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.
Bombshell Dropped in Federal Court: Proof of a Silver Market “Mafia" Among Big Banks (Pam and Russ Martens, Wall Street on Parade) Lawyers representing traders who allege they were ripped off by a group of colluding global banks filed eye-popping evidence in a Manhattan Federal Court yesterday showing that even as global banks were being criminally probed for rigging currency markets, they continued to engage in rigging the silver market, with a UBS trader referring to the group as the “mafia". In order to settle the charges against it in the matter, yesterday’s filing shows that the beleaguered Deutsche Bank turned over to the plaintiffs’ attorneys “more than 350,000 pages of documents and 75 audio tapes" that implicate other banks in a very serious way. In addition to banks previously named in the lawsuit (Deutsche Bank, HSBC, The Bank of Nova Scotia and UBS), trader conversations captured in the material provided by Deutsche Bank seriously implicate Barclays, Standard Chartered, BNP Paribas Fortis and Bank of America/Merrill Lynch.
OPEC’s Historic Deal Won’t Be Enough to Drain Oil Stockpiles (Bloomberg) OPEC is likely to bring the oil market into balance by the middle of next year, but its production cut looks set to fall short of its stated goal of draining the stockpiles that are depressing prices. The oil market will rebalance “toward the middle of next year", according to Nigeria’s Minister of State for Petroleum Emmanuel Kachikwu, bringing an end to more than three years when supply exceeded demand. However, Bloomberg News calculations based on OPEC data show that across the whole of 2017 there will be little overall reduction in record oil inventories -- even if the group convinces non-members to join supply curbs at a meeting on Saturday.
Trump defends wealthy Cabinet: 'I want people that made a fortune' (The Hill) President-elect Donald Trump defended himself on Thursday for picking a number of wealthy people to serve in his Cabinet. Trump, whose campaign was built on railing against elites, has received criticism for tapping a number of extremely wealthy people for his cabinet. NBC News reported on Wednesday that the nascent administration already has a combined wealth of $14.5 billion. Trump said at a "thank you" rally in Des Moines, Iowa:
“One newspaper criticized me, ‘Why can’t we have people of modest means?’ Because I want people that made a fortune. Because now they’re negotiating with you."
U.S. Life Expectancy Declines, and Researchers Are Puzzled (The New York Times) A study on mortality rates released on Thursday by the National Center for Health Statistics showed that Americans could expect to live for 78.8 years in 2015, a decrease of 0.1 from the year before. The overall death rate increased 1.2%. That’s about 86,212 more deaths than those recorded in 2014. Life expectancies in other developed countries are not showing a similar decline.
Senate Democrats dig in as shutdown approaches (The Hill) Senate Democrats are digging in their heels over health benefits for miners in a government funding bill, raising the risk of a shutdown at midnight on Friday. Democrats are holding up the continuing resolution (CR) to fund the government as they push to include a one-year extension of healthcare for thousands of miners and their families. The spending measure now includes a four-month extension. Absent a deal, the earliest the Senate could take an initial vote on the CR would be Saturday morning, meaning Congress would blow past the deadline to fund the government.
Is The Workforce Nearing Full Recovery? Don't Trust The Unemployment Rate For The Answer (Doug Short, Talk Markets) DS is a regular contributor to GEI. In the latest data the official unemployment rate dropped to 4.6%. The age 16+ population grew by 219 thousand, but the labor force (the employed and unemployed actively seeking employment) more than offset that growth with a shrinkage of 226 thousand. The the number of employed grew by 160 thousand while 387 thousand unemployed vanished. How can that be? Obviously, the lion's share of the unemployed didn't join the ranks of the employed. They simply disappeared from the labor force. Adding to this deviation from historical norms is the 65+ cohort which is at historically high employment levels, double the average as a percent of total employed from 1980-2000. Econintersect: The question remains as to just how much slack there is in the labor market when there are 2-4 million less in the labor force for the prime working age cohort (25-54).
Live: South Korean parliament votes to impeach President Park (CNBC) Park Guen-hye is accused of colluding with a friend and a former aide, both of whom have been indicted by prosecutors, to pressure big businesses to donate to two foundations set up to back her policy initiatives. Park has previously denied wrongdoing but apologized for carelessness in her ties with the friend, Choi Soon-sil. CNBC's Chery Kang says the national assembly voted yes to impeachment with 134 votes out of 300 voters. The majority was achieved because of a number of abstentions.
Trump Says US Must Improve Relations With China (Sputnik News) Trump said the United States needed to improve its relationship with China, with which it runs an annual trade deficit of around $500 billion. However, the president-elect stressed that China has to learn to start playing by the rules of the market economy and stop devaluing its currency. Econintersect: The ignorance of this devaluation comment is astounding. China has implemented capital controls to support the value of the yuan and to slow capital flight from China. See next two articles.
China’s forex reserves drop $70bn as outflow accelerates (Financial Times) Reserves at the People’s Bank of China fell $69.1bn to $3.051tn in November, a decline of 2.2% from the previous month and the largest drop since a 3% fall in January. A survey of economists had forecast a decline of only 1.9% from October. Analysts predict Beijing will continue tightening capital controls, measures that European and US businesses say have disrupted their operations. The fifth consecutive monthly fall points to growing difficulty for policymakers. Since a sharp renminbi depreciation in August 2015, Beijing has sought to combat more severe softening against the dollar by selling the US currency from the central bank’s forex reserves. See also next article.
Why Markets Stopped Worrying About China's Dwindling Foreign Cash Pile (Bloomberg) At the dawn of 2016, the dwindling of China's massive hoard of foreign reserves sparked turmoil on global financial markets. Now, signs of accelerating capital outflows inspire little more than a yawn. One reason is that the rate of decline has slowed from last year.
India to train Vietnam’s Sukhoi fighter pilots (The Hindu) Hat tip to Sanjeev Kulkarni. In a further boost to its growing defence ties with Vietnam, India has agreed to train the southeast nation’s Sukhoi-30 fighter pilots. The agreement was reached during bilateral discussions between Defence Minister Manohar Parrikar and his Vietnamese counterpart, General Ngo Xuan Lich, here on Monday. India and Vietnam have been steadily stepping up their cooperation, especially in the defence sector, against the backdrop of the growing assertiveness of China in the region. Econintersect: The timing of this announcement is particularly important given the following from Reuters yesterday: Exclusive: Risking Beijing's ire, Vietnam begins dredging on South China Sea reef.
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