All posts by Zhloeco

Promised Trump Tax Plan Boosts Stocks

U.S. stocks “melted up” Friday as the Standard & Poor’s 500 index, the Dow Jones industrial average, Nasdaq Composite Index and Russell 2000 Index posted all-time closing highs on continued upward momentum from President Donald Trump, who promised a “phenomenal” announcement about his tax plan in the next two to three weeks.

Industrial stocks, led by defense/aerospace companies Boeing and Lockheed Martin, outperformed on the week. Crude oil also helped lead the charge amid output cuts by the Organization of the Petroleum Exporting Countries, which in turn boosted energy stocks.

The momentum looks as if it could continue. “Broad market sentiment is showing some signs of excessive optimism, which could act as a near-term contrarian warning sign,” analysts at LPL Financial said in a research report. “These are only near-term concerns, though, as we still aren’t seeing the type of over-the-top sentiment seen at major market peaks.”

Policy reforms

One of the bigger challenges with the Trump agenda has been predicting how his administration will prioritize policy efforts. Of particular interest are the competing priorities of health care overhaul and tax reform, especially with the run-up in equities. Former Goldman Sachs Group Inc. President Gary Cohn is leading the effort to craft the tax overhaul, according to a White House official.

Trading week ahead

The Federal Reserve moves back into the spotlight with a slew of speakers on the circuit, including Chair Janet Yellen, who will give her semiannual testimony to the House Senate Banking Committee on Wednesday at 10 a.m. EST.

Key economic data include the January Consumer Price Index (CPI), Retail Sales, Leading Indicators, Housing Starts, and other industrial and manufacturing reports. The earnings calendar is starting to wind down, with mostly cable and technology names reporting.

DRC Cancels Illegal Logging Licenses

The government of the Democratic Republic of the Congo says it is canceling two illegal logging licenses following an investigation by the environmental action group Greenpeace.

The Greenpeace probe found that in September 2016, then-Environment Minister Robert Bopolo Mbongeza authorized the two logging concessions, which covered more than 4,000 square kilometers. One permit went to an adviser of President Joseph Kabila, and the other went to a parliamentarian from the ruling party.

But the DRC introduced a moratorium on logging concessions in 2002 in a bid to protect the world’s second-largest remaining rainforest and the livelihoods of the 40 million people who depend on it. The forest covers much of northern DRC, as well as parts of five other countries in the Congo Basin.

Irene Wabiwa Betoko, forest campaign manager at Greenpeace Africa, told VOA that her organization discovered these two illegal awards and asked for a clarification from the government.

Atis Kabongo Kalonji, who was appointed environment minister in December as part of a DRC government reshuffle, insists his ministry is remedying the situation.

Kalonji told VOA on Wednesday that in response to Greenpeace’s revelations, he could inform the Congolese public and the forestry operators that these licenses were now canceled. He said he would soon sign a ministerial order confirming the cancellations and would put in place a mechanism to prevent future violations.

Greenpeace says judicial action against offenders is necessary to stop recurring violations of the moratorium. A month before awarding the licenses in September 2016, Bopolo had canceled three other licenses that his predecessor awarded in 2015. Those, too, were uncovered by a Greenpeace investigation.

Greenpeace also is urging suspension of a new $200 million program to protect the rainforest, the Central African Forest Initiative, until the group can complete a comprehensive analysis of the activities being funded. Wabiwa said Greenpeace wanted to make sure donors’ money would not add to the chaos that exists in the forestry sector. At the moment, she said, the necessary safeguards are not in place.

Kabongo told VOA that the DRC’s international partners could rest assured his ministry would not permit illegality.

Egyptian Economy Making Slow, Tentative Progress

The Egyptian economy has been showing signs of a slow, but painful recovery since a $12 billion loan from the World Bank, late last year, followed by a number of economic reforms, including the free float of the national currency. Tourism appears to be picking up and foreign investors are starting to buy Egyptian treasury bills once again.

One of Cairo’s major, five-star tourist hotels was bustling with visitors on a recent day, following months of slow performance.

 

Tourism accounts for nearly 12 percent of Egypt’s GDP and has always been a key barometer of the country’s economic health.  Sporadic terror attacks, two airline crashes and the accidental bombing of a busload of tourists by army helicopters had put a damper on tourism for months.

Overall, Finance Minister Amr El-Garhy sounded optimistic during a recent press conference to discuss the country’s economic indicators for 2016.

He stressed that the government’s operating deficit in 2016 decreased slightly and looks to be headed lower for 2017.

“Deficits,” El-Garhy said, “put pressure on the state, adding to inflation and causing depreciation of the national currency.”

“By lowering deficits,” he adds, “Egypt will have less debt, decreasing the need for borrowing.”

El-Garhy said consumers may be feeling pinched by recent price increases, but would see an improvement in a year and an even greater improvement over the next three years.

Frustrated shoppers

A popular Egyptian TV program, however, reports less than favorable reaction in the street to rising prices and sporadic shortages of food staples. Shoppers at a suburban Cairo vegetable market expressed frustration.

An irate housewife says cooking oil and cooking gas have gone up in price, while a woman next to her says everything is becoming exponentially more expensive.

In southern Egypt, a disgruntled consumer set fire to a government supply depot last month, but most Egyptians have taken the situation in stride.

Egypt making progress

Egyptian President Abdel Fattah el Sisi, who has faced grumbling over recent price increases, drew applause as he addressed a crowd of young people, recently, arguing Egypt is making slow progress.

The president said development requires a collective consciousness and understanding of the threats facing the nation, in order to set things straight. He maintains that Egypt is making progress, even if people aren’t happy about everything.

Sisi added he is doing his best to help meet the aspirations of Egypt’s 90 million citizens, especially its young people.

“A young man, today,” the president insists, “will see major progress in the next 10 years.”

Investors show confidence

Foreign investors are expressing growing confidence in Egypt’s economy, as analyst Khaled Abou Haif told Egyptian TV. He said traders have been seeing very strong demand for (Egyptian) treasury bills, indicating confidence in the economy by foreign investors and helping meet the country’s foreign currency needs.

Egypt’s key stock market indices have also risen, despite the simultaneous increase in the value of the dollar, after the government allowed the Egyptian pound to float freely.

Other variables, like Suez Canal revenues, have some economists worried, given the conflict in Yemen, which overlooks the strategic Bab el Mandab strait, the Gulf of Aden and Red Sea waterways. Lower oil prices may also have caused a decrease in the number of ships transiting the canal, according to some observers.

London’s Spy Industry Thrives in Private Sector

Private intelligence companies are part of a booming business in London and the British government complains it is having trouble retaining talented agents who are being drawn by high salaries and more growth opportunities in a blossoming industry estimated to be worth $19 billion.

 

“Our mission is to fill a gap of knowledge or information in any situation,” said Patrick Grayson, founder and CEO of GPW, a respected mid-sized London intelligence firm. “There’s always something people should or could know in addition to what they do know. Our job is to answer that question. To fill that gap in knowledge.”  

 

With legal firms as their key clients, Gray’s company has set up shop on London’s Chancery Lane in the heart of the city’s legal district, where solicitors and judges dressed in the traditional court garb that includes white wigs and black robes can be seen walking between the courts and their offices in the medieval Inner Temple area.   

 

The business of private investigations was once regarded as less than respectable and downmarket – that of the stereotypical private eye in a trench coat under a streetlight; but industry observers note the private investigators of today have been pulled from the gutter and into the boardroom, where they take their places next to lawyers and accountants.

 

The man some in the industry credit as the inventor of the modern private corporate investigations sector is former prosecutor Jules Kroll, a New Yorker who in 1986 started Kroll investigations. The company’s revenues now top $1 billion.

 

It is at Kroll’s company that Grayson and other big names in the field learned the trade and brought it to London, where the city’s strategic geographic location between the United States and Asia and its long-established history as a center of espionage made it the right locale for the new industry.

 

Crowded playing field

Industry observers say the playing field has become crowded, mostly with small firms of as few as three people; but the sector continues to grow as big corporations expand operations overseas and seek to minimize risks in environments they do not fully understand.   

 

“Large companies draw on us because they don’t have the investigative capacity internally and where that capacity has its work more recently is in the international context. Our firm understands cultural sensitivities,” says Nicholas Connon, director of Quintel Intelligence, a London firm.  

 

Clients include companies taking new clients and investing in emerging markets of Africa, eastern Europe, and east Asia that are unfamiliar territory and where things are sometimes not what they appear.

 

“We’re actually getting lots of requests, with the basic question, ‘can you tell me what’s going on,’” said Alex Bomberg of International Intelligence, which works in faraway places like India. “Even if you look at the books of the company, it’s not necessarily going to give you the full picture.”   

 

Among their services, companies like Bomberg’s provide pattern of life studies that give a picture of the people in a company that can be different from the image portrayed on its website, and insight on how a company is really doing. “A swan might look great above the water line, but how people are living their lifestyle within that company can be a different kind of fish,” Bomberg said.

 

Usually not James Bond stuff

The work of corporate intelligence agents is more often not the exciting stuff of James Bond movies.  It can involve combing through individuals’ credit histories and analyzing personal habits – work that can include going through people’s trash. “We’re talking about what car they drive, what’s going into their dust bin, where their wives are shopping,” said Bomberg.

 

Although the modern industry had its start in New York, London is a breeding ground for firms, and one where they naturally thrive. The city has for centuries been a center of espionage and the British are credited with being in the spying business perhaps longer than anyone else.   

 

One reason is the nation’s history as a great colonial power.

“Britain has been a very fertile place for information, intelligence gathering, and that has to do with our position in the globe, the British tradition of exploring foreign parts and relying on accurate information to expand its interests,” said Grayson.

 

Getting that accurate information requires tools that are reminiscent of the movies. Gear commonly used include jamming equipment to ensure that boardroom discussions are not being recorded and bug-searching devices.

 

$1,000 an hour

Intelligence company officials and operatives interviewed agreed there is no piece of equipment that beats the human eyeball, and the knowledge and experience to know what to look for.

 

Observers say the British government faces a brain drain as agents employed by police forces, the military and civilian intelligence agencies leave their jobs for better paying positions in private sector firms that often bill at rates of more than $1,000 an hour.

 

“If they’ve been working for a government agency for a long time, the draw is money. There’s not a lot of money working for the government. Even the pensions are not great these days. You could quite easily double that overnight,” Bomberg said.   

 

It is not only former intelligence officers who seek out firms. Recruits include financial advisers with backgrounds that include things like experience in property or construction, lawyers, and sometimes academics.

 

When the companies recruit people, they essentially buy experience.

 

“We recruit among whoever is the best,” said Connon. “We draw our expertise across the board to get into the specific situation.”

Malawian Vintner Finding Success that Boosts Community

In southern Africa, business is booming for a popular Malawian winery, which makes Linga fruit wine. Linga is made from guava, plums and even some local flowers. The winery’s owner has been expanding into international markets while giving back to his community. For VOA, Lameck Masina has the story from Lilongwe.

World Bank: Land Rights Key to Fixing Africa’s Crowded, Costly Cities

Africa needs to reform its systems for buying and selling land and invest aggressively in urban infrastructure to create jobs, end poverty and reduce cities’ high living costs, the World Bank said Thursday.

Africa’s urban population will double over the next 25 years, reaching 1 billion people by 2040, it said.

But complicated procedures for land transactions, a lack of urban planning and under-investment in infrastructure connecting homes, jobs and shops are hampering development, the bank said.

“How can we best prepare for the unprecedented wave of people moving to towns and cities to pursue their hopes and dreams?” asked the World Bank’s vice president for Africa, Makhtar Diop, via videoconference. “African cities, in order to be drivers for economic growth, in order to be the platforms for poverty elimination, they really need to be connected and open to the world.”

Network of trains, buses needed

The bank called on governments to make transport connections in rapidly growing cities a priority, saying the lack of a reliable network of buses and trains had a negative impact on the economy.

In the Kenyan capital Nairobi, seven out of 10 people either spend an hour walking to work or on a minibus, which means they can only reach about 20 percent of the city’s potential jobs, the bank said in a report.

“Nairobi — a metropolis of 3 million people — in reality functions as a set of villages with very local markets because people cannot move efficiently across the city,” said Ede Ijjasz-Vasquez, the bank’s director for Social, Urban, Rural, Resilience Global Practice.

Vicious cycle

African cities are almost 30 percent more expensive than other countries at similar income levels, the bank said.

Housing is 55 percent more costly, and food prices are 35 percent higher than in other low- and middle-income countries.

This creates a vicious cycle, driving up wages, reducing business profits and deterring investment.

“It’s by reducing the cost of living in African cities that we will be able to create the type of jobs that are needed for Africans to escape poverty,” Diop said.

Land prices in some African cities are as high as in the United States because there is a shortage of land that can be easily and safely traded, the report said.

“There is enough physical land; there is not enough tradable land with clear property rights,” said Ijjasz-Vasquez. “Therefore the prices have gone absolutely crazy.”

Corruption, inefficiency major problems

Corruption and inefficiency are major problems in many African land ministries. Investors risk being given fake title deeds, or finding their plot has multiple titles, experts say, with swathes of land being traded informally because they have not been demarcated.

Urban plans, that lay out zones for houses, streets and public spaces, must be respected, Ijjasz-Vasquez said.

“The efficiency of Manhattan today was due to a very simple urban plan, on one sheet of paper, that was agreed and enforced by everybody,” he said. “They were able to grow a city in an organized way that allowed it to be efficient for the next two centuries.”

Lack of decent housing an issue

Money also needs to be poured into decent housing, with up to two-thirds of residents in cities like Lagos living in slums where more than three people share a room, the bank said.

Ijjasz-Vasquez praised Senegal for introducing a law enabling people with temporary occupancy permits in urban areas to convert them into permanent title deeds at no cost.

“They can start investing in housing because their properties are more secure,” he said.

Wind Passes Water as US Renewable Energy Source

Wind energy has surpassed hydropower as the biggest source of renewable electricity in the United States following the sector’s second-biggest quarter ever for new installations, a wind industry trade group said Thursday.

Wind installations totaled 82,183 megawatts at the end of 2016, enough to power 24 million homes, the American Wind Energy Association said in its fourth-quarter market report.

By comparison, U.S. hydroelectric capacity is about 80,000 megawatts, according to the federal Energy Information Administration.

Big fourth quarter for wind

Wind installations soared to 6,478 MW in the fourth quarter, accounting for nearly 80 percent of all of last year’s wind installations. The fourth quarter was the industry’s largest for installed capacity since the fourth quarter of 2012.

The 8,303 MW added for the year represented more than $13.8 billion in investment.

Just three turbine makers — General Electric Co, Vestas Wind Systems A/S and Siemens AG — accounted for up to 95 percent of the U.S. turbine market in 2016.

Texas has more than 20 MW of installed wind capacity, or nearly a quarter of the market. Iowa is the second-biggest wind state, and Oklahoma overtook California for third place at the end of 2016.

The first offshore wind project in the United States also came online in the fourth quarter, the 30 MW Block Island wind farm off the coast of Rhode Island.

More wind power coming

More than 10,000 MW of wind is under construction in the United States, about half of which is in Texas. New Mexico’s wind industry is growing rapidly, with 1,300 MW under construction. Once completed, those projects will double the size of New Mexico’s installed wind capacity. 

Corporations and others outside the utility industry have become major purchasers of wind energy, accounting for 39 percent of capacity contracted in 2016. Projects for Google, Amazon and General Motors were completed in the fourth quarter.

More Than 700 Stage Anti-government Protest in Nigerian Capital

More than 700 people took to the streets in the Nigerian capital Abuja on Thursday to protest against the government’s economic policy in a sign of mounting public anger in the oil producer grappling with recession.

Africa’s largest economy is mired in its first recession for 25 years as low oil prices have hammered public finances and foreign reserves while driving up annual inflation to almost 20 percent.

President Muhammadu Buhari was elected in 2015 on pledges to diversify the economy and fight corruption. But critics say he has made little progress, with Nigeria still heavily dependent on crude exports whose price has halved since 2014.

The 74-year-old former military ruler is currently on medical leave in Britain.

“The Buhari administration came to power on the promise of change,” said Ismail Bello, a labour union and protest leader.

“We are yet to feel the impact of change. We are rather feeling the pain of lack of good governance, we are feeling the pain of corruption, we are feeling the pain of joblessness,” he said.

The protesters marched to the presidential villa to see Vice President Yemi Osinbajo who asked for patience.

“Every time you fight corruption the way we are trying to fight corruption, there is a major fight back, because corruption in this country is wealthy, powerful, influential and it is in every aspect of our lives,” Osinbajo said.

“Things might be difficult today, but I am completely sure if we stay the course this country will not only get out of recession but always go to the path of sustainable development,” he said.

There was also a smaller demonstration in the commercial capital Lagos.

Buhari has been in Britain since mid-January for treatment for an unspecified medical condition and, with no indication of when he might return, many Nigerians suspect his health is worse

than officials admit.

Hundreds of people had already staged a similar protest on Monday in Abuja and other cities.