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Philippine foreign secretary Locsin slams Beijing over South China Sea

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Philippine Secretary of Foreign Affairs Teodoro Locsin speaks at a press conference after meeting Chinese Foreign Minister Wang Yi in Beijing, China on March 20, 2019.

Andrea Verdelli | Getty Images

Philippine Secretary of Foreign Affairs Teodoro Locsin Jr. slammed China with decidedly undiplomatic language on Twitter Monday, suggesting the Asian giant “get the f— out” as the two countries engage in a war of words over the South China Sea.

Locsin in the tweet accused China of straining its “friendship” with the Philippines. The foreign affairs secretary has been a vocal critic of China in the administration of Philippine President Rodrigo Duterte, who sought closer ties with Beijing after taking office in 2016.

China’s embassy in the Philippine capital of Manila did not immediately respond to CNBC’s request for comment.

In response to criticism of his rhetoric made by other Twitter users, Locsin said the “usual suave diplomatic speak gets nothing done.”

The Philippines and China have for years contested overlapping territorial claims in the South China Sea, a resource-rich waterway with a total area of about 1.4 million square miles where trillions in dollars of global trade pass. Beijing has in the past year appeared more assertive in the disputed waters.

Locsin’s Monday tweet followed a statement by the Philippine foreign affairs department, which protested the “illegal presence” of Chinese vessels in parts of the South China Sea that are internationally recognized as belonging to the Philippines.

The statement lashed out at “belligerent actions” by the Chinese coast guard against their Philippine counterparts in the vicinity of Bajo de Masinloc. It said the Chinese had engaged in “shadowing, blocking, dangerous maneuver, and radio challenges” on April 24 to 25.

It also protested the “incessant, illegal, prolonged, and increasing presence of Chinese finishing vessels and maritime militia vessels in Philippine maritime zones.”

China ‘enjoys sovereignty’

Beijing last week maintained that it “enjoys sovereignty” over Bajo de Masinloc — which it calls Huangyan Island — and its surrounding waters. It urged the Philippines not to escalate disputes.

Bajo de Masinloc, also known as Scarborough Shoal, is a chain of reefs in the South China Sea that lies around 120 nautical miles from the nearest Philippine coast and 470 nautical miles from the nearest coast of China.

China claims most of the South China Sea, based on what it says are nine dashes that delineate Chinese territory in historic maps.

An international tribunal in 2016 dismissed the so-called nine-dash line as legally baseless — a ruling ignored by Beijing.



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Federal Reserve gives U.S. banks a thumbs up as all 23 lenders easily pass 2021 stress test

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The Federal Reserve announced Thursday that the biggest U.S. banks could easily withstand a severe recession, a milestone for the once-beleaguered industry.

The Fed, in releasing the results of its annual stress test, said that all 23 institutions in the 2021 exam remained “well above” minimum required capital levels during a hypothetical economic downturn.

That scenario included a “severe global recession” that hits commercial real estate and corporate debt holders and peaks at 10.8% unemployment and a 55% drop in the stock market, the Fed said. While the industry would post $474 billion in losses, loss-cushioning capital would still be more than double the minimum required levels, the Fed said.

If there was an anticlimactic note to this year’s stress test, it’s because the industry underwent a real-life version in the past year when the coronavirus pandemic struck, leading to widespread economic disruption. Thanks to help from lawmakers and the Fed itself, banks fared extremely well during the pandemic, stockpiling capital for expected loan losses that mostly didn’t materialize.

Nevertheless, during the pandemic, banks had to undergo extra rounds of stress tests and had restrictions imposed on their ability to return capital to shareholders in the form of dividends and buybacks. Those will now be lifted, as the Fed has previously stated.

“Over the past year, the Federal Reserve has run three stress tests with several different hypothetical recessions and all have confirmed that the banking system is strongly positioned to support the ongoing recovery,” Vice Chair for Supervision Randal K. Quarles said in a statement.

Dividend increases and buybacks coming

After passing this latest exam, the industry will regain a measure of autonomy it lost since the last crisis. After playing a key role in the 2008 financial crisis, banks were forced to undergo the industry exam, and had to ask regulators for permission to boost dividends and repurchase shares.

Now, under something called the stress capital buffer framework, banks will gain flexibility in how they want to dole out dividends and buybacks. The stress capital buffer is a measure of capital each firm needs to carry based on the riskiness of their operations. The new regime was supposed to start last year, but the pandemic intervened.

“So long as they stay above that stress capital buffer requirement and all their other requirements every quarter, a bank can technically do whatever it chooses to do with regards to buybacks and dividends,” Jefferies bank analyst Ken Usdin told CNBC this week.

During a background call with reporters, senior Fed officials pushed back against the idea that the new regime resulted in a free-for-all. Banks are still subject to restrictions, and the Fed is confident that the stress capital buffer framework will protect their ability to support the economy during a downturn, they said.

While analysts have said they expect the industry can hike buybacks and dividends by tens of billions of dollars starting in July, the Fed has instructed lenders to wait until Monday afternoon to disclose their plans, according to people with knowledge of the situation. That’s when a flurry of press releases is expected.

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Here’s what you need to know

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People queue outside a vaccination center in Sydney on June 24, 2021, as residents were largely banned from leaving the city to stop a growing outbreak of the highly contagious Delta Covid-19 variant spreading to other regions.

SAEED KHAN | AFP | Getty Images

The “delta variant” has come to dominate headlines, having been discovered in India where it provoked an extreme surge in Covid-19 cases before spreading around the world.

But now a mutation of that variant has emerged, called “delta plus,” which is starting to worry global experts.

India has dubbed delta plus a “variant of concern,” and there are fears that it could potentially be more transmissible. In the U.K., Public Health England noted in its last summary that routine scanning of Covid cases in the country (where the delta variant is now responsible for the bulk of new infections) has found almost 40 cases of the newer variant, which has acquired the spike protein mutation K417N, i.e. delta plus.

It noted that, as of June 16, cases of the delta plus variant had also been identified in the U.S. (83 cases at the time the report was published last Friday) as well as Canada, India, Japan, Nepal, Poland, Portugal, Russia, Switzerland and Turkey.

India third wave?

As is common with all viruses, the coronavirus has mutated repeatedly since it emerged in China in late 2019. There have been a handful of variants that have emerged over the course of the pandemic that have changed the virus’s transmissibility, risk profile and even symptoms.

Read more: The fast-spreading delta Covid variant could have different symptoms, experts say

Several of those variants, such as the “alpha” strain (previously known as the “Kent” or “British” variant) and then the delta variant, have gone on to be dominant strains globally, hence the attention on delta plus.

India’s Health Ministry reportedly said Wednesday that it had found around 40 cases of the delta plus variant with the K417N mutation. The ministry released a statement on Tuesday in which it said that INSACOG, a consortium of 28 laboratories genome sequencing the virus in India during the pandemic, had informed it that the delta plus variant has three worrying characteristics.

These are, it said: increased transmissibility, stronger binding to receptors of lung cells and the potential reduction in monoclonal antibody response (which could reduce the efficacy of a lifesaving monoclonal antibody therapy given to some hospitalized Covid patients).

India’s Health Ministry said it had alerted three states (Maharashtra, Kerala and Madhya Pradesh) after the delta plus variant was detected in genome-sequenced samples from those areas.

The detection of a variation to the delta variant largely blamed for India’s catastrophic second wave of cases has stoked fears that India is ill-prepared for a potential third wave. But some experts are urging calm.

Dr. Chandrakant Lahariya, a physician-epidemiologist and vaccines and health systems expert based in New Delhi, told CNBC on Thursday that while the government should remain alert to the progress of the variant, there is “no reason to panic.”

“Epidemiologically speaking, I have no reason to believe that ‘Delta plus’ alters the current situation in a manner to accelerate or trigger the third wave,” he told CNBC via email.

“If we go by the currently available evidence, Delta plus is not very different from Delta variant. It is the same Delta variant with one additional mutation. The only clinical difference, which we know till now, is that Delta plus has some resistance to monoclonal antibody combination therapy. And that is not a major difference as the therapy itself is investigational and few are eligible for this treatment.”

He advised the public to follow Covid restrictions and to get vaccinated as soon as possible. Analysis from Public Health England released last week showed that two doses of the PfizerBioNTech or Oxford-AstraZeneca Covid-19 vaccines are highly effective against hospitalization from the delta variant.

The WHO has said it is tracking recent reports of a “delta plus” variant. “An additional mutation … has been identified,” Maria Van Kerkhove, WHO’s Covid-19 technical lead said at a briefing last week.

“In some of the delta variants we’ve seen one less mutation or one deletion instead of an additional, so we’re looking at all of it.”

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Booking volumes increase 45% over Q1

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The cruise ships “Carnival Sunrise” (L) and “Carnival Vista” (R) part of the Carnival Cruise Line, are seen moored at a quay in the port of Miami, Florida, on December 23, 2020, amid the Coronavirus pandemic. (Photo by Daniel SLIM / AFP) (Photo by DANIEL SLIM/AFP via Getty Images)

DANIEL SLIM | AFP | Getty Images

Carnival Corporation saw booking volumes increase 45% in the second quarter of this year compared to the first quarter, the cruise operator announced in a business update on Thursday

Carnival also said its cumulative advanced bookings for 2022 are ahead of its 2019 bookings, indicating the company expects a solid return to business after the pandemic shut down the cruise industry.

However, Carnival reported an adjusted net loss of $2 billion for the second-quarter of 2021. It expects a net loss on an adjusted basis for the third quarter and full year as well.

The company’s monthly cash burn rate for the first half of 2021 was $500 million.

Due to several outbreaks aboard cruise ships last year, the cruise industry was one of the last sectors allowed to resume operations.

The Centers for Disease Control and Prevention allowed cruises to return this year with strict safety protocols and requirements in place to prevent outbreaks from occurring onboard.

Carnival has resumed sailing or announced plans to resume sailing 42 ships from eight of the company’s nine cruise brands by the end of November this year.

“We are working aggressively on our path to return our full fleet to operations by next spring. So far, we have announced that 42 ships, representing over half of our capacity, have been scheduled to return to serving guests by this fiscal year end,” Carnival Corporation President and CEO Arnold Donald said in a press release.

Cruise line stocks are slowly rebounding this year after suffering huge losses during the pandemic.

Shares of Carnival fell more than 2% on Thursday. Carnival’s stock has risen 28% this year, putting its market cap at just over $27 billion.

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