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YELLEN: Rate Increases Cannot be Ruled Out

Photo Credit: Federal Reserve, March 18, 2015

Photo Credit: Federal Reserve, March 18, 2015

Federal Reserve Chair Janet Yellen calmly stated at a press conference that a rate increase in June cannot be ruled out. Yellen added for the Federal Reserve to raise rates, there must be “further improvement in labor markets,” and inflation will need to go back to its 2% target over the medium term. The Federal Reserve downwardly adjusted their inflation forecast for 2015. Low energy prices and low wage growth are holding back inflation in the United States. Economic and data metrics will be key determinants if the Federal Reserve will change rates in June.

Yellen commented on the Federal Reserve’s monitoring of financial stability – viewing it as moderate for now. She said, “overall measures of the equity markets are on the high side.” Yellen also saw the U.S. corporate debt market having unusually low spreads.

The Word Patient

Notably, the word “patient” was removed from the March Federal Open Market Committee (FOMC) statement after the two-day meeting that ended on March 18th. In December 2014, the FOMC statement read the Federal Reserve “can be patient in beginning to normalize the stance of monetary policy.” Federal Reserve Chair Yellen in her comments emphasized the removal of the word “patient” does not mean the central bank will be impatient on monetary policy. Money managers believe the pace of rate hikes will likely be extremely gradual.

SouthGobi’s CEO Arrested, CIC Struggles with Investment

The China Investment Corporation (CIC) has long struggled with its investments in coal assets, specifically in globally-listed coal miner SouthGobi Resources Ltd, which operates its flagship coal mine in Mongolia. In November 2009, CIC and SouthGobi Resources inked a convertible debenture deal. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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Qatar Central Bank Deals with MSCI

MSCI, a stock index company whose benchmarks influence investor behavior, has tremendous indirect power impacting the stock markets of smaller economies. In 1988, MSCI released its emerging markets index, a now-widely-used benchmark for many institutional investors wanting access to growth markets. China and South Korea make up the majority of the benchmark, but smaller economies such as Poland, Chile and even Qatar make up other pieces of it.

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bcIMC Buys into Bottling Business with PAI in €1.623 Billion Takeover of Refresco

Dutch soft-drink bottler Refresco Group N.V. has agreed to a buyout offer for all 81.2 million of its shares from French private equity firm PAI Partners SAS (PAI) and Canadian pension manager British Columbia Investment Management Corporation (bcIMC) in exchange for €20 in cash per ordinary share for a total consideration of €1.623 billion. Refresco’s major shareholders, which includes 3i Group, and shareholding members of its boards, who represent 26.5% of outstanding shares, have said they stand behind the deal.

Refresco’s board rejected an initial offer from PAI in April 2017 of €1.4 billion, which they felt did not adequately capture the value added by their plans to bolster its presence in North America through the acquisition of Canadian bottler Cott TB, a deal that went through in July for US$ 1.25 billion.

[ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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