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posted on 08 October 2015

Early Headlines: Glencore Big Risk For Banks, German Mfg And Exports Plunge, Deutsche Bank In Trouble, Chemistry Nobel, Oil Crash Hurts, California Going Renewable And More

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Early Bird Headlines 08 October 2015

Econintersect: Here are some of the headlines we found to help you start your day. For more headlines see our afternoon feature for GEI members, What We Read Today, which has many more headlines and a number of article discussions to keep you abreast of what we have found interesting.



  • Asia flags but China stocks jump in catch-up after long break (Reuters) Chinese stocks surged on Thursday after a week-long break as they played catch-up with a global rally, while most regional markets retreated with Japanese equities hitting the skids on weak data. The following midday data is from CNBC:


  • Glencore's $100 Billion 'Gorilla' Means Bad News for Banks (Bloomberg Business) As the highly leveraged global commodity behemoth wallows in the commodity crash, exposure of $100 billion or more to Glencore Plc may draw more scrutiny as regulatory stress tests approach after the commodity giant's stock plunge this year, according to Bank of America Corp. Bank shareholders and regulators may be concerned that Glencore's debt and trade finance deals, of which a "significant majority" are unsecured, will reveal higher-than-expected risk and require more capital once the lenders are put through U.S. and U.K. stress tests.

  • Chemistry Nobel: Lindahl, Modrich and Sancar win for DNA repair (BBC News) The three scientists are Swedish, British and Turkish-American.

  • Four Ways the Oil Price Crash Is Hurting the Global Economy (Bloomberg) Remember when the oil price plunge was going to be a huge economic tailwind? In theory, the movement of wealth from commodity producers, which often stow away oil revenue in sovereign wealth funds, to consumers, which spend a far larger portion of their income, is a positive for economic activity. But strategists at Credit Suisse believe that so far, the global economy has seen only the storm from lower crude, not the rainbow that follows.


  • California enacts ambitious renewable energy law (Al Jazeera) California is now required to produce half its electricity from renewable sources by 2030. State regulators say they already hit 25% last year, as huge solar farms sprouted in the desert and towering windmills went up along mountain passes. Environmentalists cheered the new law even though language to cut petroleum use by 50%t over 15 years was stripped from the bill after objections from the oil industry and some lawmakers. See also World's largest solar plant opens in California and Alaska island goes renewable amid rising electricity prices.

  • South Carolina Still on Edge From Floods; 2 Die in Truck (Associated Press, ABC News) It could take until the weekend for the threat of flooding to ease in storm-tattered South Carolina. Rivers rose and dams bulged as storm water from days of heavy rains made its way to the Atlantic Ocean, causing a second round of flooding downstream. Gov. Nikki Haley paid a visit to the coast, which she said would still be in danger for another 24-48 hours. At latest count, at least 19 people have died and damage is expected to top $1 billion.


  • Deutsche Bank Braces for $7 Billion Loss, May Scrap Dividend (Bloomberg) Deutsche Bank announced the firm's biggest quarterly loss in at least a decade and may eliminate a dividend that's stood since Germany's postwar reconstruction as he tries to overhaul the firm without asking shareholders for more capital. Europe's biggest investment bank expects a third-quarter loss of €6.2 billion ($7 billion) after writing down the value of its two largest divisions and boosting reserves for legal costs. Its American depositary receipts (NYSE:DB) tumbled 6.9% after the disclosure, to $26.98 in after-hours trading. GEI contributor Rick Ackerman says that DB has a 70% probability of dropping to at least $9.10 and has the possibility of going the route of Lehman Brothers.

  • German Industrial Output Drops Most Since 2009 in August (Bloomberg) German industrial production fell more than economists forecast in August in the latest sign that the outlook for Europe's largest economy is deteriorating. Production, adjusted for seasonal swings, dropped 4% from July, when it expanded 1.6%, the Economy Ministry in Berlin said today. That's the biggest decline since January 2009 and compares with a median estimate of 1.5% in a Bloomberg News survey. Germany's economy is losing momentum as sluggish growth in the euro area, its largest export market, and political tension with Russia weigh on confidence.

  • Germany's exports slide the most since the height of the 2009 recession (Bloomberg, The Straits Times) German exports slumped the most since the height of the 2009 recession in a sign that Europe's largest economy is vulnerable to risks from weakening global trade. Foreign sales in Europe's most powerful economy declined 5.2% in August from the previous month. That's the steepest since January 2009. Economists predicted a drop of 0.9%. Imports fell 3.1%. The trade surplus shrank to €15.3 billion (US$17.2 billion) from €25 billion in July


  • Swish Tea Cafes Chasing Riches Reinvent Poor Man's Chai in India (Bloomberg) That sweet and milky tea concoction called chai is getting an image makeover in India. Driving the change is the other beverage -- coffee. Rising incomes and demand for a refined experience transcending chai are spawning posh tea lounges in the nation's biggest cities, a transformation mirroring 15 years of coffee revolution that brought Starbucks in 2012. Entrepreneurs are pooling their savings to set up these tea houses, inspired by the $175 million initial public offering planned by the parent of Cafe Coffee Day, a chain backed by KKR & Co. Tea is a bigger opportunity than coffee because consumption of the leaf-based beverage beats its rival 30 cups to one in India.


  • Navy will challenge Chinese territorial claims in South China Sea (Navy Times) The Navy is preparing to send a surface ship inside the 12-nautical-mile territorial limit China claims for its man-made island chain, an action that could take place within days but awaits final approval from the Obama administration, according to military officials who spoke to Navy Times. Plans to send a warship through the contested space have been rumored since May, but three Pentagon officials who spoke to Navy Times on background to discuss future operations say Navy officials believe approval of the mission is imminent. If approved, it would be the first time since 2012 that the U.S. Navy has directly challenged China's claims to the islands' territorial limits. The articificial islands have been built in the vicinity of the Spratly Islands which lie within the 200-mile territorial limits of Philippines and Malaysia.


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