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posted on 28 March 2016

Early Headlines: Asia Stocks Fade Late, 7 Countries For Debt Crisis, Men's Final 4, Goldman Probed For Bond Rigging, EU Crony Capitalist State, India Bond Rally, India FDI Up, China Mfg Profits Up And More

Written by Econintersect

Early Bird Headlines 28 March 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.pac.2016.mar.28

... the seven countries that, on my analysis, are most likely to suffer a debt crisis in the next 1-3 years. They are, in order of likely severity: China, Australia, Sweden, Hong Kong (though it might deserve first billing), Korea, Canada, and Norway.

U.S.

  • Tournament Challenge: North Carolina rounds out the Final Four (ESPN) All four top seeds played in the elite 8, but North Carolina was the only one to survive. They will play another ACC team, 10 seed Syracuse. The other semifinal has two 2 seeds, Villanova vs, Oklahoma.

  • Goldman Sachs Implicated In Rigging Of Treasury Market (Trust Advisor) Washington's probe into the alleged rigging of the $13 trillion US Treasuries market by Wall Street banks has narrowed its focus to a handful of firms - including Goldman Sachs. Evidence is being collected from chats and e-mails.

  • Behind U.S. GDP Data Is Reason for Recession Worry: Weak Profits (Bloomberg) Corporate profits plunged 11.5% in the fourth quarter from the year-ago period, the biggest drop since a 31% collapse at the end of 2008 during the height of the financial crisis. For 2015 as a whole, pretax earnings fell 3.1%, the most in seven years, according to the Commerce Department. Earnings decline were concentrated in the energy sector which has been suffering from the collapse in oil prices and rapid diminishment of coal consumption.

  • The Seven Countries Most Vulnerable To A Debt Crisis (Steve Keen, Forbes) SK has contributed to GEI. Prof. Keen may have not put the U.S. on the seven most vulnerable list but there is reason to be wary - see graph below, which has our added notations. He wrote in the article:

... private sector expenditure in an economy can be measured as the sum of GDP plus the change in credit, and crises occur when (a) the ratio of private debt to GDP is large; (b) growing quickly compared to GDP. When the growth of credit falls - as it eventually must, as growing debt servicing exhausts the funds available to finance it, new borrowers baulk at entry costs to house purchases, and numerous euphoric and Ponzi-based debt-financed schemes fail - then the change in credit falls, and can go negative, thus reducing demand rather than adding to it.

usa.gdp.plus.credit.growth

EU

... the European Union is explicitly anti-democratic. It aims at eliminating the rule of law. It aims at instituting initially a sort of crony capitalism state that would quite quickly transmute into a bureaucratic socialist state.

It is oppressive. It is hypocritical. It has inflicted enormous misery on all its subject countries, most obviously of course through monetary union, which was presented as an economic mechanism but was always intended... And we have a former Commission president, Romano Prodi, to vouch for this. It was always intended to create economic crises which would push people into giving up more of their sovereignty, democracy, legitimacy, freedom. And sad to say it's been very successful in that regard if in no other.

UK

  • Have investors found their next 'big short'? (CNBC) London has been on the radar for many "short sellers" - traders who bet that a particular security will fall in price - with even the Bank of England Governor Mark Carney talking of stretched valuations in the capital. But, it now appears these hedge funds and asset managers are putting their money where their mouths are. London-exposed housebuilder Berkeley that is peaking the most interest.

berkeley.price.shares.on.loan

Pakistan

  • Pakistanis hunt militants behind blast that killed at least 70 (Reuters) Pakistani authorities hunted on Monday for breakaway Taliban militants who once declared loyalty to Islamic State after the group claimed responsibility for an Easter suicide bomb targeting Christians, that killed at least 70 people. The attack on Sunday evening in a busy park in the eastern city of Lahore, the powerbase of Prime Minister Nawaz Sharif, killed mostly women and children enjoying an Easter weekend outing. Pakistan is a majority-Muslim state but has a Christian population of more than 2 million.

India

  • FPIs turn net buyers, pour in $2.5 bn in capital markets in March (Business Standard) Overseas investors have pumped in close to Rs 16,500 crore ($2.5 billion) into Indian capital markets so far in March, after pulling out massive funds in the preceding four months. Market experts attributed the huge inflows to continued hopes that Reserve Bank of India (RBI) will bring down the monetary policy rate at its first policy meeting of fiscal year 2016-17 on April 5. See also One reason why equity investors prefer India over China: world-class companies (The Economic Times).

  • Top Rupee Bond Funds Stay Bullish During Best March for 13 Years (Bloomberg) India's best-performing debt-fund managers are predicting more gains for sovereign bonds as benchmark notes head for their best March in 13 years. The 10-year yield will drop at least 25 basis points in six months from 7.51 percent on March 23, according to ICICI Prudential Asset Management Co. and Kotak Mahindra Asset Management Co., which delivered the first- and second-best returns over the three months to March 22. That would add to the 12 basis point drop since Feb. 29, which exceeds the biggest decline in any March since 2003. The forecasts are more aggressive than the median analyst estimate for a three basis point fall by Sept. 30.

Japan

  • Over 60 pct Japanese oppose further sales tax hike: poll (xinhuanet.com) The latest poll released Sunday showed that 64.6% of the Japanese public oppose the government's plan to further hike sales tax from current 8% to 10% in April next year, according to local reports. Two world leading economists and Nobel laureates Paul Krugman and Joseph Stiglitz recently told Prime Minister Shinzo Abe directly to forgo the further sales tax hike plan on concerns of the negative effects on Japan's economy.

China

  • China Industrial Profits Rise 4.8%, Ending 7-Month Losing Streak (Bloomberg) Chinese industrial profits snapped a seven-month losing streak in the first weeks of this year, while the data also showed companies fell deeper in debt while inventories grew. Industrial companies' profits climbed 4.8% from a year earlier to 780.7 billion yuan ($120 billion) in January-February, the National Bureau of Statistics said in a statement Sunday. Oil processing, electrical machinery and food companies led gains as 28 of 41 industry groups posted profits, NBS said. Profits fell 2.3% during the full year 2015.

  • China faces struggle to recast steel workers for service sector (Financial Times) With millions poised to lose their jobs as China shuts down scores of underperforming mines and mills, Beijing has pledged to soften the blow, devoting a Rmb100bn ($15.4bn) fund to help "resettle" workers in the thriving service sector. But a tour around Tangshan, China's steel capital in Hebei province that lies some 260km south-east of Beijing, shows how optimistic such a plan is. Steel mills are shutting down for good. Econintersect: Perhaps the Comrades should come to the U.S. and observe how we turn skilled workers into fast food servers and Walmart greeters.

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