Germany's Schaeuble sees no deflation threat in Europe

Recent turmoil in emerging markets will hit export-oriented European economies but there are no signs the bloc that shares the single currency is headed towards deflation, German Finance Minister Wolfgang Schaeuble said.

Speaking to Reuters as part of a series of interviews with top policymakers across the euro zone, Schaeuble signalled a readiness to help emerging market countries that have seen their currencies sink to multi-year lows in past weeks as part of a broad market sell-off.

"We will help the emerging markets, within the limits of our possibilities, to solve their problems just as they stood by us in past years," Schaeuble said, pointing to a meeting of G20 finance ministers in Australia later this month.

"The difficult situation in some emerging markets affects us of course. We are all dependent on exports, Germany more than other countries," he added.

But Schaeuble, who started his second term as finance minister in December, said he agreed with European Central Bank President Mario Draghi that falling prices were not a danger for the euro zone, despite a drop in the bloc's inflation rate to 0.7 percent last month and warnings from the International Monetary Fund that deflation is a potential risk.

"There is no deflation danger in Europe," Schaeuble said.

"We understand deflation as a reluctance to spend in the anticipation of falling prices. And there are no signs of this."

In a wide-ranging interview, Schaeuble also played down the risks of last week's ruling by Germany's Constitutional Court on Draghi's bond-buying scheme. 

The court decided to refer complaints against the so-called Outright Monetary Transactions (OMT) programme to the European Court of Justice, but it also voiced concerns that the ECB went beyond its mandate with the scheme.

Although the OMT plan has never been used, it is widely credited with restoring confidence in the euro zone after years of crisis that had threatened to tear the 18-member bloc apart.

Some experts, including the head of Germany's ZEW think tank Clemens Fuest, have said the court decision severely blunts the OMT programme.

Schaeuble dismissed those concerns, saying the details of the OMT were secondary to the broad message sent by the ECB and European governments that they would not let the euro zone break apart.

"I think the return of financial market confidence in the stability of the euro has been due not only, not even primarily, to the ECB's (OMT) announcement," Schaeuble said.

"When leaders of government on the one hand, and the central bank on the other, say they will do what is necessary, then financial markets need not worry."

Schaeuble also touched on a referendum in Switzerland at the weekend in which voters approved new limits to immigration from the European Union, saying fears about the free movement of people in Europe needed to be taken seriously.

But he played down the risks of a strong performance by populist, anti-immigration and eurosceptic parties in European Parliament elections in May, saying this would only push bigger mainstream parties to work more closely together.

"If we have stronger eurosceptic voices in the next European Parliament, then it will raise the pressure on everyone else to commit even more strongly to European integration, to react to this result and make Europe more efficient," he said.

Source: Reuters

Barclays to cut 12,000 jobs, pays bigger bonuses

Barclays said it would axe up to 12,000 jobs this year even as it raised bonuses for investment bankers, prompting fury among politicians and unions who said it had not learned the lessons of the financial crisis.

Britain's third-biggest bank said up to 9 percent of employees could go, including 7,000 in Britain, as it tries to lower costs. The cuts are not concentrated in any one business area.

It said it paid 2.4 billion pounds ($3.9 billion) in incentive awards last year, raising bonuses at the investment bank by 13 percent despite a slump in its profits. The average bonus for the investment bank's 26,200 staff was 60,100 pounds.

Critics of the bonus hike said it showed Britain's biggest banks were still failing to heed the lessons of a financial crisis caused by dangerous risk taking and excessive pay.

"Today Barclays has stuck two fingers up to hard-pressed families across Britain by announcing another multi-billion pound bonus pool," said Frances O’Grady, General Secretary of the Trades Union Congress.

Barclays Chief Executive Anthony Jenkins, who took the helm in 2012 after an interest rate rigging scandal, has vowed to improve culture and standards at the bank while also reducing risk and strengthening the balance sheet.

But its investment bank profits slumped 37 percent last year to 2.5 billion pounds and analysts voiced concern about whether Jenkins can reach his target of a return on equity above 11.5 percent by 2016.

Getting costs down looked more challenging than expected, they said, while increased regulatory pressure and a grim outlook for fixed-income revenue made the target on returns look difficult to achieve.

Barclays shares were down 5 percent at 261 pence by 1255 GMT, underperforming a 0.7 percent rise by an index of European banks <.SX7P>.


"WE NEED THE BEST PEOPLE"

The higher bonuses lifted the compensation-to-income ratio in the investment bank to 43.2 percent last year from 40 percent in 2012. Jenkins, who gave up his own bonus for 2013, said he still aimed for a ratio in the "mid-30s" across the bank.

He defended the bigger bonus pot, saying the bank had to recruit the best staff to compete with global rivals and continued to have "constructive" talks with investors over pay.

Source: Reuters

In cautious testimony, Fed's Yellen says labor recovery far from complete

New Federal Reserve Chair Janet Yellen said on Tuesday the labor market recovery is "far from complete" despite a drop in unemployment, yet she said the U.S. central bank expects to continue trimming policy stimulus in measured steps due to broader improvements in the economy.

In her first public comments as Fed chief, Yellen, giving a balanced testimony to a House committee, nodded to the recent volatility in global financial markets, but said at this stage it does "not pose a substantial risk to the U.S. economic outlook."

She emphasized continuity in the Fed's approach to policy, saying she strongly supports the approach driven by her predecessor, Ben Bernanke.

While the unemployment rate has fallen by 1.5 percentage points since the latest bond-buying program began in September of 2012, at 6.6 percent the rate remains "well above levels" the Fed sees as consistent with maximum sustainable employment, Yellen said.

"(T)he recovery in the labor market is far from complete," she said according to prepared remarks to the Republican-controlled House Financial Services Committee.

Yellen, in just her second week on the job, cited the

"unusually large fraction" of jobless Americans who have been out of work for more than six months, and the "very high" number of part-time workers who would prefer full-time jobs.

"These observations underscore the importance of considering more than the unemployment rate when evaluating the condition of the U.S. labor market," she said.

More than five years after the recession ended, the Fed has embarked on perhaps its most difficult policy shift as it tries to back away from flooding the financial system with ultra-easy money while at the same time convince investors that interest rates will stay near zero well into next year.

Encouraged by momentum in the economy last year, the Fed has trimmed asset purchases twice since December; it now buys $65 billion in Treasuries and mortgage bonds each month, to keep borrowing costs low and encourage investment and hiring.

Yellen said the Fed will "likely reduce the pace of asset purchases in further measured steps at future meetings" if economic data broadly supports policymakers' expectation of improved labor markets and a rise in inflation.

She said the purchases are not on a pre-set course, repeating the Fed's policy line.

A decidedly mixed run of data has raised questions over whether the U.S. economy can sustain the strength it showed in the second half of last year. Unemployment has dropped to 6.6 percent, from 7.9 percent a year ago, yet the fewer than 200,000 new jobs created over the past two months is insufficient to sustain last year's economic growth.

The two months of weak U.S. jobs growth and a recent selloff in emerging markets that also hit Wall Street could complicate things for the Fed.

Yellen said the Fed was "watching closely the recent volatility" adding: "Our sense is that at this stage these developments do not pose a substantial risk to the U.S. economic outlook. We will, of course, continue to monitor the situation."

Noting inflation remains below the Fed's 2 percent target, Yellen said "the recent softness reflects factors that seem likely to prove transitory, including falling prices for crude oil and declines in non-oil import prices."

The Fed will not let inflation run "persistently above or below" its 2-percent goal, she added.

Long concerned with the pain the 2007-2009 recession caused American workers, Yellen is sometimes seen as more dovish than Bernanke and thus willing to do more to stimulate the economy even if inflation could eventually ramp up as a result.

Yet Yellen appeared to want to reinforce the Fed's determination to halt the money-printing presses later this year while ensuring investors that a rise in interest rates remains a long way off.

Her testimony was the Fed's semiannual monetary policy report. It was released ahead of the 10 a.m. (1500 GMT) hearing of the committee.

Source: Reuters

Asian Equity Markets Brief

Source: WSJ

• LASTCHG%CHG
• Asia Dow2888.24+24.270.85%
• Nikkei 22514718.34+255.931.77%
• Hang Seng21848.31+269.051.25%
• Shanghai2093.58+7.510.36%
• Sensex20400.94+66.670.33%
• Singapore3037.59+20.390.68%

China: Deposit insurance key to further financial reforms

Preparations for a deposit insurance system have been finished, said China's central bank over the weekend, in the latest signal that the world's second-largest economy is ready to further overhaul its financial system.

"Over recent years, the People's Bank of China (PBOC) has worked with relevant departments to conduct in-depth research and repeated analysis on a deposit insurance system," the PBOC said in a quarterly report on its website. "All preparations are now basically ready for establishing a deposit insurance system."

Similar language was seen in the PBOC's annual work conference communique in January. Those words were markedly different from earlier quarterlies, where the PBOC said it would "advance the construction of a deposit insurance system."

China is one of several among the Group of Twenty countries that have yet to adopt such a scheme, even after the State Council, China's cabinet, said as early as December 1993 that it would "establish deposit insurance funds to safeguard public interests."

Expectations were renewed in November 2013 when the scheme was promulgated as part of an ambitious reform plan in a key document issued by the Communist Party of China.

Deposit insurance is a widely implemented measure to protect bank depositors, in full or in part, from losses caused by a bank's inability to pay its debts when due.

The insurance adds a layer to the financial system safety net and promotes stability, as its absence usually implies a compulsory role for the state in dealing with bank runs.

Without deposit insurance, the state -- taxpayers' money, in fact -- is at stake in guaranteeing bank savings. In other words, banks enjoy protection that others do not have, contrary to the market-economy principle.

China has one of the highest savings rates in the world, and at a time of straining liquidity as the U.S. Federal Reserve looks poised to continue scaling back its quantitative easing, it's high on the Chinese government agenda to strengthen confidence in its financial system facing more default risks.

Deposit insurance could help to foster a proper relationship between government and market, a principle vigorously campaigned for by the Chinese government of late.

Studies also have shown that deposit insurance helps to enhance smaller banks' position, leveling the playing field for China's fragmented financial system, where megabanks traditionally enjoy greater credibility with depositors.

Source: Xinhua

China leads transnational wildlife crime bust

 A China-led campaign against international wildlife crimes has inflicted a stunning blow on poaching and smuggling, in yet another showcase of China's firm stance on illegal trafficking of rare animals and products.

The operation, code-named Cobra II, cracked over 350 cases involving more than 400 suspects, and captured more than three tonnes of ivory and ivory products, over 1,000 hides and a number of other wildlife products, the China Endangered Species Import and Export Management Office said on Monday.

The global crackdown was co-organized by China, the United States, South Africa, the Lusaka Agreement Task Force, the ASEAN Wildlife Enforcement Network, and the South Asia Wildlife Enforcement Network.

A total of 28 countries participated between Dec. 30, 2013 and Jan. 26, 2014.

The campaign was also supported by the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES), the World Customs Organization, and Interpol.

IVORY GANG BUSTED

During the month-long operation, China collaborated with Kenya in arresting a Chinese man suspected of being an ivory smuggler and head of an ivory trafficking group.

The case was brought to light after customs staff in Taoxian Airport in Shenyang, capital of Liaoning Province in northeast China, seized luggage containing 1,226 ivory beads weighing 8.77 kg.

Further investigation tracked a main suspect surnamed Xue, who hid in Kenya and controlled couriers to smuggle ivory into China. He allegedly built a crime ring engaged in purchase, transport and sales of ivory products.

Fighting illegal trade of wildlife usually demands cooperation between various countries and departments, but it's very difficult for cross-border arrests as coordination is not yet fully established.

Thanks to Cobra II, however, the Chinese government sent a team to Kenya to work with local police to capture Xue.

He was caught in Nairobi on Jan. 17 by Kenyan authorities, and extradited to China the next day, marking the first time China has arrested a wildlife crime suspect overseas.

Another two suspects of the group, surnamed Zheng and Li, were netted on Jan. 16 and 17 when they were entering China.

DETERRENCE OF WILDLIFE CRIMES

"The unprecedented intercontinental cooperation will deter global ivory trafficking, and demonstrates China's determination to deal with wildlife crime," said Zhou Yafei, a senior official at the endangered species office.

Chinese authorities, including forestry, customs, police, judiciary and quarantine departments, allocated more than 100,000 staff to the operation, and uncovered over 200 cases involving more than 250 suspects.

The country sent enforcement staff to Kenya for the first time to arrest ivory trafficking suspects and host lectures on wildlife protection.

China was not only fully committed to the operation's planning and implementation, but also played a leading role in Cobra II, according to Wan Ziming, director of the law enforcement department under the endangered species office.

"Cobra II will serve as a valuable model for the international community in future operations against transnational crimes," Wan said.

The operation showed what can be achieved when law enforcement authorities work together in a coordinated manner, said John Scanlon, CITES secretary-general.

"It also serves to highlight that intelligence-led operations are essential in the fight against transnational organized wildlife crime," Scanlon added.

DEDICATION TO WILDLIFE PROTECTION

This is not the first time that China has taken the initiative in combatting wildlife crimes.

The country called for an international crackdown on the issue in 2012, and initiated the first Operation Cobra, involving 22 countries, in early 2013.

China has rich wildlife resources, holding around 6,500 vertebrate species, about 10 percent of the world's total.

Over 470 terrestrial vertebrates are indigenous to China, including the giant panda, golden monkey, South China tiger and Chinese alligator.

However, in some parts of the country the tradition of eating exotic animals as a delicacy persists. Some rare species are also used in traditional medicine.

To protect biological diversity, China has a long list of rare and endangered species that receive judicial protection, a complete legal framework in place and many laws and regulations at central and local levels.

Last month, the Chinese government destroyed 6.1 tonnes of confiscated ivory to show its determination to discourage illegal ivory trade, protect wildlife and raise public awareness.

Raw tusks and carved ivory pieces, which the government had seized over the years, were dumped into two crushers and ground to rubble and ash at a ceremony in Dongguan City of south China's Guangdong Province.

Zhang Jianlong, deputy director of the State Forestry Administration, said that China will continue to cooperate with other countries to strengthen wildlife protection and fully fulfil its international obligations.

Sex trade crackdown reveals red China's blue headache

A tough crackdown on the illegal but highly lucrative sex trade in China's "capital of sex" has once again thrown a spotlight on this controversial issue.

Late on Sunday, more than 6,700 police officers swooped on saunas, hotels, massage parlors and karaoke bars suspected of harboring prostitutes in the southern Chinese city of Dongguan, a manufacturing center and a booming entertainment hub infamous for its rampant sex industry.

It came hours after a China Central Television (CCTV) program revealed that a dozen hotels in Dongguan were offering sex services. Video clips showed that the daring sex trade even included a parade of prostitutes wearing revealing clothes to demonstrate their bodies in front of prospective clients.

By Monday morning, 12 entertainment venues involved in prostitution and other sexual services had been closed and 67 people had been placed under investigation, according to the Dongguan municipal public security bureau.

The latest crackdown immediately prompted diverse reactions ranging from sympathies for the sex workers to support for the police in a country where prostitution has been outlawed over the past six decades.

PERSISTENT ISSUE

This is not the first time that Dongguan, a city with a population of over 8 million known for its lavish casinos and bath houses, as well as its back-street brothels, has been the subject of a police campaign designed to smash the sex trade.

Crackdowns like this have been seen at least three times in Dongguan over the past decade, said Dr. Ding Yu, a lecturer with the sociology department at Sun Yat-sen University. Ding has been studying the development of China's sex industry and the lives of those it employs.

Many question whether entrenched sex businesses in the city can ever truly be stamped out thanks to a local "protective umbrella."

"It is sometimes hard to decide whether pornographic activities are violating the law, so the police always have a major say in sex trade crackdowns," Ding said, but stopped short of saying Dongguan police have been protecting sex businesses.

Footage shot by CCTV reporters with a hidden camera showed that hotel managers did not seem in the least bit worried about being found offering sex services. They told the reporter that no police officer would come. "Otherwise, we would have been out of business a long time ago," one manager said.

Although no evidence has been provided, it is widely speculated by the public that local police offer protection for Dongguan's rampant prostitution, a dynamic which could stimulate local consumption and bring job opportunities.

Media reports put the number of people working in the sex industry in Dongguan at 300,000 at least, although Xinhua has been unable to verify that number.

In the video clips, a CCTV reporter called police twice to blow the whistle on prostitution in two hotels, but no police showed up.

Officials in Dongguan have denied that the city's prosperity is a result of its underground sex industry. In 2011, Lu Weiqi, vice head of the Dongguan municipal security bureau, told media that "the thriving hotel business in the city does not necessarily imply a prospering sex industry."

As of Monday afternoon, eight police officers including the director of the police station which failed to immediately respond to the CCTV informants' reports of illegal activities, have been suspended, the city's municipal public security bureau said in a statement.

It also suggested the local industrial and commercial bureau revoke the licenses of the 12 entertainment venues exposed to be involved in selling sex.

The public security department of Guangdong Province, home to Dongguan, has promised a sweeping crackdown on pornography and gambling sites across the province.

Local police who provide protection to the sex industry will be severely punished, according to the Guangdong provincial government.

SYMPATHY

Prostitution has been outlawed in China since the Communist Party of China took power in 1949.

But a few Chinese activists and scholars believe that the world's oldest profession should be legalized in the country, arguing that it would increase government tax revenue and better protect the vulnerable and currently "invisible" prostitutes from sexually transmitted diseases and violence.

While the topic remains by and large taboo out of morality concerns, the latest crackdown in Dongguan has prompted sharply divided opinions among the Chinese.

Some supported the campaign, saying it would make China more beautiful and civilized. But sympathies for Dongguan's sex workers also poured in on the country's Twitter-style microblogging service Sina Weibo, where "Dongguan sex trade crackdown" is among the most re-tweeted topics as of Monday afternoon.

"It is not those who sell their bodies that should be condemned," said a user with the screen name "Sophie203." "It is the parasites who make money by supporting the illegal business."

Netizen "Chongshangwuqing" said he believed that the campaign will result in a more miserable life for sex workers, and predicted a slump in the city's economy.

A large number of Weibo users are also criticizing CCTV for airing the program without blurring the sex workers' faces, accusing it of violating the prostitutes' rights.

"Some netizens equate freedom of sex to freedom of the sex market," said Professor Lyu Xinyu with the Department of Journalism at Fudan University. "That's why so many of them are sympathizing with the sex workers in Dongguan and supporting the legalization of prostitution."

"But as long as there is a sex trade, prostitutes are always the victims," he added.

WSJ: Latinos Lead U.S. Smartphone Use

        The Wall Street Journal reports,"latinos are adopting smartphones faster than other U.S. ethnic and racial groups, Nielsen says in a new report".

"The research firm says 72% of Latinos over 18 own smartphones, nearly 10 percentage points higher than the national average. Nearly half of Latinos, 49%, said they planned to upgrade their smartphones in the next six months".

The Nielsen report, released Monday, also documented the shift to accessing the Internet via mobile devices. According to Nielsen, Americans last year spent nine hours, 52 minutes more online on their smartphones each month than in 2012, and an hour and 54 minutes a month less online on computers than in 2012. Americans spend more time on smartphones than any medium other than television, said Nielsen Executive Vice President Megan Clarken.

Traditional TV has also lost audience to “time-shifted” TV such as recorded programs and online rebroadcasts. Americans are watching 2 hours and 44 minutes less live TV per month than in 2012, and an hour and 42 minutes more time-shifted TV since then, Nielsen says.

The statistics are included in Nielsen’s first Digital Consumer report, which bundles data from a dozen studies last year.

On average, Americans now own four types of digital devices.

A majority of households now own high-definition televisions, 83%, Internet-connected computers, 80%, and smartphones, 65%. Digital cable is now in 54% of homes, DVRs in 49%, and game consoles in 46%. “Smart” TVs have been slower to catch on, and are found in 16% of homes, Nielsen found.

The report offered details on how various groups use social media. For example, among social media users, 48% of moms with kids under 13 use social media in the car, compared with 31% of all social media users. Adults ages 25 to 34 who use social media are more likely to access social networks around the restaurant table, at 44%, vs. 31% of all social media users.

Source:WSJ Digits

WSJ: Fed Nominee Fischer to Sell Financial Firms Holdings if Confirmed

         The Wall Street Journal reports,"Stanley Fischer, President Barack Obama’s pick for Federal Reserve Vice Chairman, will sell his holdings of several financial firms to avoid conflicts of interest if confirmed by the Senate, he said in a letter released by the U.S. Office of Government Ethics".

The firms include asset manager BlackRock Inc. and American Express Co. He would also divest his interests in the Citigroup Employees Fund of Funds I, LP. His wife would sell holdings in Warren Buffett’s Berkshire Hathaway Inc., General Electric Co., American Express and MasterCard Inc.

“I understand that as an appointee I am required to sign the Ethics Pledge and that I will be bound by the requirements and restrictions therein in addition to the commitments I have made in this and any other ethics agreements,” Mr. Fischer wrote in the letter to Fed Assistant General Counsel Cary Williams.

The letter was first reported Thursday by Bloomberg News. Senators of both parties expect Mr. Fischer to be confirmed to the Fed’s No. 2 post. Mr. Fischer’s nomination comes at a time when the Fed starting to wind down its bond-buying program, which is aimed at spurring stronger economic growth.

Mr. Fischer served for eight years as governor of Israel’s central bank. He was vice chairman of Citigroup between 2002 and 2005 and spent seven years as a First Deputy Managing Director of the International Monetary Fund.

He is expected to have a strong influence in the direction of policy, but also to work closely with new Fed Chairwoman Janet Yellen.

WSJ: Forget the Unemployment Rate, Let’s Talk About the Employment Rate by Jonathan House

      The Wall Street Journal reports,"the unemployment rate gets all the press, but the employment rate has been improving lately too.

The number of Americans working as a proportion of the overall populace — called the employment-population ratio — rose to 58.8% in January. That level was last consistently seen in 2009".

"Still, the measure remains well below its prerecession levels in the 60s. It bottomed out at 58.2% in late 2010, a fact many economists highlight as evidence of a lack of progress in the jobs recovery despite a falling unemployment rate".

"The nation’s unemployment rate fell to 6.6% in January, a much more sizable improvement from its 10% peak in late 2009. But some of the same factors that many economists believe are overstating the improvement of the unemployment rate are also understating the improvement in the employment-population ratio.

The unemployment rate is falling so quickly in part because of many people dropping out of the labor force. The portion of Americans who are working or looking for work has been on a downward trajectory for many years, a process that gained momentum during the recession and which puts downward pressure on ratios of both employment and unemployment".

"Gary Burtless, an economist at the Brookings Institution, calculates that over half of this decline is the result of an aging population. That means it won’t be reversed as the economy recovers and lures discouraged job-seekers back into the workforce.

Mr. Burtless said January’s jobs data is new evidence the economy is slowly returning to full employment, albeit at a lower level. “We are slowly closing the gap,” he said".

US Equity Market Indices at Close

Source: Schwab

U.S. equities finished slightly higher and near the flatline to start the week, as investors appeared to sit on the fence ahead of Fed Chairwoman Janet Yellen's first monetary policy testimony tomorrowon Capitol Hill. Meanwhile, Treasuries finished modestly higher, with the U.S. economic calendar void of any major releases today. In equity news, shares of Dow member McDonald's suffered after it posted disappointing U.S. January same-store sales, despite better-than-expected results from its international segments that aided in the fast-food chain topping analysts' overall estimates, while Hasbro fell short of the Street's expectations, but raised its quarterly dividend. Gold was higher, while crude oil prices were mixed and the U.S. dollar was flat.

U.S. INDICES			Value				Change
	DJIA			15801.79				7.71
	Nasdaq Comp.			4148.17				22.31
	S&P 500			1799.84				2.82
	NYSE Advancing Issues						1800
	NYSE Declining Issues							1299
	NYSE Trading Volume							3.3 bln
	NASDAQ Advancing Issues							1496
	NASDAQ Declining Issues							1099
	NASDAQ Trading Volume							1.8 bln

Consumers Expect Inflation to Accelerate, NY Fed Survey Finds

    The Wall Street Journal reports, "a survey released by the Federal Reserve Bank of New York Monday found that in January, American households were continuing to expect inflation to increase from current levels, amid some rising signs of optimism about the job market".

In the poll of consumer expectations, the New York Fed found that respondents said they expected to see inflation readings at 3% one year ahead, a slight slowdown from the 3.14% reported in December.

The finding is notable because it shows the public continues to expect inflation to rise from current levels. The economy has been weathering an extended period of weak price gains economists and policymakers alike have struggled to explain. In December, the Fed’s preferred price gauge, the personal consumption expenditures price index, was up by 1.1% compared to the same month a year ago.

Fed officials want inflation at 2%, and a good deal of their current aggressive policy action is aimed at goosing up inflation to the desired level. Some central bankers fear that persistently weak inflation readings point to underlying weakness in the job market, as workers are unable to demand higher wages.

Fed officials, like most economists, expect inflation to rise over time. A major factor buttressing that forecast is the relative stability of inflation expectations. The New York Fed report suggests that consumers do in fact view the current nadir in inflation readings to be temporary.

The New York Fed said that consumers in their survey are expecting to be paid more over the coming year, and reckon if they lost their job, it’s getting easier to find a new one. The earnings growth expectation in January was 2.4%, from 1.8% the month before. The probability of finding a new job over the next three months if one were to lose one’s today increased to 49%, from 46% in December.

On the home price front, the survey found that households expect to see a 4.54% increase in home prices, a reading consistent with what’s been seen over recent months.

Higher Education Gets Another Online Challenger, as WEF Launches Its Own Web Courses

On Jan. 22, the World Economic Forum announced the launch of its Forum Academy at its annual meeting in Davos, Switzerland. The initiative, started in partnership with edX as the platform provider, will begin in May with the opening course, Global Technology Leadership. According to WEF Chief Information Officer Jeremy Jurgens, who's leading the initiative, the idea is to put the WEF's huge network of industry leaders and opinion-makers at the disposal of a global audience.

Other courses, with titles such as Changing Landscape in the Arab World and New Vision for Agriculture, will be launched in the spring and fall, at a cost of approximately 200 euros per course. Courses on various other issues and industries are set to follow. While some platforms such as Udacity and Codecademy focus on coding and computer science tutorials, the Forum Academy will have a broader selection of courses, similar to Coursera, edX or the Khan Academy, directed toward professionals and lifelong learners.

The WEF's launch of its academy is the latest in a number of increasingly popular online platforms that are moving to compete with traditional higher education institutions at a time when the cost of higher education in the United States is rapidly rising. Yearly tuition costs often reach $40,000 at American universities, and in the past few years the country's student loan bubble has increased to about $1 trillion.

This bubble was one of the topics discussed at this year's Open Forum session titled "Higher Education: Investment or Waste?," which took place parallel to the WEF in Davos. With the cost of a college degree now cripplingly expensive for many, students and parents are reassessing the value of higher education and looking for possible alternatives.

"Our education has not changed in hundreds of years," said Anant Agarwal, president of edX, about the current Western model. "Great papers have been written [about it], but we really have not implemented any of the learning or ideas."

Most panel participants agreed that the higher education industry has suffered from a lack of competitive alternatives, especially in the United States. While countries such as Switzerland and Germany have a strong apprenticeship culture, the U.S. largely lacks this alternative to a college education.

"Apprenticeship is still a very bad word in the Anglo-Saxon culture," Angel Gurría, secretary-general of the Organisation for Economic Cooperation and Development, told the audience. But David Callaway, editor-in-chief of USA Today and the panel's moderator, said that is already changing. "The apprenticeship ... is going to continue to grow as the demand for specific skills in these areas grows," he said.

While apprenticeships are one alternative to traditional schooling, online courses are potentially transformative for the higher education industry. In fact, the arrival of free online courses has already forced universities to re-evaluate their own models, said Zach Sims, co-founder and CEO of the online coding-education platform Codecademy. "Now that [universities] are facing competition from the free market and from companies like ours, [they will] become better and will provide more credible alternatives to people," Sims said at the panel talk.

Built as a platform "for anyone to learn the skills they need in order to find a job online," according to Sims, Codecademy has gained millions of users since its founding in 2011, with more than 70 percent of them outside of the U.S. Thus, the WEF is attempting to push into a market already beginning to boom.

The rate at which universities have picked up online education has surprised Daphne Koller, a Stanford professor and the co-founder of the online education platform Coursera. "There is a sense ... of urgency and realization that we are at the cusp of a huge transformation," she said. With a network of more than 100 universities around the world, Coursera now offers about 600 courses ranging from physics and computer science to the humanities and arts.

Meanwhile, edX not only offers courses online but provides its open courses platform, OpenedX, for any organization to license a course, after receiving edX's and its course partner's approval. Agarwal, who is also a professor at MIT, said there are about 23 "blended" classes at MIT right now, noting, "In my own course, the students use the Khan-style videos that I created and watch them before they go to class." This gives Agarwal more time to interact directly with the students and answer their questions.

In spite of online courses' huge potential for education, their openness, which could be so transformative, can be a setback. "We've looked at the current learning models, and we've seen very low completion rates," Jurgens said. "Success [for Forum Academy] would be that the majority of the students who sign up for the course take it to the end. The average rates [of completion for online courses] vary between 3 to 7 percent." The WEF's experiment includes a registration fee that serves as not only income but also as a commitment nudge. The fees varies for each course but will likely be around $200, Jurgens said.

The session's panelists agreed that this model will need to blend with traditional education in the future. While Koller noted that 10 years ago people thought that the online model was by definition inferior to face-to-face instruction, she believes there is now a more nuanced view. She added that we need to combine the strengths and weaknesses of online education and face-to-face education "in a way that leverages the strengths of each and hopefully gives way to improved quality and cost."

Sims agreed, adding that Codecademy is willing to work with universities. "We want to be an alternative," he said. "We work with institutions, and we work on our own."

With hundreds of classes offered to millions of students for free over the past few years, online education platforms have already started to disrupt the higher education world. This could increase competition in the industry, thus forcing universities to improve the quality of their education, and the platforms could also blend with traditional education to improve students' learning experiences and potentially reduce costs. Koller sees one way to improve teaching: by getting rid of the old teaching model, with the professor standing and giving a lecture to hundreds. The new model, already in use on edX, favors interaction.

Agarwal is already working on a third platform for online courses. Mooc.org (which stands for "massive online open courses") is "a YouTube for courses," he said. "We want anyone to be able to create a course, and anyone to take a course."

Source: huffingtonpost.com/student-reporter

India’s MIT costs less than $6,000 a year—and look where it got Satya Nadella

Few institutions could be as pleased with Microsoft’s recent appointment of new CEO Satya Nadella as the Manipal Institute of Technology.

+

“Over the last three months, when his name was shortlisted for the job, we have been hoping and praying that Satya would get the job,” chancellor Ramdas M. Pai said in a statement distributed by the south Indian school, where Nadella got a bachelors in engineering in 1988. “Every single student, past and present, will cherish this glorious moment,” Pai said.

+

The school was the site of “day long celebrations” after his appointment was announced, DNA newspaper reported. “Students of electronics and communication courses, who adore Nadella, rode their bikes through the town spreading the news, distributing sweets and bursting firecrackers.”

Manipal Engineering College was founded in 1957 and renamed Manipal Institute of Technology after its founder visited the Massachusetts school in the 1970s and dreamed of a similar school in India, the Indian institution’s joint director told the Wall Street Journal.

+

Nadella’s former teachers remembered an inquisitive student. “He would not meekly go and do experiments,” a professor of digital electronics told the Journal. “He would cross-question and try to understand why something is that way.” He went on to get a masters from the University of Wisconsin and an MBA from the University of Chicago.

+

The education is certainly a bargain compared with its US namesake. Manipal’sfreshman year tuition is 359,500 rupees, or $5,755, while one year at MIT costs $43,210, or $37,000 more. Living costs in Karnataka state are low too—5,000 to 6,000 rupees a month (less than $100) “should be sufficient allowance” for a student, according to one guide.

Source:  Schwab Foundation Daily

Marc Faber Thoughts

                 
                                          

US Chart Daily Oil Production from...........

U.S. shale oil output growth to accelerate in Feb, March -EIA

U.S. oil production from the fastest developing shale plays is expected to rise by 63,000 barrels per day (bpd) in February and another 64,000 bpd in March, according to forecasts from the Energy Information Administration issued on Monday.

That compares to a 53,000 bpd increase in January and a 49,000 bpd rise in December, months that typically experience slower activity due to winter weather conditions.

Oil production from Bakken shale is expected to rise to 1.04 million bpd in February and to 1.07 million bpd in March, the EIA said in its monthly Drilling Productivity Report, which counts Bakken production from both North Dakota and Montana.

Production from the shale oil poster child first exceeded 1 million bpd in December, according to the EIA.

From the Eagle Ford play in southern Texas, oil production should rise to 1.29 million bpd in February and further to 1.32 million bpd in March against about 1.25 million bpd in January.

Oil production from the Permian basin, which stretches across western Texas and New Mexico, is growing slower though it is the highest out of the plays. There, output will rise to 1.41 million bpd in February and March, compared to 1.40 million in January.

In December, the EIA increased its forecast for shale oil production across the country and pushed back the year of its peak, in a sign of how production from the tightly packed rock has consistently confounded analysts across the board.

It now sees production peaking in 2021, not 2020, at 4.8 million bpd, almost double the 2.8 million bpd it had predicted a year earlier.

Of the shale gas plays, the EIA forecast production from the giant Marcellus play in Pennsylvania and West Virginia, to rise to 13.9 billion cubic feet (bcf) a day in February and 14.3 million bcf a day in March from 13.5 bcf a day in January.

That marks a slight reduction in its forecast -- in January, the EIA said it expected production to total 13.8 bcf a day in January and 14.2 bcf per day in February.