LIVE: Twitter's user growth stalled in Q4

• Alexei Oreskovic
 
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• 17h
• 26,844
 
• 12

Justin Sullivan/Getty ImagesTwitter CEO Jack Dorsey.

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Twitter's user growth came to a halt in the fourth quarter, sending the company's shares down as much as 13% before the stock recovered some ground in after-hours trading on Wednesday.

Here are the key numbers:

• Monthly active users (MAUs): 320 million, compared to 320 million in the third quarter of 2015 and below the 323 million expected by analysts.
• Revenue: $710 million, up 48% year-on-year and in line with the $710 million expected by Wall Street.
• Adjusted earnings per share (EPS): $0.16 compared to the $0.12 average-analyst expectation.
• Q1 guidance: revenue of $595 million to $610 million, compared to the $629 million expected by Wall Street.

Twitter shares were down roughly 5% at $14.25 in after-hours trading on Wednesday after initially plunging about 13% when the results came out.

User growth came to a standstill in the final three months of the year, and in the US actually declined from 66 million to 65 million.

Excluding text-messaging, the company's global audience also shrank at the end of the year to 305 million from 307 million in Q3.

Twitter said in a letter to shareholders on Wednesday that growth was hurt by "organic declines, partially due to fourth quarter seasonal trends."

Despite the Q4 slowdown, Twitter said that things were picking back up.

"We've already seen January monthly actives bounce back to Q3 levels. We're confident that, with disciplined execution, this growth trend will continue over time," the company said.

Twitter laid out five priorities to get its business back on track in the coming year, including making the service easier to use and increasing its focus on live video capabilities, such as its Periscope app.

The stock has been pummeled, falling more than 70% from its 52-week high.

Wall Street is worried that the service's best days are behind it as users flock to newer apps such as Instagram, Snapchat, and WhatsApp. And Twitter's reduced stock price has prompted speculation that the company could become an acquisition target.

Here's a look at Twitter's slowing user growth:

BI Screenshot

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More: Twitter Jack Dorsey Social Networking Earnings

The Federal Reserve isn't sure if it has the legal authority to implement negative interest rates

• Myles Udland
 
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• 22h
• 1,572
 
• 5

Reuters/Jonathan ErnstJanet Yellen.

The hottest topic in monetary policy right now is negative interest rates. 

The Bank of Japan took rates negative last month, joining the European Central Bank and others, with over 20% of the world's GDP now covered by at least some negative rate policy exists. 

This had led to the question of whether the Federal Reserve, the most powerful and closely-watched central bank in the world, will follow suit. 

But there might be some legal hurdles to overcome. 

On Wednesday, Fed chair Janet Yellen was asked by Rep. Patrick McHenry (R-North Carolina) about the Fed's legal authority to make rates negative. And, well, it's unclear. 

Yellen told McHenry (emphasis ours):

"In the spirit of prudent planning we always try to look at what options we would have available to us either if we needed to tighten policy more rapidly than we expect or the opposite. So we would take a lot at [negative rates]. The legal issues I'm not prepared to tell you have been thoroughly examined at this point. I am not aware of anything that would prevent [the Fed from taking interest rates into negative territory]. But I am saying we have not fully investigated the legal issues."

McHenry's question referenced press reports — likely Matt Boesler's report at Bloomberg News— that questioned whether the Fed has the legal standing to make interest rates negative. 

As Boesler reported, an August 5, 2010 Fed staff memo found:

There are several potentially substantial legal and practical constraints to implementing a negative IOER rate regime, some of which would be binding at any IOER rate below zero, even a rate just slightly below zero. Most notably, it is not at all clear that the Federal Reserve Act permits negative IOER rates, and more staff analysis would be needed to establish the Federal Reserve’s authority in this area.

Among the concerns raised by the Fed is that were its IOER rate — or interest on excess reserves, which is the upper-band of the two-interest-rate program the Fed currently uses to push the Fed Funds rate into the Fed's targeted range — to go into negative territory, Treasury auctions could run into problems because US government debt cannot currently be issued at a negative yield.

Elsewhere in Yellen's testimony, the IOER rate — which currently sits at 0.50% — got quite a bit of attention as at least two members of the Committee asked whether this rate was a "subsidy" to US banks who earn this rate on reserves at the Fed. 

Yellen noted that this formulation isn't quite right given that these banks pay out an even higher rate to their customers.

Additionally, these reserves are part of what allows the Fed to hold such a large stock of assets, the interest from which is paid back to the Treasury at a much higher rate than what the Fed pays out to banks. 

Follow Yellen's testimony live here »

SEE ALSO: Yellen's prepared remarks to Congress

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More: Janet Yellen Federal Reserve Negative Interest Rates

Sweden's central bank is deliberately fuelling a housing bubble that could be 'very costly for the national economy'

• Jim Edwards

• 2h
• 376
 
• 1

FuturamaWhat could possibly go wrong?

The Riksbank, Sweden's central bank, just cut interest rates further into negative territory, to -0.5%, and has all but admitted it is deliberately creating a housing bubble that "could ultimately be very costly for the national economy."

We have never seen a monetary policy this risky before from a central bank in a wealthy, developed, Western nation. It isreally unusual.

Reading between the lines of the bank's statement, it appears that the Riksbank is playing chicken with Sweden's government: By deliberately making the property bubble worse, it is trying to force the government to reform the ballooning housing and mortgage market by mandating reductions in Swedish household debt. 

The Riksbank has been urging this change in the law for months now and it hasn't happened. So this new interest cut, from -0.34% to -0.5% — is essentially a signal that the Riksbank couldn't care less about the housing bubble it is creating. If the government won't act, then the bank won't either, seems to be the message.

There is a lot to unpack here, so let's take the news one step at a time.

• The Riksbank cut its policy rate from -0.35% to -0.5%, more than analysts were expecting.
• The bank said it stands ready to go even more negative.
• Negative interest rates are the Alice in Wonderland of economics — it means banks will charge you for saving money rather than paying you interest on your deposits.
• The Riksbank is trying to stave off deflation by creating inflation, essentially by printing money. It wants 2% inflation; Sweden's inflation right now is roughly 0%. Deflation is generally harmful to economic growth.
• The bank also wants the Swedish kroner to stay cheap compared to other currencies, in order to protect Swedish exports and maintain economic growth. GDP growth is 3.9% — pretty healthy.
• The ultra-low interest rates have an awful side effect: It is now very cheap to borrow money in Sweden, and the Swedes are borrowing like crazy to buy houses. House prices are rising at 25% per year there and credit growth has risen by 7% year on year. Here is what that looks like in a chart:

HSBC

• The bank appears to believe that fighting deflation is more important than moderating the housing bubble.

The Riksbank also made this extraordinary statement about debt and housing:

Risks associated with household indebtedness must be managed

The Riksbank has highlighted the risks associated with the low interest rate level on many occasions. In order to reduce the risks of household indebtedness, different reforms are needed that both create a better balance between supply and demand on the housing market and reduce the incentives for households to take on debt. It is also important that Finansinspektionen's mandate for macroprudential policy is clarified. If no measures are taken, this, in combination with the low interest rate level, will further increase the risks. Such a development could ultimately be very costly for the national economy.

The Riksbank also said it might go even more negative: "The Executive Board therefore still has a high level of preparedness to make monetary policy even more expansionary, even between the ordinary monetary policy meetings. There is still scope to cut the repo rate further."

Translation: We know that supply and demand in the housing market are out of balance, and we know all this cheap credit we're creating is really risky. But we're going to keep doing it!

It's a highly political statement, because it says that responsibility for Sweden's property debt bubble lies with the government's finance regulation agency, the Finansinspektionen, and notwith the Riksbank. That's debatable, because there is an obvious alternative way to reduce the risks of debt: Increase interest rates, making new debt more expensive (and thus discouraging it). Only the Riksbank can do that. Instead, the Riksbank is hoping the government will change the law to allow the Finansinspektionen to require that Swedes pay down their mortgage debt rather than simply pay the interest before selling their houses.

That distinction is crucial because everyone agrees that if the Swedish economy hits a downturn, then the country will spiral into a crash as everyone tries to sell their houses at once.

In addition, some people — like HSBC global economist James Pomeroy — worry that the bubble is now so big a decline in house prices on their own might trigger a recession. 

If that scenario is right, then Sweden is in severe danger right now. If the law changes to require Swedes to make greater payments on their debt, then that could reduce demand for mortgages, and likewise reduce demand for house purchases, which might then hurt house prices ... thus creating the exact situation the Riksbank is hoping to avoid.

MAS, CAD investigating Koyo International's managing director

By

Melissa Tanmelissat@sph.com.sg@MelissaTanBT

Catalist-Listed Koyo International's managing director Foo Chek Heng is being investigated by the Monetary Authority of Singapore (MAS) and the Commercial Affairs Department (CAD), the company said in a Singapore Exchange (SGX) announcement late on Wednesday night.

PHOTO: BLOOMBERG

FEB 11, 2016 12:56 PM

CATALIST-LISTED Koyo International's managing director Foo Chek Heng is being investigated by the Monetary Authority of Singapore (MAS) and the Commercial Affairs Department (CAD), the company said in a Singapore Exchange (SGX) announcement late on Wednesday night.

It said Mr Foo had informed the company that he is being investigated for "possible offences" under section 197 of the Securities and Futures Act (SFA). It did not elaborate on what his possible offences were.

Section 197 of the SFA pertains to false trading and market rigging transactions, going by the official website for Singapore statutes.

Koyo said MAS and CAD have interviewed Mr Foo and he has handed over his travel documents and "certain devices and documents" to them.

It added that Mr Foo had told Koyo's board that he "disputes the allegation" by MAS and CAD and will cooperate fully in the investigation.

Shares of the engineering services provider crashed 84 per cent in one session in January this year after SGX warned the investing public to be careful when trading Koyo shares.

"SGX's review of the trades in Koyo showed that a small group of individuals was responsible for 60 per cent of the trading volume of Koyo shares during this period, of which at least half of these trades were due to this group of individuals buying and selling among themselves," the bourse had said.

     

Rio Tinto slides to annual loss, abandons payout policy

Global miner Rio Tinto slumped to a net loss for 2015, hit by a rout in commodities, and scrapped its promise to pay a steady or higher dividend annually due to the tough outlook. 

PHOTO: REUTERS

FEB 11, 20162:33 PM

[MELBOURNE] Global miner Rio Tinto slumped to a net loss for 2015, hit by a rout in commodities, and scrapped its promise to pay a steady or higher dividend annually due to the tough outlook.

The world No 2 miner held its 2015 full-year dividend steady at US$2.15 a share - although below market forecasts for a higher dividend - at a time when its peers are expected to cut or suspend their payouts to shore up their balance sheets.

Rio reported a net loss of US$866 million, hammered by US$1.8 billion in writedowns. Underlying earnings slumped 51 per cent to US$4.54 billion in 2015 from US$9.31 billion a year earlier, due to weaker iron ore, copper and aluminium prices.

The result was in line with analysts' average forecast of US$4.53 billion.

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"In light of the significant deterioration in the macro-economic environment and the resultant market uncertainty, the board believes that it is no longer appropriate to maintain the progressive dividend policy," Rio said.

Miners are under pressure from credit rating agencies to curb spending, including cutting dividends, to help them weather the worst market conditions in nearly two decades.

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Gold demand rose to 2-year high on investor, central bank buying

Gold demand reached two-year high in the fourth quarter as investors bought more bars while central banks sought a haven from oil's slump and concerns about a stumbling economy. 

PHOTO: BLOOMBERG

FEB 11, 20161:33 PM

[LONDON] Gold demand reached two-year high in the fourth quarter as investors bought more bars while central banks sought a haven from oil's slump and concerns about a stumbling economy.

Global consumption rose four per cent from a year earlier to 1,117.7 metric tons in the three months through December, the World Gold Council said in a report Thursday.

Central bank demand increased by 25 per cent in the quarter, while prices near a five-year low led to the biggest jewelry purchases for a second-half period in more than a decade.

"It was a year of two halves, with the first and second quarters quite weak, but things ticked up in the second half," Alistair Hewitt, director of market intelligence at the London- based council, said by phone.

"Central banks were very important and we saw a decent amount of jewelry demand."

The strong end to the year meant that annual demand was little changed at 4,212.2 tons, the council said. While gold posted a third successive decline in 2015 on expectations for the first US interest rate in almost a decade, bullion has rebounded to become this year's best performing commodity as global market turmoil spurred demand for a haven.

China and India, the biggest consumers, will lead sustained buying, the council predicts.

Central banks added metal to reserves for a 20th consecutive quarter, buying 167.2 tons to take the full-year total to 588.4 tons, according to the report.

Holdings in exchange-traded products, which fell by 68.6 tons last quarter, have rebounded about 100 tons so far this year, data compiled by Bloomberg show.

China remained the biggest buyer last year, accounting for more than a quarter of the global total. The country's purchases rose three per cent to 250.6 tons in the fourth quarter, and India's gained six per cent from a year earlier.

While Middle East buying dropped four per cent as lower oil prices hurt income, Iran's demand jumped 16 per cent to 13.4 tons.

Recycling slipped 12 per cent in the three months through December, the report showed. Mine output contracted two per cent last quarter, with annual production growing at the slowest since 2008.

The slump in prices has forced some of the biggest producers to scale back investment in future output.

"What's going to be affecting mine production in 2016, 2017 and 2018 are all decisions that have been made since 2012," Mr Hewitt said.

Those are "decisions in terms of mothballing sites, in terms of reducing exploration and development budgets and in terms of cutting costs," he said.

BLOOMBERG