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posted on 23 May 2017

Early Headlines: Asia Stocks Mixed, Dollar And Oil Down, Gold Steady, US Rig Counts Pressure Oil, Trump Budget, Manchester Blast, Greek Debt Problem Is Back, And More

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Early Bird Headlines 23 May 2017

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.

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Global

asia.pac.2017.may.23

  • Rise In Rig Count Threatens To Undermine Recent Oil Price Spike (Oil Price) The number of active oil and gas rigs in the United States rose for the eighteenth straight week, Baker Hughes reported on Friday - this time by 16. The number of oil rigs in operation increased by 8, and gas rigs increased by the same number. Combined, the total oil and gas rig count in the US now stands at 901 rigs, or 497 above the count a year ago. The last time oil and gas rigs in the US exceed 900 was May 1, 2015.

rig.count.2017.may.20

U.S.

  • Trump seeks historic cuts to government (The Hill) The Trump administration on Tuesday will propose the deepest cuts to government programs in a generation, delivering the opening salvo in a new round of budget battles in Washington. The proposal, titled “A New Foundation for American Greatness" and set for release at 11 a.m. on Tuesday, sets out a 10-year plan to balance the budget. It relies on a mix of cuts to anti-poverty programs, optimistic economic forecasting and deep cuts to nondefense discretionary funding to meet its targets. It would not touch Social Security and Medicare, which President Trump promised to leave alone during his campaign. Econintersect: A balanced budget while maintaining a growing economy is only possible with a trade surplus; a trade surplus is only possible with wage and domestic consumption repression; wage and domestic consumption repression is only possible with domestic recession ... oops - that contradicts our starting condition of a growing economy. The proposal is "dreaming the impossible dream" - and not in a good way. Note: If you offer Germany as a counter example, we would argue that Germany did not achieve the impossible, they simply exported economic agony to the periphery of the Eurozone.

  • Everything's Coming Up Rosy in Trump Budget's Economic Scenario (Bloomberg) The Trump administration sees the U.S. economy achieving the rosiest of scenarios over the next decade -- a surge in growth that doesn’t spark a worrisome jump in inflation or tighten the labor market any further.

Economic growth is projected to climb by 2020 to 3 percent, the Trump administration’s oft-stated target, according to assumptions published Monday in the White House’s budget proposal. At the same time, the unemployment rate will rise only modestly -- to 4.7 percent in the same year -- and inflation, based on the consumer price index, will be 2.6 percent this year and 2.3 percent each year for the next decade.

  • America’s Cities Are Running Out of Room (Bloomberg) Everyone wants to live downtown, but only the rich can afford it. And it’s getting worse. A shortage of homes for sale has bedeviled U.S. house hunters in recent years, so why don’t builders build more? One problem is that they’re running out of lots to build on - at least in the places that people want to live. Cities that were sprawling before the Great Recession have begun to sprawl again. Space-constrained cities, meanwhile, have run out of room to build. That reality has spurred developers to focus on center-city neighborhoods where high-density building is allowed - and new units command exceedingly high prices.

  • Trump trip gives GOP a breather (The Hill) Out of sight, out of mind. The loss of a major distraction from Washington is a welcome relief to stressed out GOP members of congress and executive branch agencies.

UK

  • Nineteen dead, 59 injured so far: carnage at Ariana Grande concert in Manchester a suspected terrorist attack (The Conversation) See next article for latest update. While there is no confirmation as yet this was a terrorist-inspired incident, police suspect the Manchester attack, which has so far killed 19 people and injured 59 others, was caused either by a bomb contained in an abandoned backpack, or was the work of a suicide bomber. At this stage no group has claimed responsibility. But it is not being overlooked that last week Islamic State released a 44-minute video in which fighters of different nationalities urged their supporters back home to carry out acts of violence.

  • U.K. Police Confirm Manchester Blast Caused by Lone Attacker (Bloomberg) Greater Manchester Police have confirmed the blast at a pop concert Monday night that killed more than 20 people was caused by an attacker with an improvised explosive device. Bloomberg News reports. Police raised the death toll to 22 and said children were among those killed. The attacker also died at the scene. At this stage police do not know if the bomber acted alone or was part of a wider network. They say more than 400 officers have been deployed in the investigation.

  • Fact Check: have the Conservatives always been the low-tax party? (The Conversation) Thatcher inherited from Labour a basic rate of income tax at 33%, and a higher marginal rate which could reach as high as 98%. By 1988, she had cut that higher rate dramatically to 40% and the basic rate to 25%. But this tax cut was partly offset when her government raised the indirect tax, VAT, from 8% to 15%. This is a less egalitarian way of taxing, because, unlike income tax, everyone pays at the same rate. May says Labour is “about raising taxes", but, as the graph shows, the 1997 New Labour government in fact maintained the lowered basic income tax rate, and indeed reduced it further. Economic boom times in the early 2000s enabled Tony Blair’s government to both raise public spending and keep taxation relatively low.

uk.tax.rates

France

Greece

  • Euro zone ministers eye Greek debt deal with IMF, new loans decision in June (Reuters) Euro zone finance ministers failed to agree on debt relief for Greece with the International Monetary Fund on Monday and did not release new loans to Athens, but came close enough in talks to aim for both deals at their next meeting in three weeks. Greece needs new cash from the euro zone to avoid a default in July when it has to repay some €7.3 billion ($8.20 billion) worth of maturing loans. To get the money, the Greek parliament approved pension cuts and tax hikes last Thursday.

But for the disbursement to take place, Greece needs to implement some 140 "prior actions" - laws that have to be passed to make the reforms stick - and even though most of them had been done, some still remained to be completed.

The chairman of euro zone finance ministers Jeroen Dijsselbloem told a news conference that work was progressing for the disbursement to take place "before the summer".

The other reason why no new loans could be agreed was the lack of agreement between the euro zone and the IMF on debt relief for Greece.

  • Rouhani’s commanding election victory might just help him change Iran (The Conversation) Around 70% of Iranians who were eligible to vote participated in the country’s presidential election and re-elected the incumbent, Hassan Rouhani, to another four-year term. Rouhani, who was supported by Iran’s moderates and reformists, won around 57% of the vote; his main rival, the more hardline Ebrahim Raisi, won only 38.5%. Reformist office-holders and the Iranian electorate alike have all sorts of priorities for the next four years, but based on the slogans Rouhani’s supporters used during the election, three big ones stand out: improving political freedom, fighting ingrained corruption, and freeing three prominent dissidents who have been under house arrest since 2009: Mir Hossein Mousavi, Zahra Rahnavard and Mehdi Karroubi. The author says that achieving his goals will not be easy for Rouhani.

India

  • India's Book-Buying Habits Say A Lot About The Country's Economy (Bloomberg) It’s perhaps no surprise India’s GDP growth of 7.1 percent -- the fastest among major economies -- is fueling a boom in book sales. Indian publishing successes, in return, can help provide insights into the country’s growth and consumer confidence. It is a land where the travails of a saucy, soon-to-be-married Goldman Sachs Group Inc banker -- in Chetan Bhagat’s fictional One Indian Girl -- is a runaway best-seller. Nielsen estimates the sector is now worth $6.76 billion. Led by educational books, the sector is set to grow at an average compound annual growth rate of 19.3% until 2020.

China

  • China's Deleveraging Puts the Yuan Closer to a Free Float (Bloomberg) China's financial markets are fascinating to watch these days. Efforts by officials to decrease the nation’s enormous debt pile without destabilizing domestic markets are having profound consequences, most visibly in the bond market, where the yields on short-term debt have risen above those on longer maturities for the first time. The implications are more than just academic. In fact, they will likely pressure China to allow the yuan to become a free-floating currency sooner rather than later.

Canada

  • Why Milk Creates Anger Across U.S.-Canada Border: QuickTake Q&A (Bloomberg) Canada’s dairy industry, which receives tariff and quota protections from its government, has drawn the ire of U.S. President Donald Trump, who blames Canada for millions of dollars in lost sales for U.S. milk producers. In this, Trump isn’t alone. Other nations also worry that Canada may start dumping low-cost milk products on the international market, exacerbating a global glut that’s weighed on prices and led to losses all over the world.

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