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Singapore releases Q3 GDP advance estimates, MAS monetary policy

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A cyclist rides on Esplanade bridge as buildings stand in the Central Business District in Singapore on Monday, July 6, 2020.

Wei Leng Tay | Bloomberg | Getty Images

SINGAPORE — Singapore’s central bank tightened monetary policy in a surprise move on Thursday as the economy grew 6.5% in the third quarter compared with a year ago.

The Monetary Authority of Singapore — the country’s central bank — said in its twice-yearly monetary policy statement that it raised slightly the slope of its currency band, the Singapore dollar nominal effective exchange rate.

That means the Singapore dollar is allowed to appreciate against a basket of currencies within an undisclosed band. The width of the band and the level at which it is centered are unchanged, the central bank said.

Growth in the Singapore economy is likely to remain above trend in the quarters ahead.

Monetary Authority of Singapore

MAS manages monetary policy through setting the exchange rate, rather than interest rates. It adjusts the band through three levers: the slope, the mid-point and the width.

The Singapore dollar rose around 0.2% to a three-week high of 1.349 per U.S. dollar following the central bank’s move.

Eleven out of 13 economists polled by Reuters had expected the Singapore central bank to keep its policy unchanged.

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MAS said adjustment to the currency band “will ensure price stability over the medium term while recognising the risks to the economic recovery.”

It expects core inflation — which strips out accommodation and private transport — to rise between 1% to 2% next year in the medium term. Core inflation is MAS’ preferred price gauge.

“Growth in the Singapore economy is likely to remain above trend in the quarters ahead. Barring a resurgence of the virus globally or a setback in the pace of economic reopening, output should return to around its potential in 2022,” said the central bank.

“At the same time, external and domestic cost pressures are accumulating, reflecting both normalising demand as well as tight supply conditions,” it added.

Growth slightly missing estimates

Singapore’s economy grew 6.5% in the third quarter of 2021 compared to a year ago, official advance estimates showed on Thursday.

Analysts polled by Reuters had expected the Singapore economy to grow 6.6% year-on-year in the third quarter.

On a quarter-on-quarter seasonally adjusted basis, the economy expanded by 0.8%, Singapore’s Ministry for Trade and Industry said in a statement.

This is breaking news. Please check back for updates.

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CDC panel unanimously endorses Moderna and J&J Covid boosters, sending to director for final approval

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An influential Centers for Disease Control and Prevention advisory committee on Thursday unanimously recommended boosters of Moderna and Johnson & Johnson‘s Covid-19 vaccines, sending it to CDC Director Dr. Rochelle Walensky for final approval.

The agency’s Advisory Committee on Immunization Practices meeting recommended the Moderna booster for elderly people and at-risk adults six months after they complete their primary series of shots, bringing it in line with the distribution plan for Pfizer and BioNTech’s booster. It also endorsed J&J boosters for everyone 18 and older who received the initial shot at least two months ago.

More than 39 million Moderna recipients and nearly 13 million J&J recipients may be eligible for a booster dose as early as Friday, according to a slide presented by the CDC during the meeting.

Booster shots have been a contentious topic for scientists — in and outside the government — especially as many people in the U.S. and other parts of the world have yet to receive even one dose of a vaccine. The World Health Organization has pleaded with wealthy countries to hold off on distributing boosters, and some scientists say they aren’t convinced most Americans need them right now.

Before the vote, some members said they were concerned about the lack of data on boosters, while others asked the agency if they could simplify the messaging on who is eligible to get the extra doses.

“These recommendations are in some ways asking the individual to decide on their underlying risk and medical condition, because the reality is they’re not consulting with their physicians in all cases; they’re just going out and getting booster doses,” said member Dr. Jason Goldman.

“And I worry that if it’s too prescriptive or if it’s too wordy, we are either going to miss the ability to give people boosters who really should be getting it, or people are just doing it anyway and not necessarily having the support of the language to do it,” he added.

The Biden administration hopes giving the U.S. population additional doses will ensure long-term and durable protection against severe disease, hospitalization and death as the fast-moving delta variant continues to spread and change. A newly-discovered mutation of delta is being investigated in the U.K. amid worries that it could make the virus even more transmissible and undermine Covid-19 vaccines further.

Walensky addressed the committee before the vote Thursday, thanking them for their work and noting that the data around the virus and vaccines is constantly evolving.

“None of us individually can exactly predict what may happen next, and none of us individually can know exactly what to do,” she told the panel. “Please know that I am here listening and eager to learn from your perspective.”

Moderna recipients can get a booster at half the dosage of the original two shots.

The effectiveness of the two-dose vaccine against infection wanes over time, according to data the CDC posted before the committee’s meeting. Some studies show small declines in protection against hospitalization too, mainly for those over the age of 65, the data showed.

The CDC said the data has shortcomings, noting that some recipients may have been engaging in riskier activities after getting vaccinated.

CDC official Dr. Tom Shimabukuro presented data that showed there is an increased risk of rare inflammatory heart conditions, myocarditis and pericarditis, following vaccination with the Moderna or Pfizer vaccine, particularly following the second dose.

The rate of the rare heart conditions within seven days of vaccination was 10 cases per million doses, Shimabukuro said, citing a study of U.S. military members. It often occurred in young men and usually after the second dose, he said. Most patients reported feeling fully recovered within six weeks.

The surveillance is “ongoing,” he said.

Dr. Macaya Douoguih, head of clinical development and medical affairs for J&J’s vaccines division Janssen, said there is no data to suggest people are at increased risk of a rare, but serious, blood clot condition after receiving a second dose. She presented data from the U.K. on second doses of AstraZeneca’s vaccine, which uses a similar platform to J&J’s.

However, one expert on the committee noted that U.K. authorities began to curb the use of AstraZeneca’s vaccine in young women earlier this year because of the risk of rare blood clots, meaning it may be difficult to determine the impact of a second J&J dose based on that data.

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Intel (INTC) earnings Q3 2021

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Pat Gelsinger

Horacio Villalobos | Corbis News | Getty Images

Intel shares fell more than 6% on Thursday on a weaker-than-expected sales report and after the company blamed an industry-wide component shortage for its PC chip business shrinking 2% during the quarter.

Intel CFO George Davis announced plans to retire in May 2022.

Here’s how Intel did versus Refinitiv estimates:

  • EPS: $1.71, adjusted, versus $1.11 expected.
  • Revenue: $18.1 billion, adjusted, versus $18.24 billion expected.

Intel said it expected around $18.3 billion in adjusted sales in the fourth quarter, compared with analysts’ expectations of $18.24 billion.

Intel’s largest business, its client computing group, was down 2% year-over-year to $9.7 billion. That includes PC chip revenue. Intel said that PC sales were down primarily due to lower laptop volumes because of the chip shortage, and that its customers may have lacked other parts it needed to finish assembling computers.

“We call it match sets, where we may have the CPU, but you don’t have the LCD, or you don’t have the Wi-Fi. Data centers are particularly struggling with some of the power chips and some of the networking or ethernet chips,” Intel CEO Pat Gelsinger said in an interview with CNBC.

Gelsinger said he didn’t expect the semiconductor shortage to end until 2023.

“We’re in the worst of it now, every quarter next year we’ll get incrementally better, but they’re not going to have supply-demand balance until 2023,” Gelsinger said.

PC sales have been strong for the last year as consumers around the world needed new laptops and desktops to work from home. But the pandemic-related PC surge may be coming to a close as sales slow, according to analysts.

Gelsinger said he believed that the increase in PC sales was likely a trend that will continue. “We do think the PC business is now just structurally larger, a million units-a-day kind of business,” Gelsinger said.

Intel’s Data Center Group, which sells processors and other silicon for data centers, produced $6.5 billion in sales, up 10% year-over-year, but fell short of analyst estimates of $6.66 billion. Intel said that the annual increase was due to increased demand for on-premise servers for corporations and governments.

Intel is in a period of massive capital expenditure as it spends $20 billion this year, including on a new semiconductor factory in Arizona. Investors are closely watching Intel’s gross margin as the company spends on ramping up new production lines to catch rivals in semiconductor performance.

The company plans to shift its business model to become a manufacturer, or foundry, for other chip designers, in addition to continuing to design and manufacture its own processors.

The quest to become a foundry is an expensive initiative that could have its costs defrayed by government support in the U.S. and Europe, but could be extremely lucrative if the semiconductor industry doubles in size over the next 10 years, as Intel has predicted.

During the quarter, Intel signed up the U.S. government as a foundry customer, Intel said.

Intel’s gross margin during the quarter was 56%, up 2.9% year-over-year. It also saw growth in its internet of things group, which increased 54% to $1 billion, and Mobileye, its automotive chip subsidiary, which grew 39% to $326 million.

Intel is likely to provide more details on how it sees the transition to becoming a foundry and its views on its technology roadmap next month at its analyst day, which the company moved to next February on Thursday. It was previously scheduled for November.

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Fed to ban policymakers from owning individual stocks, restrict trading following controversy

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The Marriner S. Eccles Federal Reserve building in Washington, D.C., on Friday, Sept. 17, 2021.

Stefani Reynolds | Bloomberg | Getty Images

Responding to a growing controversy over investing practices, the Federal Reserve on Thursday announced a wide-ranging ban on officials owning individual stocks and limits on other activities as well.

The ban includes top policymakers such as those who sit on the Federal Open Market Committee, along with senior staff. Future investments will have to be confined to diversified assets such as mutual funds.

Fed officials can no longer have holdings in shares of particular companies, nor can they invest in individual bonds, hold agency securities or derivative contracts. The new rules replace existing regulations that, while somewhat restrictive, still allowed members to buy and sell stocks.

“These tough new rules raise the bar high in order to assure the public we serve that all of our senior officials maintain a single-minded focus on the public mission of the Federal Reserve,” Fed Chair Jerome Powell said in a statement.

Under the new rules, the officials will have to provide 45 days’ notice in advance of buying or selling any securities that are still allowed. They also will be required to hold the securities for at least a year, and cannot buy or sell funds during “heightened financial market stress,” a news release announcing the moves said.

The rules come on the heels of disclosures that multiple Fed officials had been buying and selling stocks at a time when the central bank’s policies were designed to improve market functioning, particularly during the Covid crisis.

Regional presidents Robert Kaplan of Dallas and Eric Rosengren of Boston both resigned shortly after disclosures that they had engaged in trading of individual securities in 2020. In Kaplan’s case, the moves occurred in large-dollar allotments.

Vice Chairman Richard Clarida also had been featured in the reports. Powell also sold securities last year, though they were exchange-traded funds that tracked market indexes.

“It’s probably a wise move, because the fact is that distinguishing between genuine insider trading and just ordinary trades that look like they might be taking advantage of insider information is fraught with problems,” said George Selgin, director emeritus of the of the Center for Monetary and Financial Alternatives at the Cato Institute.

The announcement stated that reserve bank presidents will have to disclose transactions within 30 days, a requirement already in place for FOMC members and senior staff. The new rules will be incorporated formally “over the month months,” the release said. Current holdings will have to be divested, though no timetable has been announced.

“The optics are bad,” Selgin said of the previous Fed rules. “They needed a rule like this. I don’t think we need to feel sorry for them. They’ll do well enough with this restraint in place.”

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