1 Upbeat on economy, US Fed holds rates (BBC) The US
central bank remained positive on the economy, as it kept interest rates on
hold in its first meeting since President Donald Trump took office. The Federal
Reserve ruled unanimously to keep its benchmark interest rate in a range of
0.5% to 0.75%. The jobs market and economic activity had continued to
strengthen, it said.
The Fed had raised its benchmark interest rate by
0.25% in December, only the second increase in a decade. President Trump has
promised to boost growth through tax cuts, spending and deregulation, raising
the prospect of higher inflation. The Fed said inflation "will rise to 2%
over the medium term".
Despite being upbeat, the central bank also
signalled the Federal Open Markets Committee (FOMC), the body which sets rates,
would still only make "gradual increases". It did not give any update
on when the body might next raise rates. Dennis de Jong, managing director at
UFX.com, said that uncertainty about Mr Trump's economic policies could further
delay the next rate rise.
2 Deglobalisation may hit world economy (Mohamed
El-Erian in The Guardian) The retreat of the advanced economies from the global
economy – and, in the case of the UK, from regional trading arrangements – has
received a lot of attention lately. At a time when the global economy’s
underlying structures are under strain, this could have far-reaching
consequences.
Whether by choice or necessity, the vast majority of
the world’s economies are part of a multilateral system that gives their
counterparts in the advanced world – especially the US and Europe – enormous
privileges. Three stand out.
First, because they issue the world’s main reserve
currencies, the advanced economies get to exchange bits of paper that they
printed for goods and services produced by others. Second, for most global
investors, these economies’ bonds are a quasi-automatic component of portfolio
allocations, so their governments’ budget deficits are financed in part by
other countries’ savings.
The advanced economies’ final key advantage is
voting power and representation. They command either veto power or a blocking
minority in the Bretton Woods institutions (the International Monetary Fund and
the World Bank), which gives them a disproportionate influence on the rules and
practices that govern the international economic and monetary system.
These privileges don’t come for free – at least they
shouldn’t. In exchange, the advanced economies are supposed to fulfil certain
responsibilities that help ensure the system’s functioning and stability. But
recent developments have cast doubts on whether the advanced economies are able
to hold up their end of this bargain.
Perhaps the most obvious example is the 2008 global
financial crisis. The result of excessive risk-taking and lax regulation in the
advanced economies, the financial system’s near-meltdown disrupted global
trade, threw millions into unemployment, and almost tipped the world into a
multi-year depression.
It should not be surprising that globalisation and
regionalisation no longer command the degree of support they once did. It is
not yet clear whether this is a temporary and reversible phenomenon or the
beginning of a protracted challenge to the functioning of the global economy.
The Bretton Woods organisations, instituted after
world war two to maintain stability, risk losing their influence. If these
tendencies continue, developing countries will probably suffer the most; but
they won’t be alone. In the short term, the world economy would face slower economic
growth and the risk of greater financial instability. In the longer term, it
would confront the threat of systemic fragmentation and proliferating trade
wars.
3 Why FB promotes its video feature (San Francisco
Chronicle) Facebook is furiously promoting its live video feature as it tries
to get more users to shoot and watch such videos. But will it be a big business
for the social network? The prospects for advertisers are uncertain, and even
when users do "go live" — broadcasting their toddler's first steps to
family or showing footage from protests around the world, for instance — their
friends often don't see it until after the fact, just like any other recorded
video.
So why all the big fuss? Some analysts believe it's
just another in Facebook's ongoing efforts to keep people attached to its
service as long as possible. "It's a usage thing — keeping them engaged,
keeping them on Facebook, giving them an avenue to share," says eMarketer
analyst Debra Aho Williamson. "As long as Facebook can be successful with
that, it can show ads to them."
As is its custom, the company is first pushing the
service to as many of its 1.8 billion users as possible. Users get special
notifications when their friends go live, and ads prompting them to do the same
have been prevalent in the last few weeks.
But making money off live streams isn't easy,
starting with the fact that they offer few opportunities to display video ads.
But that's OK, Williamson says, arguing that now is the time for marketers to
experiment with the feature.
Mobile video, especially live video, is already
transforming how we experience the world online. While the company isn't
disclosing data on how many users have gone live or watched a live video,
anecdotally at least it seems to be catching on — somewhat. The company says
people comment more than 10 times more on live videos than on regular ones.
Facebook reported fourth-quarter earnings of $3.56
billion, up sharply from $1.56 billion in the same period a year earlier. The
company posted revenue of $8.81 billion, up 51 percent from $5.84 billion a
year ago. Facebook's monthly user base, meanwhile, grew 17 percent to 1.86
billion.
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