Early Bird Headlines 29 May 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.
U.S.
- JPMorgan told to provide communications with top Chinese official (Financial Times) The US Securities and Exchange Commission has ordered JPMorgan to hand over any correspondence with Wang Qishan, one of the seven politburo members who rule China, in connection with a probe into how the bank hired the children of high-ranking Chinese officials to help win business. Econintersect: Good thing for JP Morgan they are a bank and not a football organization – otherwise someone might go to prison.
- Former House Speaker Hastert indicted on federal charges (Reuters) Former House of Representatives Speaker Dennis Hastert was indicted on Thursday on federal charges, including for lying to the FBI, relating to an alleged effort to hide $3.5 million in payments he was making to a person to conceal past misconduct. Econintersect: Too bad for Hastert he is not a megabank executive.
- U.S. economy likely shrank in first quarter, but fundamentals strong (Reuters) The U.S. economy likely contracted in the first quarter as it buckled under the weight of unusually heavy snowfalls and a resurgent dollar, but activity since has rebounded modestly. The consensus expectation is that GDP shrank at an annual rate of 0.8% in the first quarter, much below the advance estimate last month that it grew 0.2%. Econintersect: This article is scary because the four most feared words in economic forecasting are repeated a number of times: “The fundamentals are strong“. This was very a popular phrase as the Great Financial Crisis was unfolding. In our economic forecast for June we find that, although the economy is still growing, the growth is weakening. We would say: “The fundamentals are weakening“.
UK
- U.K. GDP confirms economy slowed in first quarter (MarketWatch) U.K. gross domestic product rose 0.3% during the first quarter of 2015, the Office for National Statistics said, an annualized rate of 1.2%. Figures were unrevised from preliminary data released last month. The result was below expectations.
Switzerland
- U.S. reaches deals with four more banks under Swiss program (Reuters) Four more Swiss banks have cut deals with the U.S. Department of Justice to avoid possible prosecution for helping Americans evade taxes. The banks settled under a voluntary program the Justice Department launched in 2013 to allow Swiss banks to resolve potential criminal charges by disclosing cross-border activities that helped U.S. account holders conceal assets.
Philippines
- Philippines GDP grows at slowest pace since 2011 (MarketWatch) The economy expanded at 5.2% year-on-year in the first quarter, its slowest pace in three years, as government spending continued to miss targets and export growth slowed. The target for the year is 7%-8% growth and a government spokesman said that can still be achieved. The first-quarter gross domestic product growth was slower than the 6.4% median forecast from a poll of economists by The Wall Street Journal.
India
- FDI may be allowed in sectors with high employment scope (Business Standard) Prime Minister Narendra Modi seeks to increase FDI (foreign direct investment) in “areas with high employment potential and strong local talent” and expects that incentives to that end will be “reforms measures like the Goods and Services Tax (GST) and land acquisition Bill” that will be passed in “a matter of time“.
Hong Kong
- It’s time for HK to reinvent itself, says Alexa Lam (Asian Investor) The recently retired CEO of the Securities and Futures Commission says Hing Kong must reinvent itself to avoid becoming redundant in the Eurasia ‘one belt, one road’ China superconnector initiative.
China
- China stocks slump 6% on margin tightening (Business Standard) China’s stock markets plunged on Thursday, with indexes dropping over 6% in record high turnover as investors rushed to sell after more brokers tightened margin trading requirements for clients and the central bank drained money market liquidity. We had just posted articles on China’s booming stock markets in Early Bird for Wednesday. We will have more on this in What We Read Today later today.
- China central bank draining cash from flush banks through back-door repos: sources (The Business Times) China’s central bank has drained money from cash-flush financial institutions by selling them bond repurchase agreements behind closed doors, signaling policymakers’ discomfort with excess liquidity in the financial system. It is an unusual step, and was partly responsible for Chinese stocks tumbling over 6 per cent on Thursday in their worst daily decline in four months.
Japan
- April retail sales disappoint as consumption tax weighs (The Japan Times) Retail sales rose less than forecast in April, signaling a weak start to the second quarter for an economy that is still weighed down by last year’s sales-tax increase. Econintersect: Was that the most stupid tax increase in history? We don’t know but expect it would be high on such a list.
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