north from the second half of 2016.

LTA had announced in June that one-north - a 200-hectare Singapore business park in Buona Vista - would be the country's first test site for self-driving vehicle technologies and mobility concepts.

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In the Facebook post, LTA added that in partnership with one-north's master planner JTC, it will progressively install CCTVs and develop a backend system to monitor and study the behaviour of self-driving vehicles.

Short range communications beacons will be implemented at designated locations to enhance the vehicles' way-finding ability by broadcasting information such as traffic conditions in the vicinity. These include nearby road works and traffic incidents.

Prominent signboards will be put up around one-north, along with special decals and markings on all test vehicles, to create awareness among the one-north community and its visitors.

Said LTA on Monday: "We hope to one day deploy a network of demand-responsive shared vehicles to form a new mobility system for intra- and inter-town travel. This will provide convenient point-to-point transport mode within towns, and help us rely less on private cars.

"In time to come, we also wish to have self-driving buses operating on fixed routes and scheduled timings to reduce the heavy reliance on manpower."

      

Cow dung and old tyres inspire South African township artists   

South African artist Mzi Gojo stands in his studio among his artworks at the FUNDA art foundation on Oct 1, 2015 in Soweto, South Africa. 

PHOTO: AFP

OCT 12, 201511:42 AM

[SOWETO] On land that is both a marshy field and a rubbish dump in the township of Soweto, artist Mzi Gojo is looking for a special material to use in his latest work - cow dung.

"The good thing about summer is that the cow dung is very green and it stays very green on my canvas," he explains.

Mr Gojo is a member of Ubuhle Bobuntu ("beauty of humanity" in Zulu), a group of artists who use recycled materials and experimental techniques to express their own lives in modern South Africa.

The 12 artists are all from Soweto, the former heartland of the violent struggle against apartheid that has now developed into a sprawling town of brick houses and tin-roofed shanks outside Johannesburg.

Mr Gojo, 33, carefully mixes the dung in water - and adds a little bit of glue - to achieve the variety of colours and textures needed to produce his mysterious, elegant abstract paintings.

As well as a normal brush, he uses a broken comb, a blade or a piece of plastic grid.

"Cow dung is like a soccer ball. I can control it," he told AFP, wearing an immaculate white shirt and brown chinos on his search through wasteland and stagnant water for the exactly right droppings.

"Winter cow dung makes a nice brown (colour). Calf dung is yellowish because they only drink milk, but it is so hard to get it here.

"I was using this material when I was young. I used to clean the house, and we used dung to make huts. It reminds me of the good times," said Gojo, whose paintings sell for between 5,000 and 50,000 rand (US$370 and US$3,700).

Every artist in Ubuhle Bobuntu has their own technique and recycles whatever they can best exploit for their work: plastic bottle caps, burnt matches and even old bread or human hair.

"There is no art shop in Soweto. We don't have the money. So we had to come up with an alternative way," said Lehlohonolo Mkhasibe, one of the group's founding members.

"We wanted to create a new language, away from the conventional techniques created by the old masters," he said, dressed in a black beret and wearing circular John Lennon-style glasses.

"I was so stressed (after I left school). It is so hard to find linocard. I could not buy any. I had to think outside of the box." Mr Mkhasibe, who uses his garage as a studio, spent months developing a technique in which he stacks strips of old car tyres together to create a canvas and then cuts into the material to create a black and white image.

It is a method that earned a commission from Austrian energy drinks company Red Bull.

For Victor Mofokeng, bread can be transformed into the perfect means of artistic expression by moulding it or toasting it, and the stale loaves thrown away by supermarkets produce a vivid green.

One of his painting uses a stunning spectrum of subtle colours to depict youngsters who brandish banners reading "No work, No food".

The intriguing techniques and production of Ubuhle Bobuntu have attracted increasing attention since it launched in 2011, with exhibitions already held in Soweto and at the "Museum Africa" in Johannesburg.

This year, the group's best-known artist Pauline Mazibuko, who works with recycled magazines to make colourful collages, exhibited her work in Santa Fe, New Mexico.

For Charles Nkosi, the enthusiastic head of fine arts at the Funda art college school in Soweto, the group represents an approach that says much about how people live today.

"They are reinventing the world and beautifying it with what people dismiss," he said.

AFP