(Bloomberg) — The Federal Reserve has already unleashed a barrage of new policies to keep the economy out of depression. Investors reckon it’s lining up another one.The Fed’s version of the strategy known as yield-curve control is expected to involve capping yields on government bonds of a chosen maturity -– by buying however much it takes. For central banks that already cut short-term interest rates to zero, it’s a way to signal that they’ll stay low for an extended period, while helping pin down longer-term borrowing costs too.Japan has been doing this for years, and Australia adopted the idea in March as the coronavirus struck. The Fed, which has responded to the pandemic by bulk-buying Treasuries and showering business and local government with credit, may not be ready to follow suit right now. U.S. states are tentatively emerging from lockdown, and policy makers will want to see how economic activity picks up.But with unemployment at levels not seen since the 1930s, and Congress deadlocked over another round of fiscal stimulus, Fed officials have been publicly warning that more action will likely be needed. They’re taking another look at their own toolkits, in a policy review due to conclude this year. And the idea of tamping down Treasury yields keeps coming up.Fed Governor Lael Brainard is a proponent. Vice Chairman Richard Clarida said in a webcast last week that Fed policy makers will probably get a briefing about how other central banks have done it.“We do expect yield-curve control by year-end,” said Priya Misra, head of global rates strategy at TD Securities in New York. Fed Chairman Jerome Powell and his colleagues paint a bleak picture of the economy’s near-term prospects, and they’ll need a strategy to deal with that, she said. “They can’t keep a negative economic outlook without easing monetary policy further.”Blurred LinesOther countries have tried negative interest rates, and some investors are betting that U.S. central bankers will follow that path too. But in October, Fed officials unanimously rejected the idea. And Clarida said Thursday that “nothing that has happened since then has changed my mind.”The Fed is already buying trillions of dollars of government debt this year, as the U.S. borrows in record volumes to fight the virus slump. That combination, echoed across the developed world, is blurring what on paper are supposed to be sharp dividing lines between central banking and fiscal policy.Yield-curve control, another example of that unconventional mix, would involve a tactical shift by the Fed. Instead of announcing a pre-set volume of Treasury purchases, as it has done under quantitative easing programs, it would buy (or conceivably sell) the debt in whatever volume is needed to maintain the chosen yield.Capping debt costs for the government, the argument goes, will benefit other borrowers in the economy too because those rates are benchmarks in key industries such as housing. Fed officials who favor the strategy also see it as a way of putting an exclamation point on their intentions to keep the short-rate low for a period of time.Japan, which pioneered yield-curve control in 2016, chose to pin 10-year rates at zero. When Australia adopted the idea in March, it plumped for 3-year debt and a target yield of 0.25%. The U.S. is more likely to follow the Australian example and focus on the short end of the curve, investors say.That could mean maturities of two or three years, Tiffany Wilding, an economist at Pimco, told Bloomberg TV last week. Mansoor Mohi-uddin, a senior macro strategist at NatWest Markets in Singapore, predicts somewhere between two and five years.“That would allow longer-term yields to move above those targets and keep the curve upward-sloping, which enables financial institutions to generate profits,” Mohi-uddin said.Wartime PrecedentTreasuries have already stabilized after some violent swings in the early days of the pandemic crisis, when at one point the entire yield curve crashed below 1%, with many maturities reaching all-time lows.The 10-year note, a benchmark for global borrowing, has fluctuated around 0.7%, more than double its record low in March. Two-year yields have been trading below the 0.25% level that marks the top of the Fed’s target range, while 5-year yields are slightly above it.And the yield gap between these securities and longer-dated debt has been widening -– especially as the Treasury has tilted issuance toward the latter. It sold 20-year bonds on Wednesday for the first time since the 1980s.Long-dated securities were part of the deal last time the U.S. experimented with a policy of yield-curve control. To help finance World War II, the Fed agreed to cap 30-year bonds at 2.5%.This time around, focusing only on shorter-term debt would help allay concern that central-bank independence is being subordinated to fiscal needs, according to Zach Pandl, a strategist at Goldman Sachs, who says yield-curve control is an option for the Fed along with more QE and even possibly negative rates.“This would be about providing monetary stimulus rather than keeping Treasury’s borrowing costs fixed,” said Pandl. “If economic conditions change, and the recovery is faster than expected, the Fed would have the ability to move away from yield curve control and tighten policy.”For now, according to minutes of its last rates meeting in April, the Fed is more concerned about demonstrating a commitment to staying loose.Officials discussed tying the benchmark interest rate to an inflation or unemployment goal, or pegging it around zero for an extended period. And a few suggested that capping short- to medium-term yields could strengthen the signal of their guidance on the short-term rate.“Yield curve control would reinforce that the Fed is going to keep rates low, and allay fears it will be overly reactive by removing accommodation at the first sign of inflation,” said Jonathan Cohn, a strategist at Credit Suisse.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

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IBM Corp. (IBM) is said to reduce the number of employees across the U.S., streamlining its workforce in at least five states.The company declined to comment on the total number, but the workforce reductions appear far-reaching, according to a Bloomberg report.“IBM’s work in a highly competitive marketplace requires flexibility to constantly add high-value skills to our workforce. While we always consider the current environment, IBM’s workforce decisions are in the interest of the long-term health of our business,” company spokesman Ed Barbini said in a statement. “Recognizing the unique and difficult situation this business decision may create for some of our employees, IBM is offering subsidized medical coverage to all affected U.S. employees through June 2021.”Based on a review of IBM internal communications on the Slack corporate messaging service, the number of affected workers is likely to be in the thousands, said a North Carolina-based worker who lost his job along with his entire team of 12.“This was far ranging — and historical employment ratings, age and seniority did not seem to matter,” he said. The person asked not to be identified on concern that speaking publicly may impact his severance package, according to the Bloomberg report.IBM employees in Pennsylvania, California, Missouri and New York, are also said to be affected by the round of job cuts, according to the Bloomberg report.Another worker who lost his job said the reductions mostly focus on IBM’s North American workforce. Half of his 70-person department were cut and told their last day with the company will be June 22.IBM is joining a list of tech companies, who are implementing cost-cutting measures, such as widespread job cuts after the coronavirus pandemic induced a slower economic growth environment. Uber Technologies Inc. (UBER) has cut about a quarter of its workforce, while Hewlett Packard Enterprise Co. (HPE) last week said it will cut some employees to preserve cash.In an earnings call in January, IBM discussed reducing costs through “aggressive structural actions” to improve the competitiveness of its Global Technology Services consulting unit, which represents about a third of revenue.Shares in IBM, which have advanced 25% in the past two months, are still down 13% year-to-date.Turning now to Wall Street, analysts are cautiously optimistic about the stock’s outlook. The Moderate Buy consensus is divided into 4 Buy ratings and 8 Hold ratings. The $132.36 average price target suggests shares have 12% upside potential in the coming 12 months. (See IBM stock analysis on TipRanks).Related News: Nvidia Sinks Despite Stellar Earnings; Top Analyst Says Buy On Any Weakness Micron Has More Than Enough Tailwinds to Offset Huawei Sanctions, Says Top Analyst Baidu May Use Nasdaq Delisting To Boost Value – Report More recent articles from Smarter Analyst: * Air Canada’s Proposed Takeover Of Transat Faces EU Anti-Trust Probe * Uber Cuts 600 Jobs In India, Cites Unpredictable Covid-19 Recovery * Latam Airlines Files For Chapter 11 Bankruptcy Protection In U.S. * Chi-Med, BeiGene Join Forces For Solid Cancer Tumor Treatment

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Tesla Inc. (NASDAQ: TSLA) CEO Elon Musk and his partner Canadian musician Grimes have changed their baby's name to comply with Californian law. What Happened The baby X Æ A-12 will now be named X Æ A-Xii to comply with a law in California, revealed Grimes on Instagram Sunday.Grimes said in response to a comment on the social media network, "Just removed the numbers to confirm [sic] to California law," She added, "Roman numerals. Looks better tbh."The singer also added that a dash in the name was allowed by the law.Why It Matters According to the California Birth Registration Handbook, baby names are limited to the 26 alphabets of the English language and cannot include numeric characters or diacritical marks. Hyphens or apostrophes may be used in certain names. Musk had previously disclosed that his baby boy's name is pronounced "X Ash A 12." Explaining the meaning of the name, he had said X is just "X," and the A-12 is just "A 12."The Tesla chief executive gave credit to his wife for coming up with the name and disclosed that A-12 signifies the Archangel-12 plane, the precursor of their favorite aircraft SR-17. Musk announced at the beginning of the month that he was rethinking his "attachment to the material world" and will be selling "almost all physical possessions."It is not certain if the baby's name would be accepted by the state of California, reported Business Insider. Price Action On Friday, Tesla shares closed 1.30% lower at $816.88.Image Credit: Elon Musk's Twitter.See more from Benzinga * Amazon Shareholders Demand Disclosures On COVID-19 Worker Safety * BlackRock Under Pressure From Activist Shareholders On Mindful Climate-Related Investing * Hewlett Packard To Reduce Workforce, Slash Salaries(C) 2020 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.

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Macau gambling king Stanley Ho, who built a business empire from scratch in the former Portuguese colony and became one of Asia’s richest men, died peacefully at the age of 98, his family confirmed on Tuesday. The flamboyant tycoon, who loved to dance and advised his nearest and dearest to shun gambling, headed one of the world’s most lucrative gaming businesses through his flagship firm, SJM Holdings Ltd, valued at about $6 billion. Ho oversaw the transformation of once-sleepy Macau into the world’s biggest casino centre, outpacing the United States’ Las Vegas strip, and held a monopoly until 2002 when the enclave licensed five other operators to run casinos.

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Latam Airlines Group S.A. (LTM) and its affiliates in Chile, Peru, Colombia, Ecuador and the U.S. have filed for Chapter 11 bankruptcy protection due to the impact of the coronavirus pandemic on the global aviation industry.The Latin American airline said that it has secured up to $900 million in financing from the Cueto and Amaro families and Qatar Airways, two of its largest shareholders. As of the Chapter 11 filing, the group had about $1.3 billion in cash on hand.During the debt restructuring process, Latam and its affiliates will continue flying as conditions permit, the airline said.Commercial airline travel has fallen off a cliff due to coronavirus-induced lockdown restrictions forcing many global airlines around the world to ground the majority of their fleets, suspend aircraft deliveries, and streamline operations.Deutsche Lufthansa AG (DLAKY) on Monday announced that it has reached an agreement with the German government on a €9 billion ($9.8 billion) bailout package, while earlier this month Colombian Avianca Holdings (AVH) filed for bankruptcy protection."Latam entered the COVID-19 pandemic as a healthy and profitable airline group, yet exceptional circumstances have led to a collapse in global demand and has not only brought aviation to a virtual standstill, but it has also changed the industry for the foreseeable future," said Roberto Alvo, CEO of Latam. "We have implemented a series of difficult measures to mitigate the impact of this unprecedented industry disruption, but ultimately this path represents the best option to lay the right foundation for the future of our airline group.”Latam and its affiliates said that they are also in discussions with their respective governments of Chile, Brazil, Colombia and Peru to seek sourcing additional financing, protect jobs where possible and minimize disruption to its operations.Shares in the air carrier fell $4.8% to $2.58 as of Friday in U.S. trading taking the year-to-date plunge to 75%.TipRanks data shows that three out of five analysts releasing a review over the past month downgraded the stock’s rating to Hold. The $3.40 average analyst price target implies 32% upside potential in the shares in the coming 12 months. (See Latam Airlines stock analysis on TipRanks).Related News: Ryanair Cuts Traffic Target By Almost 50% For Coming Year, Seeks To Reduce Boeing Plane Deliveries Boeing Gets No Orders in April, Customers Cancel 737 MAX Jets Colombian Carrier Avianca Files for Bankruptcy Protection Due to Coronavirus Woes More recent articles from Smarter Analyst: * Air Canada’s Proposed Takeover Of Transat Faces EU Anti-Trust Probe * Uber Cuts 600 Jobs In India, Cites Unpredictable Covid-19 Recovery * Chi-Med, BeiGene Join Forces For Solid Cancer Tumor Treatment * Irish Data Protection Commission Completes Inquiry into Twitter Data Breach

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May.24 — Susan Shirk, a former deputy assistant secretary of state during the Clinton administration and currently a professor chair of the 21st Century China Center at the School of Global Policy and Strategy at the University of California, San Diego, looks at the tensions between the U.S. and China. The U.S. should give up its “wishful thinking” of changing China, Foreign Minister Wang Yi said, warning that some in America were pushing relations to a “new Cold War.” Shirk speaks on “Bloomberg Markets: Asia.” (Corrects typographical error in headline)

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(Bloomberg) — The German government’s 9 billion-euro ($9.8 billion) bailout of Deutsche Lufthansa AG may cost the stricken carrier some valuable assets: Key flight slots at airports in Frankfurt and Munich.The European Commission wants Lufthansa to surrender the slots out of concern the aid will give the carrier unfair advantage over competitors, people familiar with the matter said.After weeks of talks, Germany on Monday offered Lufthansa a package of loans and equity investment to keep the carrier aloft through the coronavirus storm. = Officials in Brussels are concerned the deal will distort competition and fuel lawsuits from competitors like Ryanair Holdings Plc, the people said. Approval of the deal could take several weeks, they said, asking not to be named discussing confidential deliberations.To compensate for the state help, the European Union’s executive arm also would like the airline to decrease the number of aircraft based in Germany, the people said. German Chancellor Angela Merkel told a meeting of conservative lawmakers the government would fight for Lufthansa to keep key slots, people familiar with the matter said.“The discussions with the European Commission are continuing at full speed,” German Economy Minister Peter Altmaier said Monday at a news conference in Berlin. “So far, we have managed to get approval from Brussels for all our aid requests during the corona crisis. How long it will take I cannot say, but the main point for us is that we want to achieve a good result.”Shares GainLufthansa shares advanced on Tuesday, building on Monday’s 7.5% gain in the wake of the deal. As of 9:29 a.m. in Frankfurt, the stock was up 6.4%. Still, it remains down 44% for the year.Analysts at Deutsche Bank AG said that while some of the terms of the German government deal were less punitive than expected, it would leave Lufthansa with high debt levels.Airport slots are a crucial currency for airlines, which rarely give up the ability to operate flights at popular times and to destinations. It’s a commodity that EU regulators have often asked carriers to cede to smaller rivals when seeking approval for mergers, including during Lufthansa’s 2017 takeover of a unit of Air Berlin.Like airlines the world over, Lufthansa is fighting for survival as restrictions to contain the coronavirus puncture a decades-long aviation boom. The company plans to operate fewer aircraft when flights resume and is closing discount arm Germanwings to resize for what it warns could be years of depressed demand.The EU press office said it had no comment on the Lufthansa plan and was “in constant contact” with governments. It defended the need for “additional commitments to preserve effective competition” that are required for recapitalizations of more than 250 million euros to a company, according to an emailed statement.“This is important to preserve the level playing field in the single market post-coronavirus crisis to the benefit of all European consumers and companies,” the EU said.The Lufthansa package will be the first recapitalization to be weighed by the EU after it loosened rules this month that usually prevent governments from pumping money into favored firms. Regulators are facing criticism from Ryanair that they are violating EU principles on fair competition by allowing huge amounts of state cash to prop up inefficient airlines. Ryanair argues that this could fund a price war or expansion spree to knock out rivals.EU officials are aware of the need for speedy approvals, said Margrethe Vestager, the bloc’s antitrust chief. Officials have been “working seven days a week around the clock” and at night “in order to make sure that things can be processed as fast as possible,” she told EU lawmakers on Monday.Blocking StakeThe German government on Monday unveiled an aid package for Lufthansa that involves taking an initial 20% stake that could rise to a blocking minority of 25% plus one share in the event of a hostile takeover. The deal also includes a 5.7 billion-euro investment via a so-called silent participation — a debt-equity hybrid instrument that wouldn’t dilute shareholder voting rights. The state will also back a three-year loan of 3 billion euros.As well as approval from the European Commission, Lufthansa’s supervisory board must approve the deal and shareholders will have to vote on the capital increase at a special meeting, likely to be held in late June. Lufthansa is poised to receive some 2 billion euros in ad from Austria, Belgium and Switzerland.The German package represents the biggest corporate rescue in the country during the pandemic crisis. It’s also the only one that involves a direct investment by Merkel’s government, but more may be coming. The government set up the 100 billion-euro fund to buy stakes in stricken companies as part of its effort to stabilize Europe’s largest economy.(Updates with share price move in sixth paragraph, analyst comment)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

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