Written by Econintersect
Early Bird Headlines 26 October 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
Asian stocks advance on China rate cut, US tech earnings (Reuters) Asian stocks on Monday were close to wiping out all their losses since China’s shock currency devaluation in August, as global equities rallied after the Chinese central bank cut rates and U.S. tech giants provided upbeat earning guidance. MSCI’s index of Asia-Pacific shares outside Japan .MIAPJ0000PUS rose 0.5% to hit its highest since Aug. 12, led by 1.2% gains in Honk Kong .HSI. Japan’s Nikkei .N225 rose 1.1% to a two-month high. See more about events in China later below.
U.S.
October doldrums? History says a terrible trading week is ahead (CNBC) Using data going back to the creation of the S&P 500 in 1957, technical analyst John Kosar of Asbury Research found that “the fourth week of October, which is next week, is seasonally the weakest of the entire fourth quarter.” Econintersect: This report does not reveal an equally important factoid: How many weeks have had gains in week 4 of the 4th quarter over the 57 years?
EU
EU, Balkan leaders commit to more refugee shelters at emergency summit (Al Jazeera) European Union, Balkan leaders agreed on a 17-point plan to cooperate on managing flows of refugees. The leaders agreed to slow the chaotic flow of people moving up from Greece and provide much more shelter as winter looms after spending Sunday lashing out at each other’s handling of Europe’s greatest immigration crisis since World War II. Nearly 250,000 people have passed through the Balkans since mid-September and the surge is not being deterred by either cold weather or colder waters off Greece. Croatia said 11,500 people crossed into the country Saturday, the highest in a single day in a month. Econintersect: While some coordination was agreed in processing and sheltering refugees it is not clear that anything can be done to stem the flow until the onset of winter will encourage “sheltering in place”.
UK
Free market think tank the Adam Smith Institute calls for controversial welfare overhaul (City A.M.) A conservative free market organization proposes a guaranteed income program for the UK:
The government should replace all major welfare payments with “negative income tax”, an eyebrow-raising report from free market campaign group the Adam Smith Institute (ASI) has suggested.
The call to ditch tax credits, jobseeker’s allowance, and the universal credit system for a new system comes as the government has taken fire for changes to tax credits which critics say could cost the nation’s poorest an average of £1,300 a year.
The radical negative income tax would pay out to British citizens in decreasing amounts until they reach a certain wage, when they would begin paying tax.
Those out of work would receive the maximum amount.
The ASI says the scheme would be structured to encourage people into work, with the final “negative taxed” salary always higher if more hours were worked.
Poland
Poland elections: Conservatives secure decisive win (BBC News) Poland’s conservative opposition Law and Justice party has won parliamentary elections. Exit polls suggest it has enough seats to govern alone, with an anticipated 39% of the vote. Its eurosceptic leader Jaroslaw Kaczynski has claimed victory, and the outgoing Prime Minister, Ewa Kopacz of the centrist Civic Platform party, has admitted defeat. If the numbers suggested by the exit poll are confirmed, it will be the first time since democracy was restored in Poland in 1989 that a single party has won enough seats to govern alone.
Syria
Rights group: Russian airstrikes in Syria may have killed dozens of civilians (CNN) Hat tip to Alun Hill. Airstrikes believed to have been carried out by Russian warplanes in western Syria are reported to have killed dozens of civilians, Human Rights Watch says, suggesting that the bombings appear to be war crimes. The aerial attacks took place in the northern part of Homs governate on October 15 as Russian and Syrian planes were supporting a ground offensive by the Syrian military and its allies against rebel groups, the rights group said in a statement Sunday.
China
China’s Leaders Shift From Short-Term Stimulus to Five-Year Plan (Bloomberg) Old drivers such as manufacturing and residential construction are spluttering, and new areas like consumption, services and innovation aren’t picking up the slack quickly enough. While President Xi Jinping’s blueprint for 2016-2020 will seek to map out the structural change needed to propel the next leg in China’s march toward high-income status, a more immediate fix has been delivered with the sixth interest-rate cut in a year. Defensive stimulus may be needed to ensure structural reforms while excess capacity may undercut measures to prop up growth.
Chinese Official Economists: China Should Grow At 6-7% For Some Years (Forbes) Author Tim Worstall:
Given that this is the official stance of China’s Communist Party, that the Chinese economy can and will grow at 6-7% in the coming years, it’s not all that much of a surprise to hear official economists stating that China’s economy can and will grow at 6-7% for several years. But, however cynical we might be about such official pronouncements it’s not obvious that they’re wrong. My own argument in favor of this possibility would be one not shared by many economists I think. For it’s one where I concentrate upon the microeconomics of the situation, not the macroeconomics of it. Then again, coming from the corner of economic opinion that I do, the classically liberal, it’s not all that much of a surprise that I think the way that I do.
China’s Central Bank Moves to Spur Economic Growth (The Wall Street Journal) Days after reporting its worst economic performance since the global financial crisis, China unleashed a one-two punch to prop up growth while also sweeping away a major control on how banks set deposit rates. The country’s central bank combined a quarter-point cut in benchmark interest rates with a half-percentage reduction in banks’ reserve-requirement ratios, moves aimed at lowering corporate financing costs and pumping liquidity into the economy. Friday’s moves marked the sixth time in less than a year that the PBoC has cut interest rates and the fourth across-the-board reduction of the amount of deposits banks are required to hold in reserve.
Argentina
Argentina elections: November run-off looms in presidential race (BBC News) Argentina will face a run-off election next month after neither presidential candidate gained enough votes to win the poll outright. Centre-left candidate Daniel Scioli led exit polls, and just edged centre-right Buenos Aires mayor Mauricio Macri with most votes counted. Many had expected Mr Scioli to lead by a greater margin. The run-off on 22 November will be the first time an Argentine election will be decided by a second round. With 86% of the votes counted, Mr Scioli was marginally ahead with 35.9% of the vote, while Mr Macri had 35.2%.
Guatemala
No joke: Guatemalan comedian wins presidency in landslide (Reuters) Jimmy Morales, a former TV comedian who has never held office, swept to power in Guatemala’s presidential election on Sunday after milking public anger over a corruption scandal that deepened distrust of the country’s political establishment. The 46-year-old Morales overwhelmingly beat center-left rival and former first lady Sandra Torres in a run-off vote in a 68% landslide despite his lack of government experience and some policy ideas that strike many as eccentric.
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