Written by John Lounsbury
Early Bird Headlines 14 September 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 pulls higher as markets on edge ahead of Fed meeting (Reuters) Asian shares rose in choppy trade on Monday after Chinese markets were hit by soft economic data, while the dollar sagged as investors questioned whether the U.S. Federal Reserve will be confident enough to raise rates for the first time in almost a decade. But financial spreadbetters predicted more upbeat openings for European bourses, with Britain’s FTSE 100 .FTSE, Germany’s DAX .GDAXI and France’s CAC 40 .FCHI all seen opening up to 0.9 percent higher.
- Next two years hottest, says Met Office (BBC News) UK’s Met Office warns big changes could be under way in the climate system with greenhouse gases increasing the impact of natural trends. The research shows that a major El Nino event is in play in the Pacific, which is expected to heat the world overall. But it also reveals that summers in Europe might get cooler for a while as the rest of the globe warms.
- Alarm bells ringing over global debt timebomb (City A.M.) Global debt levels have hit dangerous heights, a top financial group has warned, leaving many countries vulnerable to a US rate hike which could come as early as this week. Recent swings in global stock markets are reflective of deep underlying problems in the global economy, the Bank of International Settlements (BIS) said yesterday. “We are not seeing isolated tremors, but the release of pressure that has gradually accumulated over the years along major fault lines,” said Claudio Borio, the BIS chief economist.
- The Impact Of Chinese Buyers On Western Real Estate (Wealth-X) Hat tip to Marvin Clark via GEI Discussion Group, LinkedIn. Also discussed yesterday in Early Bird. The purchase of U.S. residential real estate has grown dramatically since 2009. Will the juan renminbi devaluation and the Chinese stock market crash put a damper on this? This article seems to think there will be a limited effect unless China enters a long-term decline. What wasn’t discussed yesterday was the insignificance of Chinese residential real estate purchases in the U.S. See first article under U.S. See also first article under Australia.
U.S.
- Purchases of U.S. Real Estate by International Clients for the Twelve Month Period Ending March 2014 (National Association of Realtors) From the data displayed below we can readily calculate that Chinese buyers accounted for less than 24% of all foreign buyer purchases in 2014, and possibly less than 20%. This means that Chinese buyers accounted for less than 1% of U.S. residential real estate transactions last year.
- Fears grow over US stock market bubble (Financial Times) A growing number of investors believe that US stocks are overvalued, creating the risk of a significant bear market, according to research by Yale University market scholar Robert Shiller. The Nobel economics laureate told the Financial Times that his valuation confidence indices, based on investor surveys, showed greater fear that the market was overvalued than at any time since the peak of the dotcom bubble in 2000. Shiller says it looks like “bit like a bubble again“.
EU
- Euro plummets after Draghi’s dove-bomb (City A.M.) The euro lost over one per cent of its value yesterday after Brussels’ top central banker hinted that he could push the button on further monetary stimulus in a bid to boost the single currency area. European Central Bank (ECB) boss Mario Draghi gave an unexpectedly dovish statement, revealing that his organisation has cut forecasts for both growth and inflation.
- Tax Deal ‘Is Within Reach,’ EU Economics Commissioner Says (International Business Times) For three years, the finance ministers of 11 countries within the European Union have been negotiating the terms of a pivotal transaction tax deal that would decide how — and how much — to tax companies operating in member countries. On Saturday, the EU’s economic commissioner, Pierre Moscovici, told reporters that the countries were finally nearing an end to the deadlock.
UK
- Labour’s lost it (City A.M.) Conservatives in Britain are having fits with talk of public banking and higher top income tax rates:
New shadow chancellor wants to seize shares and impose 60 per cent tax rate.
JEREMY Corbyn’s Labour party last night signalled a dramatic lurch to the left with the appointment of radical socialist John McDonnell as its new shadow chancellor.
McDonnell proposes the full public ownership of Britain’s banking system in order “to take control of our casino economy” and has described his interests as “fermenting the overthrow of capitalism”.
The Hayes and Harlington MP wants a 60 per cent rate of tax on incomes over £100,000 plus an additional wealth tax on the richest 10 per cent of Brits.
Germany
- Don’t close the borders: Why Germany needs the refugees (City A.M.) While the German public has thus far been solidly behind keeping the country’s doors open and extending their welcome to the refugees, given the mammoth undertaking of re-settling a projected 800,000-plus people this year alone, Germany’s decision to reintroduce controls on its border with Austria yesterday may not be too much of a surprise. This is not only a great shame in humanitarian terms, however, but could prove to be a catastrophe for Germany economically in the long run if the restrictions do not turn out to be temporary. For on the question of whether Germany can and should keep its doors open to the refugees, one basic, overriding fact must be stressed time and again; it is entirely in Germany’s own self-interest to keep doing good. In fact, without this demographic jolt to the system, Germany’s enviable way of life (a major reason the refugees wish to go there in the first place) is doomed to come to a jarring halt. Within the next ten years, Germany will become the world’s oldest major industrialized nation, displacing even Japan. Econintersect: As we have said repeatedly, Germany needs an influx of young immigrants and we feel the country cannot get too many newcomers under the current circumstances.
Egypt
- Mexican tourists killed by Egyptian security forces (BBC News) Security forces in Egypt have mistakenly killed 12 people, including Mexican tourists, during an anti-terror operation, the interior ministry says. The tourists were traveling in four vehicles that entered a restricted zone in the Wahat area of the Western Desert, a ministry statement said. Ten Mexicans and Egyptians were also injured and are being treated in a local hospital.
China
- China unveils plan to fix state-owned firms as growth slows (Al Jazeera) China has unveiled its plan to restructure its mammoth state enterprise sector, including partial privatization, as data pointed to a cooling in the world’s second-largest economy. The guidelines, jointly issued on Sunday by the Communist Party’s Central Committee and the State Council, China’s cabinet, included moves to clean up and integrate some state firms.
Australia
- Chinese investment in residential real estate amounts to just 2% (The Conversation) The scale of Chinese investment in the Australian residential property market continues to polarize public opinion. Chinese buyers are often blamed for driving up house prices in Australia and causing the current affordability crisis. However, Chinese offshore purchases are surprisingly low. Based on Foreign Investment Review Board (FIRB) approval figures, ABS data, and our own data on actual Chinese investment in commercial real estate, we estimate Chinese residential real estate investment totals around 2% of all residential real estate transactions in Australia. This compares to less than 1% in the U.S. – see article under U.S., above.
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