Written by Econintersect
Early Bird Headlines 30 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 shares edge up, Nikkei gyrates as BOJ holds steady (Reuters) Asian shares edged up on Friday, on track for their biggest monthly rise since January 2012 but headed for weekly losses as investors fretted about the possibility United States interest rates could still rise this year. Japanese shares slipped briefly and then regained their composure, while the yen rose after the Bank of Japan held policy steady.
Crude Extends Slide Below $50 as Producers Report Further Pain (Bloomberg) Crude was poised to end its fourth month below $50 a barrel amid a global glut that’s showing no signs of relief for oil and gas companies that posted more than $19 billion in writedowns in a single week. Futures slid as much as 1% in New York. Output from Iraq, the second-biggest OPEC producer, exceeds 4 million barrels a day, Oil Minister Adel Abdul Mahdi said, according to Almada news website. U.S. crude stockpiles rose for a fifth week through Oct. 23, keeping supplies more than 100 million barrels above the five-year seasonal average, government data showed Wednesday. Oil failed to sustain a gain above $50 a barrel earlier this month as the Organization of Petroleum Exporting Countries pumps above its quota and the International Energy Agency estimates the surplus will remain until at least the middle of 2016. Royal Dutch Shell Plc announced its worst loss in 16 years on Thursday, including $8.2 billion in impairments. And the U.S. continues to overproduce and grow stockpiles – see next article.
U.S.
Oil Producers Curb Megaproject Ambitions to Focus on U.S. Shale (Bloomberg) Big U.S. oil companies are starting to think small. A stubborn 16-month crude rout with no end in sight is driving the largest U.S. oil producers away from costly, high-risk megaprojects long touted as the industry’s future and toward safer shale operations that generate the cash needed to satisfy anxious investors. Exxon Mobil Corp., Royal Dutch Shell, Chevron Corp., ConocoPhillips and Hess Corp. have all either delayed or abandoned projects that range from the deep seas of the Gulf of Mexico to Canada’s oil sands and the U.S. Arctic. At the same time, Exxon and Chevron both announced plans to substantially increase U.S. crude production, largely as a result of their shale operations. Econintersect: How many pundits are “fracked” with their predictions of the end of shale production if it actually increases as suggested in this article? And what about the Saudi strategy to wage a price war against shale when shale production costs appear to be falling like a rock? Are the Arabs also “fracked”? See also (just published) Oil Companies Have Cut Back Everything Except Crude Production (Bloomberg)
Today AIG, Tomorrow Citi, BofA? Icahn Takes on Too Big to Fail (Bloomberg) Carl Icahn says TBTF is TBTBP (too big to be profitable):
Carl Icahn is pushing for the breakup of insurance giant American International Group Inc., but America’s biggest banks could be forgiven for thinking he was talking about them, too.
What the gray-bearded activist investor identifies as the symptoms of AIG’s corporate obesity — below-target returns, discounted valuations and the scarlet letter of the “systemically important” designation that brings what he calls an “onerous regulatory burden” — can also be slapped on Wall Street financial supermarkets such as Bank of America Corp. and Citigroup Inc.
Boeing 767 Catches Fire at Florida Airport, Injures 14 (The Daily Beast) Dynamic International Airways flight 405, bound for Caracas, Venezuela, had its left engine catch on fire just before scheduled depoarture shortly after noon. According to airport police, the plane’s left engine caught fire just as it was ready to depart from Fort Lauderdale-Hollywood International Airport. A total of 14 people were reported hospitalized.
You’re About to Get Too Expensive for Your Pension Plan (Bloomberg) Your plan could try to boot you after a big premium boost the Pension Benefit Guaranty Corp. in the U.S. budget deal.
UK
US warns Britain: If you leave EU you face barriers to trading with America (The Guardian) Hat tip to Roger Erickson. Trade representative Michael Froman says UK would face same tariffs and barriers as China, Brazil or India in the event of Brexit. Voters are due to decide by the end of 2017 whether the UK should remain in the EU, and opinion polls show rising support for leaving the bloc. Froman’s comments on Wednesday undermine a key economic argument deployed by proponents of exit, who say Britain would prosper on its own and be able to secure bilateral free trade agreements (FTAs) with trading partners. The US is Britain’s biggest export market after the EU, buying more than $54bn (£35bn) in goods from the UK in 2014. Econintersect: Is it time for new motto: Live free AND die?
Greece
Migrant tragedy in Greek seas shows dangers as winter nears (Associated Press) Dead migrants float belly-up, stripped of their clothing by churning seas. On shore, wailing women search for loved ones among the shivering, wide-eyed survivors. A rescuer tries to revive a toddler who lies unconscious in her sodden striped sweater. The scenes bring home a sobering reality: While the flow of migrants into Europe tends to abate as winter nears and the journey becomes more dangerous, this year it has only risen as thousands of people brave death in raging seas and freezing temperatures.
Syria
Syria conflict: UN’s Ban Ki-moon urges ‘flexibility’ in Vienna talks (BBC News) UN Secretary General Ban Ki-moon urged the five main participants in talks on the war in Syria – the US, Russia, Iran, Saudi Arabia and Turkey – to abandon “national perspectives” for “global leadership”. The civil war has become a global conflict with Russia and Iran on one side (backing the government of Bashar Assad) and The U.S. Saudi Arabia and Turkey on the other.
Iraq
Pentagon: ‘We’re in combat’ in Iraq (CNN) The Pentagon conceded Wednesday that U.S. troops are in combat in Iraq after days of dancing around the characterization following the first death of U.S. service member in the campaign against ISIS.
Japan
BOJ Refrains From Adding Stimulus Even as Inflation, Growth Wane (Bloomberg) The Bank of Japan kept its monetary policy unchanged as Governor Haruhiko Kuroda bets that the current level of stimulus is still sufficient to drive prices to his 2% inflation target. Kuroda has maintained the view in recent months that a strong economic cycle is intact, with high corporate profits and a tight labor market bringing price gains, once the effect of low energy costs is discounted. The BOJ released a brief statement after its meeting Friday showing that the board voted 8-1 to continue expanding the monetary base at an annual pace of 80 trillion yen ($664 billion). Econintersect: What is the definition of insanity? Oh yeah – continue aggressive central bank asset purchases – aka QE (quantitative easing) – when there is still not a single case of inflation in anything other than asset prices. When will a child point at the emperor on parade?
China
South China Sea: US and China hold talks on ship (BBC News) China’s naval commander has warned his US counterpart against “dangerous and provocative acts“, days after a US warship sailed within 12 nautical miles of contested islands in the South China Sea. In a video conference, Adm Wu Shengli said the US risked “a minor incident that sparks war“, China’s navy said. The US said the talks were productive and that both had agreed to maintain dialogue. The U.S. is backing China’s neighbors who object to the construction artificial islands far from China’s shore and within the territorial waters of other countries. See next article.
In defeat for Beijing, Hague court to hear South China Sea dispute (Reuters) In a legal setback for Beijing, an arbitration court in the Netherlands ruled on Thursday that it has jurisdiction to hear some territorial claims the Philippines has filed against China over disputed areas in the South China Sea. Manila filed the case in 2013 to seek a ruling on its right to exploit the South China Sea waters in its 200-nautical mile exclusive economic zone (EEZ) as allowed under the United Nations Convention on the Law of the Sea (UNCLOS). The Hague-based Permanent Court of Arbitration rejected Beijing’s claim that the disputes were about territorial sovereignty and said additional hearings would be held to decide the merits of the Philippines’ arguments. China has boycotted the proceedings and rejects the court’s authority in the case. Beijing claims sovereignty over almost the entire South China Sea, dismissing claims to parts of it from Vietnam, the Philippines, Taiwan, Malaysia and Brunei. The rest of the world recognizes sovereignty of countries up to 200 nautical miles from their shoreline. Not China. They claim, by self-proclaimed historical right, sovereignty of virtually all of the South China Sea almost right up to the shoreline of bordering nations.
These Charts Explain Why China Scrapped Its One-Child Policy (Bloomberg) Hat tip to John O’Donnell. Econintersect: What could possibly be inconsistent with 6.5% growth and a shrinking labor force?
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