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posted on 10 December 2015

Early Headlines: Asian Stocks Slip, European Stocks Down, Aging World, US Middle Class Con, Billions Of Barrels Oil Vanish, London Property Bubble, China "Eats" Debt And More

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Early Bird Headlines 10 December 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.

early-bird-301-180

Global

  • Asia slips as weak oil widens growth worries, euro bullish (Reuters) Asian stocks slipped on Thursday as weak oil prices continued to feed global growth worries, while the euro held solid gains after a policymaker poured cold water on market expectations of more easing by the European Central Bank. European shares were poised to start lower, with financial spreadbetters expecting Britain's FTSE 100 .FCHI to fall 0.4%, Germany's DAX .GDAXI to open down 0.5% and France's CAC40 .FCHI to begin the day off 0.6%. MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS shed 0.1%. Japan's Nikkei .N225 closed down 1.3% at a five-week low and Australian shares pared earlier declines to end the day 0.8% lower. Chinese shares gave up early gains, with the CSI300 .CSI300 trading flat. Indonesian shares .JKSE also saw gains disappear, and was down 0.1%, while Korea's Kospi .KS11 erased earlier losses to finish 0.2% higher.

  • COP21: US adds weight to group pushing for strong climate deal (Financial Times) The US has unexpectedly joined a large group of countries trying to isolate China and India in the tense home stretch of UN talks in Paris on a new global climate agreement. The group, which has dubbed itself the "high ambition coalition", claims to include about half the 195 nations involved in the two-week Paris meeting known as COP21, which is due to end on Friday. This group wants to tighten target limits for global warming. That includes an acknowledgment that global temperatures should not rise more than 1.5C from pre-industrial times and provisions to ensure this goal is met by requiring countries to update their emissions reduction pledges every five years, starting as soon as possible. The pledges that more than 180 countries have tabled for the Paris accord would see warming rise above 2C, a threshold that governments had agreed should not be breached at UN climate talks five years ago.

  • Aging Asian countries must reform pensions, encourage more women to work: World Bank (Benefits Canada) Asian countries are aging faster than has been seen anywhere else in the world, and they need to urgently reform pension systems and encourage more women to enter the labour force, the World Bank said in a report Wednesday. By 2040, the aging populations could shrink the working-age population by more than 15% in South Korea and more than 10% in China, Japan and Thailand, according to the "Live Long and Prosper: Aging in East Asia and Pacific" report. In China, that would mean a net loss of 90 million workers. The report covered aged richer countries like Japan and South Korea, rapidly aging middle-income countries such as China, Thailand and Vietnam, and younger, poorer ones like Cambodia and Lao which will start to age rapidly in 20 or 30 years' time. Econintersect: Yesterday we discussed why Germany has the same aging demographic problem, as does much of the EU. The best positioned countries are the UK, Russia, U.S. and France. See graphic from the Financial Times:

aging.nations

U.S.

  1. Money from the 1% controls the elections;

  2. Privatization of the State toward third world status;

  3. Delegitimization of Congress and the President;

  4. National Seccurity State as a fourth branch of government; and

  5. Demobilization and alienation of the American Public.

  • Billions of Barrels of Oil Vanish in a Puff of Accounting Smoke (Bloomberg) Across the American shale patch, companies are being forced to square their reported oil reserves with hard economic reality. After lobbying for rules that let them claim their vast underground potential at the start of the boom, they must now acknowledge what their investors already know: many prospective wells would lose money with oil hovering below $40 a barrel. The biggest loser is Chesapeake Energy Corp. will erase the equivalent of 1.1 billion barrels of oil from its books, 45% of its previous reserves.

EU

A quick tour of current EU member states paints the picture of a fracturing polity: the Finns are questioning the euro; the French are testing the Stability and Growth Pact in addition to the free movement of peoples; since August 2002, when Chancellor Schroeder refused to join the US over Iraq, Germany has got used to saying Nein, most recently to France's de facto proposal for a transfer union; France equally says Non to embedding a balanced budget regime in EU law; Portugal is in a constitutional crisis, and the government in Madrid faces a serious secessionist movement in Catalonia. The list goes on.

On a macro level, the Eurozone has not grown much at all since 2008. Levels of unemployment remain stubbornly high, leading to extensive youth emigration from distressed countries such as Spain, Greece and southern Italy, compounding the long-term problem of sluggish southern Mediterranean growth, and enriching the countries to which they move such as the US, Germany, and Britain. As stagnation drifts on, radical voices are becoming ever more audible - most recently seen in Marine Le Pen's first place in the French regional elections last weekend - and the prospect of remaining chained to the EU appears riskier each day.

UK

  • Bubble fears as average London property hits £600,000 with outer boroughs seeing highest rises (City A.M.) The average price of a London property is now just shy of £600,000, reigniting fears of a bubble and prompting talk of a market correction. The average London house price was £598,173 ($897,000) in October, 5.6% higher than the same month last year, according to figures released today by estate agents Your Move and Reeds Rains. Easier mortgage availability has added to the upward pressure on prices created by a shortage of homes for sale. For the UK overall, house prices have hit a record high of £290,640 ($436,000), rising 6%. The figures also show that central London's sky-high prices are spreading to outer boroughs, with prices in the cheapest third rising at the fastest pace. Over the course of the past 12 months, prices in Greenwich rocketed by 17.9%, in Newham by 19.3% and in Barking and Dagenham by 15.2%.

Belarus

  • Belarus views Vietnam as springboard into other markets in Southeast Asia (Belarus News) Hat tip to Rob Carter. Belarus views Vietnam as a springboard in Southeast Asia which can be used to develop cooperation with other states in the region, Belarus President Alexander Lukashenko said after the talks with Vietnam President Truong Tan Sang on 9 December. Lukashenko said:

"Vietnam is our strategic partner. Vietnam is our reliable friend in Southeast Asia, if you like, it is a springboard which we are ready to use to enhance cooperation with other states in the region."

  • Belarus-EU visa facilitation agreement ready for signing (Belarus News) The text of the agreement on facilitating visa regulations between Belarus and the European Union is ready for signing. The statement was made by Gunnar Wiegand, Deputy Managing Director for Europe and Central Asia of the European External Action Service (EEAS) during a press conference in the European Union representative office in Minsk on 9 December.

  • European Union ready to double financial aid to bolster competitive ability of Belarus economy (Belarus News) The European Union is ready to double the financial aid to Belarus in 2016 as part of several programs meant to bolster the competitive ability of the Belarusian economy and advance regional development. The statement was made by Gunnar Wiegand, Deputy Managing Director for Europe and Central Asia of the European External Action Service (EEAS) during a press conference in the European Union representative office in Minsk on 9 December.

Russia

  • Turkey accuses Russia of ethnic cleansing (BBC News) Turkey's prime minister has accused Russia of attempting "ethnic cleansing" with its air strikes in northern Syria. Ahmet Davutoglu said Russia's campaign had targeted Turkmen and Sunni communities around the Latakia region. Relations between Ankara and Moscow have plummeted since Turkey shot down a Russian warplane on the Syrian border. President Vladimir Putin has asked UK specialists to help analyze the flight recorder in a phone conversation with PM David Cameron, the Kremlin says. Turkey insists that its F-16 fighters shot down the Russian Su-24 on 24 November because the bomber had trespassed into its airspace. Russia denies this.

China

  • China Said to Form State-Owned Fund to Deal With Mining Debt (Bloomberg) China's government is said to be setting up a state-owned fund to absorb bad debt in the mining sector, including loans owed by China Minmetals Corp., as the fallout from a price collapse batters the global commodities industry. The investment company would be established by the State-Owned Assets Supervision and Administration Commission to coordinate the country's investment in mineral resources. Econintersect: In short, the government is preparing to simply "eat" (wipe out) the bad debt.

  • China's inflation edges up, but deflation risks dog economy (The Globe and Mail) China's consumer inflation picked up slightly in November but remained well under the government's 2015 price target of 3 per cent, raising concerns that the world's no. 2 economy could be sucked into a Japan-style deflationary trap. With the economy sputtering after years of double-digit growth, analysts predict Chinese consumer prices are unlikely to pick up significantly in the near future due to crumbling commodity and energy prices, overcapacity and weak demand.

  • A Strong Dollar Hurts China More Than the U.S. (Bloomberg) The biggest loser from a stronger dollar may be China, not the U.S. And that's why some economists predict the Asian nation will loosen its currency's link to the greenback and allow the yuan to depreciate.

Vietnam

  • Vietnam Sees Record-High Foreign Investment on TPP, Eased Rules (Bloomberg) Hat tip to Rob Carter. Vietnam expects disbursed foreign direct investment to reach a record high this year after the government eased business regulations, luring investors seeking to benefit from the Trans-Pacific Partnership trade pact. Disbursed foreign direct investment in 2015 should be about $14 billion, $1.5 billion more than last year, about 2/3 of the $21.9 billion pledged last year. The amount pledged in the current year is not given in the article but it does say that "(p)ledged foreign investment is forecast to increase over last year's $21.9 billion".

  • Vietnam's Economic Recovery Firms up with A Positive Outlook (The World Bank) Hat tip to Rob Carter. Vietnam's economy has weathered the recent turbulence in the external environment fairly well, says the World Bank's Taking Stock report, released today, with GDP growth expected to come in at 6.5% this year. The performance is underpinned by further recovery in domestic demand, in turn reflecting robust private consumption and investment growth.

Brazil

  • Brazil's troubles deepen with ratings blow (Financial Times, CNBC) Brazil's woes deepened on Wednesday as Moody's Investors Service downgraded all ratings for embattled oil group Petrobras, and the country faced the threat of losing its investment grade credit rating from the agency. Moody's downgraded all ratings for Petrobras to Ba3 from Ba2, and placed them on review for possible further downgrade. Meanwhile, after Congress opened impeachment proceedings against President Dilma Rousseff last week, Moody's said it was placing Brazil's Baa3 rating on review for downgrade, driven by a rapidly deteriorating economy and "worsening governability". The move raises fears of an investor exodus from Latin America's biggest economy.

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