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posted on 26 April 2016

Early Headlines: Asia Stocks Lower, Next Euro Crisis?, Brexit Remain Gains, Singapore 17 Months Deflation, Record FDI For India, BOJ Buying Japan Inc, China Pumps Liquidity And More

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Early Bird Headlines 26 April 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.





  • Confusion Reigns on First Day of Cruz-Kasich Alliance (Bloomberg) The alliance may be falling apart before it even really got started. The plan to stop Donald Trump is not playing well in Indiana, a state crucial to the billionaire's prospects of winning the Republican presidential nomination. Ohio Governor John Kasich locked up both of his campaign offices in the state and canceled a Tuesday rally there after his team vowed Sunday night to "give the Cruz campaign a clear path" in Indiana to defeating the front-runner. But he gave no instructions to his volunteers about what to do next. The Indiana co-chairman of Kasich's campaign wouldn't tell supporters to back Senator Ted Cruz. An Indiana delegate supporting Kasich was ambivalent about backing Cruz. And Kasich himself added to the confusion when he decided to make a fresh appeal to voters.

  • US Presidential Election 2016: Donald Trump calls Hillary Clinton "crooked" and insists he can act like a president (City A.M.)

Donald Trump has been at it again in his latest bombastic media appearance, as he blasted Hillary Clinton for being "crooked" and said she sets a bad example for other women.

But don't worry everybody, the Donald is just playing the fool to get attention - he can become a regular politician anytime he wants, according to his latest campaign rally.

In an interview to be broadcast later today on Fox News, Trump said that Clinton, who is currently leading Bernie Sanders in the race for the Democratic presidential nomination, "is a person who has got many many flaws."


  • The Euro's Next Existential Crisis (Bloomberg) The eurozone could be plunged into a new crisis at the end of this week if a long-awaited review of Portugal's creditworthiness falls short.


  • Average weekly disposable income climbed in March, according to Asda's income tracker (City A.M.) The average weekly disposable income climbed to £198 per UK household in March according to Asda's latest income tracker. Families were £12 better off year-on-year. This means that annual growth in spending power has remained above £10 for 17 consecutive months. London saw spending power rise slightly, up £14 on the same period last year. However, the percentage increase of 5.5% sees its rate of growth remain below the UK average of 6.3%.

  • UK banks set for grim results showing size of turnaround task (The Business Times) Britain's top banks are set for one of their worst first-quarter earnings seasons since the financial crisis, adding to their struggle to win over investors against a backdrop of misconduct charges, a weak economic outlook and uncertainty over Brexit. Despite shoring up their capital bases and paying out strong dividends, the five biggest banks - HSBC, Barclays, Standard Chartered, Lloyds Banking Group and Royal Bank of Scotland - have collectively seen their shares fall about 11% this year against a 1.5% rise in the FTSE 100.

  • EU referendum odds: Call it the Obama effect? Brexit odds have fallen again (City A.M.) The odds of Britain voting to leave Europe in the upcoming referendum have fallen again, putting the prospect of leaving at one of its lowest points yet, according to one bookie. Chances of Brexit diminished "drastically" after Obama last week told Brits the nationshould remain, and that trend has apparently continued into the weekend. The chances of leaving the EU have now fallen to 27% as money poured into Remain.


  • Singapore March inflation eases further to -1%, core inflation up slightly at 0.6% (The Business Times) Overall inflation fell for the 17th straight month in Singapore in March, but core inflation edged up slightly. As expected, the consumer price index (CPI) for all items eased further to -1% (annual rate) in March, from February's -0.8%. Falling car and housing prices will continue to suppress inflation, and headline inflation is expected to "remain negative throughout 2016, and average -1 to 0% for the whole year".



  • The Tokyo Whale is quietly buying up huge stakes in Japan Inc (Business Standard) TheBank of Japan's exchange-traded fund purchases have made it a top 10 shareholder in about 90% of the Nikkei 225 Stock Average, according to estimates compiled by Bloomberg from public data. It's now a major owner of more Japanese blue-chips than both BlackRock Inc., the world's largest money manager, and Vanguard Group, which oversees more than $3 trillion.

South Korea

  • FSC probes family members' dumping of Hanjin Shipping shares for insider trading (Pulse News) South Korean financial authorities embarked on an investigation on Eusu Holdings Co. Chairwoman Choi Eun-yeong and her offspring on suspicion of insider trading in their unloading of entire shares in Hanjin Shipping Co., a company Choi previously headed before the troubled shipper applied for debt workout with creditors on Friday. A capital market investigation team of the Financial Services Commission (FSC) said on Monday it was looking into illegality behind sale of 0.39% remaining stake held by Choi and her two daughters in Hanjin Shipping worth 3.1 billion won (US$2.7 million) over the last two weeks. The sale was completed a day before Hanjin Shipping announced it voluntarily was seeking to go under creditors workout. Share prices of Hanjin dipped 7.5% on Friday following the news.


  • China's central bank pumps more money into market (Xinhuanet) China's central bank on Monday pumped more money into the market to ease a liquidity strain. The People's Bank of China (PBOC) conducted 180 billion yuan (US$27.6 billion) of seven-day reverse repurchase agreements (repo), a process in which central banks purchase securities from banks with an agreement to resell them in the future. The move followed a net injection of 260 billion yuan and 250 billion yuan into the financial system last week on Thursday and Wednesday, respectively.

  • RBS sees China 'black swan' risk from loans for non-bank finance (Business Times) Chinese banks' surging lending to non-bank financial institutions such as fund managers may pose a "black swan" risk for the nation's financial system, according to Royal Bank of Scotland Group Plc. Lending to such firms had become "the biggest driver of overall credit growth", Harrison Hu, the firm's chief Greater China economist, wrote in a note Monday. Non-bank financial institutions include companies, such as brokerages and fund managers, that aren't allowed to accept deposits, Hu said. The surge in lending brought with it the risk of an "abrupt reversal" that could trigger an event like China's cash squeeze of mid-2013 if it wasn't properly handled, Hu wrote.

  • Beijing Auto Show: Chinese Upstarts Take On the Electric Car Market (Bloomberg) The Beijing Auto Show is the latest opportunity for China to showcase fruits of the estimated 37 billion yuan ($5.6 billion) invested into new-energy vehicles over the past five years. Highlights include models from BYD Co., the automaker backed by Warren Buffett's Berkshire Hathaway Inc. that is collaborating with Daimler AG; and the concept from Faraday Future, which counts tech billionaire Jia Yueting as a major investor. Go to the article for a great picture display from the show.


  • Budget explainer: why is Australia's wage growth so sluggish? (The Conversation) The article specifies four factors which have contributed to low wage growth in Oz: (1) low consumer price inflation; (2) low growth in labor productivity; (3) a low level of labor demand; and (4) slumping output prices due to the unwinding of the mining boom. But one graph shows the difficulty in trying to identify each of these impacts. The low level of labor demand (high unemployment) does show a tendency to depress wage growth. The author points out that the most recent data has wage growth falling below vales that would be predicted from the 15 preceding years. Econintersect: Without running any statistical tests we think there is no doubt that the red data belongs to a different distribution than the blue. But not discussed is the scatter of the blue data. We expect that the correlation coefficient would be less than 0.7, which is the top boundary of weak correlation in our definition, and could be closer to0.5, the upper limit of poor correlation. This would suggest that there are probably factors with stronger relationship to wage growth than unemployment.

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