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posted on 28 January 2016

Early Headlines: US Earnings Decline, Asia Stocks Steady, Oil Spikes, Populist Revolts, Negative US Rates, US Fund Fees Near Zero, China 1 Trn Exodus And More

Written by Econintersect

Early Bird Headlines 28 January 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 stocks find support, oil still unstable (Reuters) Asian shares pushed back into the black on Thursday as investors dipped their toes back into equities and demand for safehaven assets such as the yen and sovereign bonds faded. A bounce in oil prices offered some salve to strained nerves. While Brent crude was off 23 cents at $32.87 a barrel, this followed a 4% jump on Wednesday after Russia hinted at co-operation with OPEC on oversupply. U.S. crude eased back 21 cents to $32.09. After starting weaker, MSCI's broadest index of Asia-Pacific shares outside Japan swung 0.4% firmer in very choppy trade. Likewise, Japan's Nikkei turned 0.3% higher having been down more than 1% at one stage. Shanghai's Composite Index was just a whisker lower.

  • Oil jumps after Russia dangles prospect of OPEC cooperation (Reuters) Oil futures surged on Wednesday after Russia indicated there was a possibility of co-operation with OPEC, fanning hopes for a deal to reduce a global oversupply that sent prices to the lowest levels in over a dozen years last week.

  • Number of obese and overweight children under five "alarming", WHO says (Thompson Reuters Foundation) Hat tip to Roger Erickson. At least 41 million children under the age of five are obese or overweight across the globe, with numbers rising most rapidly in developing countries, the World Health Organization (WHO) said on Monday. The number of obese or overweight children has risen by 10 million worldwide since 1990 and there are now more overweight and obese children in low- and middle-income countries than in high-income countries, the WHO said. In developing countries, the number of overweight children more than doubled to 15.5 million in 2014 from 7.5 million in 1990.

  • The economic losers are in revolt against the elites (Financial Times) Martin Wolf says that losers have votes, too. That is what democracy means - and rightly so. If they feel sufficiently cheated and humiliated, they will vote for Donald Trump, a candidate for the Republican party's presidential nomination in the US, Marine Le Pen of the National Front in France or Nigel Farage of the UK Independence party. There are those, particularly the native working class, who are seduced by the siren song of politicians who combine the nativism of the hard right, the statism of the hard left and the authoritarianism of both. He says: "We know that story: it ends very badly indeed." But the economic distortions globally are at the root of the revolt as the upper middle class where many community leaders come from has been eviscerated.


  • Bets on Negative U.S. Rates by End-2017 Jump Above 10% Chance (Bloomberg) Federal Reserve officials are expecting to raise interest rates this year and next. Options markets show some investors are taking out protection in case rates instead go negative. The implied probability of U.S. interest rates sinking below zero next year has risen above 10%, data compiled by Bloomberg show. The move has been driven by a surge in purchases of contracts that pay out if rates are cut below zero by the end of 2017 and may be linked to investors finding a cheaper way to hedge the opposite bet -- that rates will actually rise as the Federal Reserve expects.

  • Theranos Lab Faults Jeopardized Patient Health, U.S. Says (Bloomberg) Deficiencies at a laboratory run by medical testing startup Theranos Inc. "pose immediate jeopardy to patient health and safety," U.S. government regulators said in a letter to the company released Wednesday. Theranos violated at least five regulations governing clinical laboratories that operate medical diagnostics used to do things like test blood levels or assess disease, the U.S. said in the letter, which is dated Jan. 25. Theranos has 10 days to show the Centers for Medicare and Medicaid Services it is taking action to immediately fix the issues. Statement from Theranos, which said it will submit a full corrective plan within days:

"This survey of our Newark, CA lab began months ago and does not reflect the current state of the lab. As the survey took place we were simultaneously conducting a comprehensive review of our laboratory's systems, processes and procedures to ensure that we have best-in-class quality systems."

  • Fees on Mutual Funds and ETFs Tumble Toward Zero (The Wall Street Journal) The cost of investing is tumbling toward zero for some basic portfolios of stocks and bonds as firms duel for customers. The slide has been under way for years but is accelerating as the industry's biggest companies target increasingly cost-obsessed investors. More than 100 mutual funds and exchange-traded funds now cost $10 or less per $10,000 invested, up from 40 in 2010, according to Morningstar Inc.

  • Study Says Sarao May Not Have Been Responsible for Flash Crash (Bloomberg) Navinder Singh Sarao, dubbed the Hound of Hounslow by newspapers after his arrest for allegedly manipulating markets, has a few academics on his side as he goes back to court next week. Sarao may not have had a material, or even any, impact on the bout of equity market volatility in May 2010 that later became known as the flash crash, according to a draft research report by University of California, Santa Cruz and Stanford University professors dated Jan. 25. The study, which has yet to be formally released because the authors are still soliciting feedback, claims to be the first to analyze the entire order book on a millisecond level. See The Flash Crash: A New Deconstruction.


  1. The native Germans have all been expelled and replaced with Russians.

  2. Western Germany had enough things to pour money into in Eastern Germany without having to rebuild Kaliningrad too.

  3. Germany couldn't trust that Poland would allow troops through to defend Kaliningrad in case of invasion.

Saudi Arabia

  • Saudi strikes on Yemen civilians may be crimes against humanity: U.N. (Reuters) A Saudi-led coalition fighting in neighboring Yemen has targeted civilians with air strikes and some of the attacks could be a crimes against humanity, United Nations sanctions monitors said in an annual report to the Security Council. The report by the U.N. panel that monitors the conflict in Yemen for the Security Council, seen by Reuters on Wednesday, sparked calls by rights groups for the United States and Britain to halt sales of weapons to Saudi Arabia that could be used in such attacks.


  • China's $1 Trillion Money Exodus Isn't About Capital Controls (Bloomberg) Last year, Chinese policy makers watched $1 trillion in capital head for the exits. Now, the question on the minds of global investors is what exactly will President Xi Jinping's economic team do about it. One option is to build a wall around the $10 trillion-plus economy with new and comprehensive capital controls. It's the economic equivalent of breaking the glass and pulling the alarm--and some serious people are advocating it. One is Bank of Japan Governor Haruhiko Kuroda, who turned heads at the talking salons of Davos last week when he urged China to impose capital controls to stem the flow of cash leaving. The solution here for a soft landing is to let the yuan float and concentrate on domestic employment.


  • The diminution of Australian education standards (Macro Business) A university degree in Australia used to mean something. To gain entry to a decent course at a decent institution, students were required to work hard at school and gain a tertiary entrance score above a high threshold. Not any more. Thanks to the former Labor Government's uncapping of university places in 2012, allowing universities to recruit as many students as they can fit, actual tertiary entrance scores have plummeted, meaning every man and his dog can now get a degree, devaluing their worth in the process.


  • Caught off-guard by Zika, Brazil struggles with deformed babies (Reuters) Microcephaly is a tragic neurological complication linked to Zika, the mosquito-borne virus sparking a health scare across the Americas. More than 1,000 cases of microcephaly have been reported in just a few months in Pernambuco state, the epicenter of the Zika outbreak. For a country that for years has battled the Aedes aegypti mosquito - responsible for previous epidemics of dengue, yellow fever and other tropical diseases - the outbreak of Zika has caught the government, public health administrators and doctors entirely off guard.

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