Written by Econintersect
Early Bird Headlines 19 January 2015
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.
Global
Asia gains as China shares surge on stimulus hopes (Reuters) Asian shares were mostly higher on Tuesday as Shanghai stocks surged after data pointing to slower Chinese economic growth fanned stimulus hopes. (See article on China’s GDP report later, below.) MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS was up 0.8%t, rebounding from a four-year low touched earlier. Volatile Shanghai shares .SSEC, which descended to a 13-month low on Monday, swerved in and out of the red before gaining more than 2%. Spreadbetters expected Europe to follow Asia’s lead and forecast a higher open for Britain’s FTSE .FTSE, Germany’s DAX .GDAXI and France’s CAC .FCHI.
Davos Boss Warns Refugee Crisis Could Be Precursor to Something Much Bigger (Bloomberg) As the crash in commodities prices spreads economic woe across the developing world, Europe could face a wave of migration that will eclipse today’s refugee crisis, says Klaus Schwab, executive chairman of the World Economic Forum. Schwab said in an interview ahead of the WEF’s 46th annual meeting, in the Swiss resort of Davos:
“Look how many countries in Africa, for example, depend on the income from oil exports. Now imagine 1 billion inhabitants, imagine they all move north.”
US
Market hoping for earnings season boost (CNBC) Maybe it’s earnings season that will turn the tide for stocks. Earnings are expected to show the worst decline since the financial crisis, yet analysts are holding out hope that the bar is low, earnings will beat and that will help pull the market out of its worst new year slump ever. See also The Week Ahead: Will Earnings Season Halt The Slide? (Jeff Miller, GEI Investing)
Young whites view race with rose-tinted glasses (Al Jazeera) Racial divides are still deep in America.
Michigan governor on Flint water crisis: ‘It’s a disaster’ (CNN) Michigan Gov. Rick Snyder acknowledged Monday the water crisis in Flint is a disaster, but said he would not be stepping down. In an interview with the National Journal, the Republican governor said critics calling the crisis his “Katrina,” referring to then-President George W. Bush’s handling of Hurricane Katrina, is not unfair. The contaminated water supply for Flint not only delivered lead poisoning but is also connected to an outbreak of Legionnaire’s Disease. How did this come about? The state changed the source of water to save money.
UK
The bear is back: Experts warn the FTSE 100 is on the brink as global market volatility continues (City A.M.) The FTSE 100 has so far managed to fend off falling into the bear trap (down 20%), trading around 19% off its all time high of 7,103 in April last year. However, experts have warned that London’s premier index is now on the brink.
France
French president declares economic emergency (CNBC) French President Francois Hollande pledged Monday to redefine France’s business model and declared what he called “a state of economic and social emergency“, unveiling a 2-billion-euro ($2.2 billion) plan to revive hiring and catch up with a fast-moving world economy. The measures he proposed, however, are relatively modest, and he said they would not “put into question” the 35-hour workweek. With his country under a state of emergency since extremist attacks in November, Hollande did not seek to assume any new emergency powers over the economy. In an annual speech to business leaders, Hollande laid out plans for training half a million jobless workers, greater use of apprenticeships, and aid for companies that hire young workers.
Iran
How Iran’s hardliners still threaten the nuclear deal (The Conversation) Iran’s regime is beset by some of the most serious infighting since the Islamic Revolution in 1979. Hardliners and some conservatives were unsettled by the surprise election of “centrist” President Hassan Rouhani in 2013; now they fear that a centrist bloc – allied with reformists, who have been suppressed within Iran for more than a decade – could gain influence in February’s elections for Parliament and the Assembly of Experts, the body which chooses the Supreme Leader.
India
Madhya Pradesh inks pact with IFC to set up world’s largest solar plant (The Economic Times) Hat tip to Sanjeev Kulkarni. The Madhya Pradesh government has inked a pact with IFC, member of the World Bank Group, to set up the world’s largest solar energy plant with a capacity of 750 MW. The Rewa Ultra-Mega Solar Power Project will be set up in Gurh tehsil of Rewa district over an area of 1,500 hectares at an estimated cost of Rs 4,500 crore (US$680 million). The project will be the largest single-site solar power project in the world.
15 more coal mines to start production by March 31: Coal Secretary (The Economic Times) Much of the rest of the world is moving to reduce coal consumption, but not India.
Why are there so few Dalit entrepreneurs? The problem of India’s casted capitalism (The Conversation) There is widespread discrimination against Dalits in being able to access credit from both public and private banks. This is casted capitalism at work, or rather, failing to work.
China
China G.D.P. Growth at Slowest Pace Since 2009, Data Shows (The New York Times) The Chinese economy grew at a 6.8% pace in the fourth quarter, according to data released on Tuesday. It was the lowest quarterly expansion since the global financial crisis in 2009. Uncertainty about the Chinese economy – and whether the government can manage a slowdown – has been weighing heavily on global markets in recent weeks. Investors, in part, are trying to determine if China’s slump will spread, dragging down the rest of the world. The latest data is not likely to reassure investors that all is well in China, the world’s second-largest economy. The quarterly growth rate was lower than analysts expected. For the full year, China expanded at 6.9%, just below the government’s target of 7%.
The yuan and the markets (The Economist) The strains on the Chinese currency suggest that something is very wrong with China’s politics. China’s economy is not on the verge of collapse (see latest GDP report previous article). Yet China is not normal. It is caught in a dangerous no-man’s-land between the market and state control. And the yuan is the prime example of what a perilous place this is. After a series of mini-steps towards liberalization, China has a semi-fixed currency and semi-porous capital controls. See also The worries about China’s slowing growth:
The biggest fear about Chinese growth is that much worse is still to come. Total debt has gone from about 150% of GDP before the global financial crisis in 2008 to nearly 250% today. Increases in indebtedness of that magnitude have been a forerunner of financial woes in other countries. Cracks are beginning to appear in China: capital outflows have surged, bankruptcies are occurring more frequently and bad loans in the banking sector are rising. It is all but certain that more pain lies ahead, though quite how much and how it will play out are matters for debate. If there is one thing all can agree on about China’s economy, it is that the gap between official data and market perceptions has widened to a chasm.
