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.
“Commodity market black swan events come in many forms, and the market may take years or an instant to price them in. Indices are already pricing in record levels of volatility as 2017 begins, and investors are specifically concerned about geopolitical developments."
“Congressman John Lewis should spend more time on fixing and helping his district, which is in horrible shape and falling apart (not to mention crime infested) rather than falsely complaining about the election results. All talk, talk, talk - no action or results. Sad!"
Ringling Bros. circus folding its tent after nearly 150 years (Reuters) The Ringling Bros. and Barnum & Bailey circus said on Saturday it will cease performances after 146 years in business, owing to what it said were declining tickets sales and high operating costs. In May of last year, the circus retired its elephant act, years after a suit by activists. It admitted no wrongdoing, but agreed to a six-figure fine several years before ending the elephant performances. In his statement on Saturday,Kenneth Feld, chairman and CEO of Feld Entertainment, the Florida-based producer of Ringling Bros. and Barnum & Bailey, noted that declining sales had fallen off even more dramatically following what he called "the transition of the elephants off the road".
“Bernie really was a successful businessman with quite original insights into the market, and he’s continued applying his business instincts in prison. At one point, he cornered the hot chocolate market. He bought up every package of Swiss Miss from the commissary and sold it for a profit in the prison yard. He monopolized hot chocolate! He made it so that, if you wanted any, you had to go through Bernie."
Income Inequality (Inequality.org) Income includes the revenue streams from wages, salaries, interest on a savings account, dividends from shares of stock, rent, and profits from selling something for more than you paid for it. Income inequality refers to the extent to which income is distributed in an uneven manner among a population. In the United States, income inequality, or the gap between the rich and everyone else, has been growing markedly, by every major statistical measure, for some 30 years. Data for graph below: Emmanuel Saez, Center for Equitable Growth, June 2015
Income disparities have become so pronounced that America’s top 10 percent now average nearly nine times as much income as the bottom 90 percent. Americans in the top 1 percent tower stunningly higher. They average over 38 times more income than the bottom 90 percent. But that gap pales in comparison to the divide between the nation’s top 0.1 percent and everyone else. Americans at this lofty level are taking in over 184 times the income of the bottom 90 percent.
The likelihood of the UK carving out a special status with the EU looks remote. And so the UK will have to see through a hard Brexit and all the pitfalls that could entail. There won’t be any uncertainty then. If consumers actually do stop buying and business investment sinks, it is then that we should see that response. All of the financial stability concerns could indeed come roaring back too. And that’s when policy offsets might prove inadequate. So from where I sit, the risk from Brexit now is actually higher, not lower.
Trump aides deny summit with Putin planned (Reuters) Two top aides to President-elect Donald Trump denied a published report on Saturday that he is planning to hold a summit with Russian President Vladimir Putin weeks after taking office. The Sunday Times of London reported that Trump had told British officials that such a summit was being planned, possibly to be staged in the Icelandic capital of Reykjavik. "The story is a fantasy," one Trump aide told Reuters, speaking on condition of anonymity. Another said the report was not true.
Indonesia Confounds Mining Industry With Export Policy Curveball (Bloomberg) Indonesia’s unexpected mining policy shift is reverberating around the world. As the dust settles, here are four charts showing possible consequences of what Macquarie Group Ltd. called a “very strange move". Southeast Asia’s biggest economy on Thursday said it will allow exports of excess nickel ore and bauxite by miners that are building processing plants in the country, easing a ban on unprocessed ore shipments that’s been in place since 2014. While it’s not a complete reversal of the ban, the potential for greater ore exports is bearish for global nickel prices, according to Citigroup Inc. Futures tumbled more than 5 percent in London after the changes were announced, before reversing losses. The bank thinks they could drop as low as $9,500 a metric ton from $10,205 as of 5:46 p.m. in Singapore on Friday.
Philippines' Duterte says he may impose martial law if drug problem 'virulent' (Reuters) Philippine President Rodrigo Duterte has said he would impose martial law if the drug problem became "very virulent", just a month after dismissing as "nonsense" any suggestion he might do so. Duterte has made a brutal war on drugs a central pillar of his administration since he took office in the middle of last year. Since July, more than 6,000 people have been killed in the anti-drug campaign, in both police operations and unexplained killings by suspected "vigilantes". More than 1 million drug peddlers and users have been arrested or have surrendered to authorities.
On Monday, I wrote a piece outlining how the US has pivoted away from China toward Russia. And the conclusion I drew from the circumstances was that this pivot will create a lot of geopolitical and economic uncertainty depending on both the importance of the actors on the world stage and the violence of the pivot. As US President Obama is constantly at pains to stress, Russia is not a major player economically. So the pivot toward Russia is one of geo-strategic importance. But the pivot away from China has economic implications. And China-hater Peter Navarro as Trump’s new trade czar is telling us the pivot will be violent.
Picking Navarro to a new trade czar role makes it much more likely that Trump’s actions will be punitive in nature - and therefore lead to a trade war with China. Navarro has written a number of books about China that tell us this. For example, his 2008 book, “The Coming China Wars," is described by many as basically a litany of grievances about China on multiple fronts - from militarization to human rights abuses to currency manipulation. In Peter Navarro’s depiction, China is now the new Evil Empire for America that Russia once was. Here’s what the most liked favourable review said.
One-China Policy Can’t Be Bargaining Chip, Beijing Warns Trump (Bloomberg) China’s foreign ministry said its One-China policy isn’t negotiable and urged Donald Trump to recognize the “high sensitivity" with which it views Taiwan, a day after the president-elect hinted for the second time in a month at a reset of U.S.-China relations. Trump was quoted by the Wall Street Journal late Friday as saying he would only commit to the One China policy after assessing the progress the world’s second-largest economy makes on trade and currency issues. Ministry of Foreign Affairs spokesman Lu Kang said in a statement on the agency’s website:
“The One-China principle, which is the political foundation of the China-U.S. relations, is non-negotiable."
On sensitive U.S. stopover, Taiwan leader connects to Twitter (Reuters) Taiwan President Tsai Ing-wen, carving a careful diplomatic path on her stopovers in the United States, visited the headquarters of micro-messaging service Twitter Inc on Saturday and reactivated an old account. Tsai was returning from a week-long visit to Central America. But it was her stopovers in the United States that raised more interest after President-elect Donald Trump said last month he would reconsider the long-standing "one China" policy, whereby the United States acknowledges the Chinese position that there is only one China and that Taiwan is part of China. See preceding article (under China).
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