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Asian stock markets mostly weaker as oil turns lower (CNBC) Asian stock markets were mostly weaker Tuesday as the price of crude oil turned lower following a surge overnight. Japan's Nikkei 225 closed 0.4% lower at 16,052.05 while South Korea's Kospi fell 0.1% to 1,914.22. Hong Kong's Hang Seng index fell 0.3% to 19,408.30 and the Shanghai Composite Index in mainland China dropped 0.8% to 2,903.33. Australia's S&P/ASX 200 was down 0.4% to 4,979.60. Stocks in Singapore and the Philippines were higher but stocks in Indonesia were lower.
The World's Debt Is Alarmingly High. But Is It Contagious? (Bloomberg) Global debt levels are raising alarms over whether we're on the brink of another debt-fueled economic meltdown. The potential for disaster depends on how contagious a new round of defaults would prove and whether writedowns in one part of the world could cause losses in others. That's what happened in the last two major debt crises, which rippled through the global economy. The biggest concerns are centered on emerging economies and especially China.
The Saudi-Russian oil gambit has little to do with prices (The Conversation) Saudi Arabia and Russia, the world's two most powerful oil producers, have reached a tentative agreement to freeze oil production at its current levels. As the first deal between an OPEC and non-OPEC member in 15 years, it marks a significant declaration of intent. But it is not geared toward buoying oil prices, as some might hope. Rather, it has much more to do with blocking Iran's re-emergence as a global oil exporter.
Sovereign Wealth Funds May Sell $404 Billion of Equities (Bloomberg) Sovereign wealth funds may withdraw $404.3 billion from global stock markets this year if crude prices stay between $30 to $40 per barrel as oil-rich nations seek to shore up their finances, according to the Sovereign Wealth Fund Institute. The value of listed equities held by the world's largest wealth funds will probably drop to $2.64 trillion this year, from about $3.04 trillion at the end of 2015, the Las Vegas-based SWFI said in an e-mailed report sent Monday. Withdrawals are set to approximately double from last year, when sovereign funds sold about $213.4 billion of equities. And foreign reserves are falling as well. See Saudi Arabia 18% decline:
The U.S. Economy Is in Good Shape (The Wall Street Journal) Martin Feldstein says that we are in the process of "shaking off the effects of past Fed policy", but "many signs are good". He is alarmed that "the 2016 race has seen some alarming proposals floated". Two excerpts:
The American economy is in good shape, better than critics think and financial investors fear. Incomes are rising, unemployment is falling, and industrial production is up sharply. The recent steep declines in the prices of stocks and junk bonds are not the precursor of an economic downturn. Instead, they are part of the inevitable unwinding of mispriced financial assets caused by the Federal Reserve's unconventional monetary policy.
But the big uncertainties that now hang over our economy are political, with presidential candidates threatening to raise taxes, increase fiscal deficits and pursue antibusiness policies. Removing those uncertainties could stimulate growth after this year's election.
The U.S. States Where Recession Is Already a Reality (Bloomberg) Energy-state slumps put economists on alert for wider decline. As economists size up the chances of the first nationwide slump since 2009, pockets of the country are already contracting. Four states -- Alaska, North Dakota, West Virginia and Wyoming -- are in a recession, and three others are at risk of prolonged declines.
Eurozone growth lowest in over a year and prices fall further (Markit) The flash (preliminary) Markit Eurozone PMI fell from 53.6 in January to 52.7 in February, the lowest since January of last year. The second consecutive monthly slowing in the rate of output expansion reflected a waning in growth of new orders for a third successive month, resulting in the smallest rise in new business for 12 months. Germany held up fairly well but France returned to contraction. The rest of Europe declined as well.
Thatcher's revenge? The Tories finally get to go to war over Europe (The Conversation) The Brexit issue is not about Europe. No matter what David Cameron came back with from Brussels by way of a deal, it would not have been enough for parts of his party. Many Tories have spent 20 years in an existential crisis over the tension between British and Tory identity.
London ranks 39th in the world for quality of living (City A.M.) Many of the top cities are in Europe (7 of top 10) but Vancouver, BC, Canada and Auckland, NZ also cracked the top 10. London was the top ranked city in the UK. The top city overall was Vienna, in the spot it also held last year.
Germany Isn't Investing as in the Past and That's a Problem (Bloomberg) All the pieces appear to be in place for a surge in corporate investment in Germany -- except one critical element. While low borrowing costs, robust domestic consumption and capacity strains mean companies should be itching to spend, the confidence to do so is lacking. Market turmoil, signs of a weaker global demand and Germany's own aging population are giving bosses plenty of reason to hold back, leaving capital spending as a share of output clinging stubbornly to a five-year low. Investment in 2015 was about 70% of the level in 2000 when interest rates were much higher.
Islamic State rigs currency rates in Mosul to prop up finances (Reuters) Islamic State militants in the northern Iraqi city of Mosul are manipulating the exchange rate between U.S. dollars and Iraqi dinars to squeeze money out of local people as coalition bombers attack the group's finances. The U.S-led coalition has said that in addition to attacking Islamic State's fighters and leaders it will go after financial infrastructure too. Air strikes have reduced Islamic State's ability to extract, refine and transport oil, a major source of revenue that is already suffering from the fall in world prices. Since October the coalition says it has destroyed at least 10 "cash collection points" estimated to contain hundreds of millions of dollars.
Japan's scandals, shaky economy erode Abe's support as polls loom (Reuters) Voter support for Japanese Prime Minister Shinzo Abe slipped to below 50% in a weekend opinion poll, sending a warning signal to the government with an election less than six months away. Overall support for Abe's cabinet slipped to 46.7%, down 7 points from late January and the lowest rating in six months, according to a survey conducted by Kyodo news agency. Disapproval rose 3.6 points to 38.9% and 77.7%t of the respondents said they felt the administration was "growing slack".
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