The Star Online: Business
The Star Online: Business |
- White House rounding up support for Yellen to take reins at Fed
- News Corp revenue rises on subscriptions; advertising rev falls
- US stocks needn't fret about a government shutdown
| White House rounding up support for Yellen to take reins at Fed Posted: WASHINGTON:White House officials are mustering support among Democrats on the Senate Banking Committee to back Federal Reserve Vice Chair Janet Yellen, three sources said on Friday, laying the groundwork for her expected nomination to the Fed's top job. Two Senate Democratic aides, who requested anonymity, said officials had encouraged senators to support Yellen and talk her up, hardening the sense that President Barack Obama has settled on her to replace Fed chief Ben Bernanke when his term ends in January. A third source familiar with the calls said the White House had reached out to some of the 20 Democratic senators who had signed a letter to Obama in July urging him to appoint Yellen, who would be the first woman to hold the job if confirmed by the Senate. This source said the White House had not communicated that Obama had made a decision on who to nominate, but wanted to make sure any negative reports about Yellen did not go unanswered. The outreach to Capitol Hill indicates a serious effort to make sure her confirmation would run smoothly. A White House official said earlier this week that Yellen was the leading candidate. The third source said the calls were mostly at the staff level, although some senators may have been contacted directly. Obama, who leaves on a week-long tour of Asia on Oct. 6, is expected to announce his decision in the coming weeks. Yellen, who is seen as one of the most dovish Fed officials, is likely to enjoy solid backing from Democrats, but could draw some fire from Republicans worried that the central bank's aggressive efforts to spur stronger economic growth could fuel inflation or asset bubbles. Democrats control the Senate 54-46, but any nomination is likely to need to secure 60 votes to overcome procedural hurdles. Republicans have not indicated whether they might seek to block a Yellen nomination. Yellen became the front runner after former Treasury Secretary Lawrence Summers withdrew from the race on Sunday in the face of opposition from liberal Democrats. Obama was felt to favor his selection. But Summers' record of advocacy for financial deregulation, as well as remarks in the past deemed as sexist, sparked a backlash among some Democrats on the banking panel that would need to decide whether to send any nomination to the full Senate for approval. Obama said last month that Summers and Yellen were both being considered for the job, the most powerful economic office in the nation, as was former Fed vice chair Donald Kohn. One of the senate aides said Kohn's name had not come up in the conversations with the White House. - Reuters |
| News Corp revenue rises on subscriptions; advertising rev falls Posted: NEW YORK: News Corp, the publishing company controlled by Rupert Murdoch, reported on Friday that annual revenue grew 2.7 percent to almost $8.9 billion on a rise in circulation and subscription revenue. Net income for the fiscal year ending June 30 was $506 million, or 87 cents per share, compared with a loss of $2.1 billion, or $3.58 per share, in the previous year. News Corp split from the entertainment properties controlled by Murdoch at the end of June. Its businesses include newspapers The Wall Street Journal and The Times of London, book publisher HarperCollins, education company Amplify, and pay-TV and digital stakes in Australia. The movie studio, TV and cable holdings are now part of 21st Century Fox. Advertising revenue, which makes up half of total revenue, fell almost 9 percent to $4.3 billion. The News Corp split occurred as newspapers, one of its major assets, have experienced challenges across the globe as advertisers have shifted more of their dollars away from print and toward digital. For the fiscal fourth quarter ending June, News Corp reported a 10 percent rise in revenue to $2.3 billion and a loss of $1.1 billion due to a $1.4 billion impairment charge. In May, the company said it would write down the value of its Australian and U.S. publishing assets by up to $1.4 billion and take a charge for the quarter ending June 30. - Reuters |
| US stocks needn't fret about a government shutdown Posted: NEW YORK: Investors may be tempted to shy away from stocks in the next week or two as the latest version of the fiscal follies plays out in Washington. It's understandable. The prospect of a government shutdown or, worse, default on the federal debt, rekindles memories of 2011 when Washington's infighting prompted the loss of the United States' triple-A credit rating and was a primary driver behind the stock market's last full-on correction. The sense from Wall Street analysts this time, however, is that the current drama is likely to feature more bluster than bravado and contains overblown threats. "Looking back at the pattern that has emerged since the debt ceiling fiasco back in 2011, the Republican leadership got the message that if there is a government shutdown, most likely their party is going to get blamed," said Brian Jacobsen, chief portfolio strategist at Wells Fargo Funds Management in Menomonee Falls, Wisconsin. "They're going to be very sensitive to that public sentiment as we get closer to a midterm election year" in 2014, Jacobsen said. "In spite of all the brinkmanship being talked about ... there will be a deal and then we will move on," said Stephen Massocca, managing director at Wedbush Equity Management in San Francisco. This autumn's standoff comes with two separate but related deadlines. First, failure to come up with a budget deal by the end of the month risks a federal government shutdown starting Oct. 1. Then, by mid-October lawmakers must vote to raise the federal debt ceiling to prevent a default. The posturing has been under way for weeks. In the latest move, the Republican-controlled House of Representatives passed legislation on Friday to fund federal agencies through mid-December but also inserted a provision killing President Barack Obama's landmark healthcare overhaul. Democrats, who control the Senate, have said they will strip out that provision when the bill comes before the Senate, most likely next week. Wall Street players are sanguine about events unfolding in Washington. EMPTY THREAT "Uncertainty will probably rise ahead of these events, but we think this is likely to be short-lived and probably less severe than some other recent episodes," said a Goldman Sachs research note. In fact, the current episode could prove to be an empty threat, like the so-called "fiscal cliff," last December. After weeks of dire predictions of big tax hikes and draconian spending cuts if no deal was reached, lawmakers came to a last-minute accord, and the market kicked into high gear for 2013. The S&P 500 is up more than 22 percent year to date on a total return basis, including re-invested dividends. "While we could get a pullback on worries about the debt ceiling and the continuing resolution, my guess is it will go the same way as the fiscal cliff went - a bunch of sound and fury signifying nothing," said Jeffrey Saut, chief investment strategist at Raymond James Financial in St. Petersburg, Florida. "If the market pulls back on (Washington) worries, I think it's a buy," said Saut. As the budget battle heats up, the lack of angst among investors was reflected in a fall in the CBOE Volatility Index , Wall Street's favorite measure of fear. It ticked down to 13.12 on Friday and has posted three straight weeks of losses for a total drop in that period of 23 percent. Next week on Wall Street, the widely followed Dow Jones industrial average will open Monday with three new components as Goldman Sachs, Visa and Nike replace Bank of America, Hewlett-Packard and Alcoa. ANOTHER TAPER TANTRUM Even though the market has a low chance of disruption from the fiscal fighting, there might still be a bearish signal from Washington. "Fiscal retrenchment" in Washington was one of the reasons cited this week by the Federal Reserve for not reducing its stimulus program of $85 billion a month in bond purchases. The policy has kept downward pressure on interest rates and has helped lift the S&P 500 this year. The reduced likelihood of a political impasse over the budget could then open the door for the Fed to begin tapering as early as late October when it holds its next policy-setting meeting. That possibility was raised by St. Louis Fed President James Bullard on Friday, noting that the decision still depends on data about the economy. He also said the Fed has maneuvering room as along as inflation is low. "One of the things that pushed the Fed into the precautionary side was the fiscal issues. They realized what sort of effect that could have on the economy and decided not to taper," said Wells Fargo's Jacobsen. "It is entirely possible that on Oct. 30 we could see a slight tapering because we'll have passed some of the chaos in (Washington) D.C. if there is a resolution of the budget issues," he said. - Reuters |
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