Connect with us


Russian stocks tumble on Mueller indictments



Russian stocks tumbled Friday afternoon after a federal grand jury indicted 13 Russian nationals and three Russian entities for alleged interference in the 2016 presidential election.

The VanEck Vectors Russia exchange-traded fund (RSX), which tracks a host of publicly-traded Russian companies, fell 1.6 percent following news of the indictments. The fund is largely comprised of energy and financial companies, according to FactSet.

The iShares MSCI Russia ETF (ERUS), a similar fund, shed 1.4 percent.

The downturn appeared to reflect investor fears over souring U.S.-Russia relations and that the latest developments could force President Donald Trump’s hand in enforcing sanctions.

Trump has been reluctant to enforce additional sanctions on Russia despite a new law designed to punish Moscow’s interference, saying that the measure was already taking a toll on Russian companies.

Known as the “Countering America’s Adversaries Through Sanctions Act,” the legislation called for the administration to deliver a report on Russian President Vladimir Putin’s hierarchy in and out of the Russian government in an attempt to spook political opponents.

The administration delivered a list of Russian “oligarchs” in January, though the document came under fire after Forbes went through the lists and confirmed that it was an exact replica of the Russians on its 2017 billionaires list.

Still, special counsel Robert Mueller’s latest indictments mark the latest in an investigation that has kept markets on edge.

All three major stock indexes turned negative following Mueller’s announcement, with the Dow Jones industrial average falling roughly 150 points before rebounding.

Source link


Fed Chairman Powell says economic reopening could cause inflation to pick up temporarily



Federal Reserve Chairman Jerome Powell said Thursday that he expects some inflationary pressures in the time ahead but they likely won’t be enough to spur the central bank to hike interest rates.

“We expect that as the economy reopens and hopefully picks up, we will see inflation move up through base effects,” Powell said during a Wall Street Journal conference. “That could create some upward pressure on prices.”

Markets reacted negatively to Powell’s comments, with stocks sliding and Treasury yields jumping. Some investors and economists had been looking for him to address the recent surge in rates, with a possible nod toward adjusting the Fed’s asset purchase program.

The Fed currently is buying $120 billion a month in Treasurys and mortgage-backed securities. Recent market chatter has revolved around the central bank potentially implementing a new version of “Operation Twist,” in which it sells short-term notes and buys longer-dated bonds.

According to Fed officials, the central bank is far from any action to try to influence the long end of yields, despite expectations from economists and Wall Street strategists, CNBC’s Steve Liesman reported.

Powell instead reiterated past statements he has made on inflation in saying that he doesn’t expect the move up in prices to be long lasting or enough to change the Fed from its accommodative monetary policy. He did note that the rise in yields did catch his attention, as have improving economic conditions.

“There’s good reason to think that the outlook is becoming more positive at the margins,” he said.

The Fed likes inflation to run around 2%, a rate it believes signals a healthy economy and provides some room to cut interest rates during times of crisis. However, the rate has run below that for most of the past decade and inflation has been particularly weak during the coronavirus pandemic.

With the economy increasingly back on its feet, some price pressures are likely to emerge, said Powell, but he added they likely will be transitory and look higher because of “base effects,” or the difference against last year’s deeply depressed levels just as the Covid-19 crisis began.

Raising interest rates, he added, would require the economy to get back to full employment and inflation to hit a sustainable level above 2%. He doesn’t expect either to happen this year.

“There’s just a lot of ground to cover before we get to that,” he said. Even if the economy sees “transitory increases in inflation … I expect that we will be patient.”

The Fed has repeatedly said that it will keep short-term rates anchored near zero and continue its monthly bond-buying program until it sees not only a low unemployment rate but also a jobs recovery that is “inclusive” across income, gender and racial lines.

However, some economists have worried that the Fed’s commitment to low rates will foster inflation. Powell said he’s “very mindful” of the lessons from runaway inflation in the 1960s and ’70s, but believes this situation is different.

“We’re very mindful and I think it’s a constructive thing for people to point out potential risks. I always want to hear that,” he said. “But I do think it’s more likely that what happens in the next year or so is going to amount to prices moving up but not staying up and certainly not staying up to the point where they would move inflation expectations materially above 2%.”

Source link

Continue Reading


Why the market is worried about Powell’s stance on inflation



The bond market sold off on Thursday when Federal Reserve Chairman Jerome Powell expressed little worry about inflation and provided no indication of policy changes ahead.

In an exchange with the Wall Street Journal, the central bank leader acknowledged that an economy recuperating from the depths of the Covid-19 pandemic could see some price pressures ahead.

But he also dismissed them as mostly “base effects.” In other words, prices in the next couple of months will look high, but only when compared to last year, just as the pandemic was beginning and inflation pressures fell through the floor.

In addition to indications of full employment, Powell said, “We’d want to see inflation sustainably above 2% and we’d want to be on track for inflation to run sustainably above 2%.”

“There’s just a lot of ground to cover before we get to that,” he added.

Bond markets sold off during his comments, sending yields higher, as prices and yields move in opposite directions. Stocks also tumbled, sending the Dow industrials down more than 600 points.

Inflation is kryptonite for the bond market for a few reasons.

First, inflation erodes the capital of bonds as rising yields struggle, and generally fail, to keep up with price pressures. Rising yields mean falling prices.

Further, if inflation rises, that means future interest payments one receives for holding the bond are worth less.

Powell said the recent leap in yields was “notable and caught my eye,” but didn’t sound any alarm. Instead, he said he would be concerned only by “disorderly conditions” in the market, which he did not indicate to be case even though yields are at the highest levels since before the pandemic began.

Even if inflation does rise, Powell and other Fed officials say they are content to let it run above their 2% target until the jobs market shows a full and inclusive recovery along income, gender and racial lines.

Wall Street was looking for some indication of policy tweaks from the Fed. Rather than seeking rate hikes, some economists and investors are looking for the Fed to change the composition of its monthly asset purchases.

One option would be to sell short-term bills and buy longer-dated notes in an effort to raise yields on the short end and lower them further out in duration to flatten the yield curve, in a process known as Operation Twist.

Investors worry that the Fed may again have to play catch-up by hiking rates when inflation does occur. Stock market investors also don’t like rising interest rates as they make it more expensive for companies to borrow and endanger debt-laden companies that have become dependent on low rates.

“With respect to financial conditions, it will be up to the Fed on whether they tighten further. The more dovish they get in the face of market expectations of higher inflation, the more financial tightening we’ll see,” wrote Peter Boockvar, chief investment officer at Bleakley Advisory Group.

Boockvar added that Fed officials “have put themselves in a tough situation” and must hope that inflation does not hit the 2% target before employment also reaches their goal.

“If it does, they have a problem because they will be afraid to confront it with higher rates if they remain so focused on employment,” he said.

Source link

Continue Reading


Facebook trains A.I. to ‘see’ using 1 billion public Instagram photos



A person using Instagram.

Lorenzo Di Cola | NurPhoto via Getty Images

Pugs, Ferraris, mountains, brunches, beaches, and babies — Instagram is full of them. In fact, it’s become one of the largest image databases on the planet over the last decade and the company’s owner, Facebook, is using this treasure trove to teach machines what’s in a photo.

Facebook announced on Thursday that it had built an artificial intelligence program that can “see” what it is looking at. It did this by feeding it over 1 billion public images from Instagram.

The “computer vision” program, nicknamed SEER, outperformed existing AI models in an object recognition test, Facebook said.

It achieved a “classification accuracy score” of 84.2% when it attempted a test provided by ImageNet, which is a large visual database designed for use in visual object recognition software research. Basically, it tests whether an AI program can identify what’s in a photo.

New approach

Whereas many AI models are trained on carefully labelled datasets, Facebook said SEER learned how to identify objects in photos by analyzing random, unlabeled and uncurated Instagram images. This AI technique is known as self-supervised learning (SEER is a play on SElf-supERvised).

“The future of AI is in creating systems that can learn directly from whatever information they’re given — whether it’s text, images, or another type of data — without relying on carefully curated and labeled data sets to teach them how to recognize objects in a photo, interpret a block of text, or perform any of the countless other tasks that we ask it to,” Facebook’s researchers wrote in a blog post.

“SEER’s performance demonstrates that self-supervised learning can excel at computer vision tasks in real-world settings,” they added. “This is a breakthrough that ultimately clears the path for more flexible, accurate, and adaptable computer vision models in the future.”   

While this is only a research project, a Facebook spokesperson said the potential uses were relatively broad. They include improved automatically generated text for describing images to people with visual impairments, better automatic categorization of items sold on Facebook Marketplace, and better systems to keep harmful images away from the Facebook platform, the company said.

Privacy issue?

But many Instagram users may be surprised to hear that their images are being used to train Facebook AI systems. 

“We inform Instagram account holders in our data policy that we use the information we have to support research and innovation including in technological advancement like this,” Priya Goyal, a software engineer at Facebook AI Research, told CNBC.

Facebook said it will open source some of its software so that other researchers can experiment with it.

“While we’re sharing the details of our research and creating an open-sourced library that will enable other researchers to use self-supervised learning to train models on uncurated images, we are not sharing the images or SEER mode,” said Goyal.

Other big tech companies including Google and Microsoft are also trying to push the boundaries of computer vision. Last summer, Google published the SimCLRv2 computer vision model, while OpenAI published iGPT 2.

Source link

Continue Reading