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.
Crude Oil May Rebound to $57 Next Year, Analysts Say (Bloomberg) Oil closed in a bear market Monday, but don't abandon hope. Analysts are looking beyond the current slide to next year for a rebound. Crude has plunged by more than 20% in less than two months as refineries created a glut of gasoline while failing to eliminate excess supply of crude. That wrecked refining margins and hurt the earnings of Exxon Mobil Corp., BP Plc and Royal Dutch Shell Plc. Yet, global oil prices will average $57 a barrel in 2017, according to the median of at least 20 analyst estimates compiled by Bloomberg.
U.N. to Probe Whether Iconic Secretary-General Was Assassinated (Foreign Policy) U.N. Secretary-General Ban Ki-moon will propose reopening an inquiry into allegations that Dag Hammarskjold, one of the most revered secretaries-general in the organization's history, was assassinated by an apartheid-era South African paramilitary organization that was backed by the CIA, British intelligence, and a Belgian mining company, according to several officials familiar with the case. The move follows the South African government's recent discovery of decades old intelligence documents detailing the alleged plot, dubbed Operation Celeste, that was designed to kill Hammarskjold.
Reconciling the Contradictions of U.S. GDP Data (Mohamed El Erian, Bloomberg) A deeper dive into US GDP data released last week reveals a mix of contradictions, writes Mohamed El-Erian. The danger is that the contradictions will resolve in favor of downward-pointing indicators, a risk that could be lessened if the US government provided fiscal support for the Federal Reserve's monetary policy.
Fed's Dudley says likely to raise rates before election if economy improves quickly (Reuters) The Federal Reserve will likely raise interest rates before the November U.S. election if the economy and labor market improve quickly, New York Fed President William Dudley said on Monday. "If that all happens very quickly, I can definitely see the Fed raising interest rates even prior to the election possibly," Dudley said at an international central bankers conference in Bali. "But if that all happens very slowly, then we're going to go very slowly."
Trump fears election could be 'rigged' (The Hill) Republican nominee Donald Trump on Monday raised the prospect of the presidential election being "rigged" against him. Trump made similar complaints about a "rigged" process during the Republican primaries. Trump told a crowd at an event in Columbus, Ohio:
"I'm afraid the election is going to be rigged, I'm going to be honest. I think my side was rigged. If I didn't win by massive landslides - think about what we won in New York, Indiana, California, 78 percent; that's with other people in the race."
Trump on Clinton: 'She's the devil' (The Hill) Donald Trump on Monday called Hillary Clinton "the devil", while describing the regret he thinks Sen. Bernie Sanders (I-Vt.) has over endorsing her. He said of Sanders during a campaign rally in Harrisburg, Pa:
"He made a bad deal. He should not have made the deal. Believe me, he has buyers's remorse.
McCain in tough spot with Trump (The Hill) John McCain is in a precarious spot in what he's called his toughest reelection bid to date. And he can thank Donald Trump. The Republican senator from Arizona on Monday ripped into Trump in a nearly 700-word, emotionally charged rebuke of the GOP presidential candidate's attack on Khizr and Ghazala Khan, the Muslim parents of a U.S. soldier killed in Iraq.
A complacent, secretive IMF failed to deal with EU crisis; what's changed? (The Conversation) A report into the IMF's handling of the euro crisis carefully avoids blame, while attempting to reclaim influence. There are serious charges of mismanagement in the report. The IEO states baldly that the Executive Board of the IMF never met to discuss individual case management of countries. Indeed, the Board first met in May 2010 to discuss only one country: Greece. The problem is an impenetrable veil of secrecy, not only for the IMF but for all the financial institutions in Europe. When Yanis Varoufakis started recording Eurogroup finance ministers' meetings in 2015, EU ministers were justifiably peeved. So they did two things: they started green-rooming without him; and they made his position untenable, forcing him to resign. For Varoufakis' reaction to the report, read IMF Confesses To Being 'Hitman'.
Brexit hit UK manufacturing harder than initially estimated (The Business Times) UK manufacturing shrank more than initially forecast in July, suffering its biggest drop in more than three years. A Purchasing Managers' Index (PMI) slumped to 48.2, below the one-off flash reading of 49.1, Markit Economics said Monday in London. The index has only fallen below the 50 mark - which separates expansion from contraction - one other time since early 2013. The index was at 52.4 in June. The report suggests that Britain's decision to leave the European Union may have a harsher impact on the economy than initially expected.
Japan cabinet approves $130 billion in fiscal steps to boost growth (Reuters) Japanese Prime Minister Shinzo Abe's cabinet approved ¥13.5 trillion ($132.04 billion) in fiscal measures on Tuesday as part of efforts to revive the flagging economy, with cash payouts to low-income earners and infrastructure spending. The package includes ¥7.5 trillion in spending by the national and local governments, and earmarks ¥6 trillion from the Fiscal Investment and Loan Program, which is not included in the government's general budget. The stimulus spending is part of a renewed government effort to coordinate its policy with the Bank of Japan, but growing concerns that the BOJ policy has reached its limit triggered the worst sell-off in government bonds in three years. Econintersect: We are confused. CNBC headline has a different number: Live: Japan approves a $274 billion stimulus package.
Abe's Fiscal Plan Follows a Long Road of Packages That Failed (Bloomberg) Prime Minister Shinzo Abe's "bold" plan to revive the economy with a $273 billion package leaves him traveling down a well-trod path: it marks the 26th dose of fiscal stimulus since the country's epic markets crash in 1990, in a warning for its effectiveness. The nation has had extra budgets every year since at least 1993, and even with that extra spending, it has still had six recessions, an entrenched period of deflation, soaring debt and a rapidly aging population that has left the world's third-largest economy still struggling to get off the floor.
How Uber crashed in China (The Conversation) Uber has announced its exit from the Chinese taxi market by merging with arch-rival Didi Chuxing in a US$35 billion deal. Uber is selling its operations to Didi, with Uber China investors receiving a 20% stake in Didi, according to reports. It represents a major defeat for the San Francisco-based tech giant after a long and hard-fought battle to dominate China's ride hailing market. Uber tried to succeed where other Western companies had failed in China but, like Google and Amazon before it, found that Chinese markets tend to be enormously competitive with very narrow margins. On top of this, Uber found itself the victim of the business model that is behind its own success in numerous other countries - the network effect.
Chinese Capital Outflows May Still Be Happening - But In Disguise (Bloomberg) China may have slowed capital outflows in 2016, but thay still have spurious leakages. Authorities in the world's second-largest economy have been able to pursue a policy of managed depreciation for the Chinese yuan without spooking markets and eliciting expectations of major foreign-exchange volatility, the way the one-off devaluation did last August. One big reason is that Beijing seems to have had success in cracking down on the flood of money leaving the country, which had been prompting sizable drawdowns in the central bank's foreign currency reserves, to prop up the value of the yuan. But over-invoicing for imports still seems to be a big play in China. Econontersect: A facetious example: A bank in Samoa could send a bag of sand (labeled 'Virgin Silica') to China with an invoice for $1 million and then the receiver in China pays the invoice with an account established in his name in Samoa containing almost all of the million.
Australia cuts interest rate to record low 1.5% (The Business Times) Australia's central bank cut interest rates to a new record low Tuesday in a widely expected decision after a recent run of soft inflation readings. The 25 basis points cut to 1.5 per cent means the Reserve Bank of Australia has slashed rates by 300 basis points since November 2011 to support the economy as it transitions towards non-resources growth after an unprecedented mining investment boom.
Australia's core consumer prices increase faster than forecast (The Business Times) This report is from last week before the RBA cut interest rates Monday. Australia's core consumer prices gained more than economists forecast last quarter, suggesting the central bank may not need to rush to cut interest rates. The Reserve Bank of Australia looks at two core inflation measures - trimmed mean and weighted median - and targets an annual rate of between 2% and 3% on average. Last Wednesday's report showed that trimmed mean CPI rose 1.7% from a year ago vs median forecast of 1.5% gain; weighted median CPI climbed 1.3% vs forecast 1.3% increase. Headline CPI rose 1% vs forecast 1. 1% rise.
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