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.
Merck’s Ebola Vaccine Found to Protect Against Deadly Virus (Bloomberg) An experimental Ebola vaccine manufactured by Merck & Co. was found to be highly protective against the deadly virus, showing promise in the fight against future outbreaks after an earlier epidemic killed thousands and highlighted a shortage of weapons to battle the disease. The vaccine was studied in a trial involving more than 11,000 people in Guinea. Of those who received the shot in a final-stage trial, no Ebola cases were recorded after a ten-day incubation period, according to a study published in the medical journal, The Lancet.
Events of the last year have raised questions about the future growth of international trade. This column examines the role played by ‘global firms’ that both import and export, and are likely to be part of multinationals, in the international economy. In a world of interdependent firm decisions, small reductions in tariffs or trade costs can have magnified effects on trade flows, as they induce firms to serve more markets with more products at greater volumes, and also to source greater volumes of intermediate inputs from more countries. At the same time, policies to restrict imports can end up hurting producers for whom both importing and exporting are a central pillar of their overall business strategy.
Trump May Have a $300 Million Conflict of Interest With Deutsche Bank (Bloomberg) For years, Donald Trump has used a powerful tool when dealing with bankers: his personal guarantee. Now that guarantee -- employed to extract better terms on hundreds of millions of dollars of loans to the Trump Organization -- is at the center of a delicate loan-restructuring discussion at Deutsche Bank AG, which is under investigation on several fronts by the U.S. Department of Justice. The bank is trying to restructure some of Trump’s roughly $300 million debt as part of an attempt to reduce any conflict of interest between the loan and his presidency, according to a person familiar with the matter. Normally, the removal of a personal pledge might lead to more-stringent terms. But there is little normal about this interaction. Trump’s attorney general will inherit an investigation of Deutsche Bank related to stock trades for rich clients in Russia -- where Trump says he plans to improve relations -- and may have to deal with a possible multibillion-dollar penalty to the bank related to mortgage-bond investigations.
Deutsche Bank to Settle U.S. Mortgage Probe for $7.2 Billion (Bloomberg) Deutsche Bank AG said it reached a $7.2 billion agreement to resolve a years-long U.S. investigation into its dealings in mortgage-backed securities, removing a legal hurdle that fueled investor angst. Deutsche Bank will pay a $3.1 billion civil penalty and provide $4.1 billion in relief to consumers under a settlement in principle with U.S. authorities, according to a statement early Friday. The fine will cut pretax profit by $1.2 billion this quarter as the firm taps existing legal reserves to blunt much of that cost. The relief may drag on earnings for years. The deal is far below the Justice Department’s initial request of $14 billion. See also next article.
Deutsche Bank agrees on settlement in principle with the DoJ regarding RMBS (Deutsche Bank Press Release) DB has a more correct statement of the settlement. It involved a fine of $3.1 billion. The other $4.1 billion involves items that have no direct finacial measurement (in other other words, they applied some arbitrary figure to some "fluff" which never amount to much actual cost to the bank:
US dollar 4.1 billion in consumer relief in the United States. The consumer relief is expected to be primarily in the form of loan modifications and other assistance to homeowners and borrowers, and other similar initiatives to be determined, and delivered over a period of at least five years.
Credit Suisse Agrees to Pay $5.3 Billion in U.S. Mortgage Accord (Bloomberg) Credit Suisse Group AG agreed to pay $5.28 billion to resolve a U.S. investigation into its business in mortgage-backed securities as officials work through a backlog of crisis-era bank cases. The Swiss lender will pay a $2.48 billion civil penalty and $2.8 billion in relief for homeowners and communities hit by the collapse in home prices, according to bank statement on Friday. Credit Suisse will take a pre-tax charge of about $2 billion in addition to its existing reserves during the fourth quarter.
Russia says Trump better partner for Syria deal than Obama: Ifax (Reuters) Russia is not in touch with the incoming U.S. administration over Syria, but Moscow sees Donald Trump as a better partner to negotiate with than Barack Obama, Russian Deputy Foreign Minister Gennady Gatilov said on Friday. The Interfax news agency quoted Gatilov as saying that Trump had never linked the resolution of the Syrian crisis to the removal of President Bashar al-Assad, who is supported by Moscow.
World’s Worst Air Has Mongolians Seeing Red, Planning Action (Bloomberg) If you think air pollution in China has been bad, just look at Mongolia. Levels of particulate matter in the air have risen to almost 80 times the recommended safety level set by the World Health Organization -- and five times worse than Beijing during the past week’s bout with the worst smog of the year. Mongolian power plants working overtime during the frigid winter belch plumes of soot into the atmosphere, while acrid smoke from coal fires shrouds the shantytowns of the capital, Ulaanbaatar, in a brown fog. Angry residents planned a protest, organized on social media, on Dec. 26.
China’s 2% Inflation Doesn’t Tell Whole Story as Yuan Slumps (Bloomberg) China’s official inflation rate -- still near its 2% average of the past four years -- masks a surge in living costs felt by its most-influential citizens. That’s why Hao Hong, chief strategist at Bank of Communications International Holdings Co. in Hong Kong, is looking at surging housing and factory prices, as well as weakening yuan forwards and collapsing bonds, to more effectively gauge inflation. As the consumer-price index rose 2.3% in November from a year earlier, the producer-price index jumped 3.3% and new home costs in first-tier cities surged almost 27%.
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