Written by Econintersect
Early Bird Headlines 22 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 stocks end week rallying off four-year lows, helped by ECB, oil bounce (Reuters) Asian stocks bounced at the end of a tumultuous week, recovering from four-year lows thanks to hints of more monetary policy support by the European Central Bank and a rally in crude oil from 12-year lows. European markets could follow, with financial spreadbetters expecting Britain’s FTSE 100.FTSE to open up about 0.4%, Germany’s DAX .GDAXI to start the day as much as 0.9% higher, and France’s CAC 40 .FCHI to be up as much as 0.8%. MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS rose 2.6%, the most since Sept. 9, after probing a four-year low on Thursday. That puts the index on track for a 0.2% gain for a week in which oil prices plunged and China-led global growth concerns pummelled risk assets globally. Japan’s Nikkei .N225 surged 5.9% at the close, the most in more than four months, moving away from a 15-month low struck Thursday.
Why do oil prices keep going down? (The Conversation) Plummeting oil prices have raised fears of a worldwide recession, even though countries are still reporting growth in jobs and income. Are there other factors driving oil prices globally? If prices are going down, suggesting flat or falling demand, why do producers keep adding supply to the market? They should be curtailing production, according to economics 101. But the oil market doesn’t always seem to follow the rules.
Davos: An outlook as chilly as the setting (City A.M.) The author says the “mood is as downbeat this year” as he has seen, and that includes the Great Financial Crisis years of 2008 and 2009.
U.S.
EPA regional director resigns in connection to Flint water crisis (The Guardian) A regional director with the US Environmental Protection Agency is resigning in connection with the drinking water crisis in Flint, Michigan. EPA chief Gina McCarthy said on Thursday that Susan Hedman is stepping down effective 1 February. Hedman is administrator of EPA’s region 5, which is based in Chicago and includes Michigan.
Is dark money boosting Bernie Sanders? (Al Jazeera) Bernie Sanders may decry how big money influences political elections, but that isn’t stopping groups independent of the Democratic presidential candidate from spending significant cash in his name. The latest organization to do so: Friends of the Earth Action. The national environmental nonprofit this week released an ad that praises Sanders’ green record and highlights his early opposition to the Keystone XL pipeline. See also next article.
Republican Operatives Try to Help Bernie Sanders (Bloomberg) “Picking your opponent” is an age-old political manipulation tactic and Republicans think Bernie a weaker oponent than Hillary. Econintersect: Didn’t they think the same in 2008 for Barack vs. Hillary?
Exclusive: California gas leak spotlights shoddy regulation of aging storage wells (Reuters) Companies have been calling for increased regulation, something unusual in the U.S. From this article:
Long before a natural gas storage well sprung a disastrous leak near Los Angeles, California, utilities and national industry groups were raising alarms about the danger of aging underground storage infrastructure.
The leaking well’s owner, Southern California Gas Co, warned state utility regulators in 2014 of “major failures” without a rate hike to pay for comprehensive inspections of 229 storage wells.
Twenty-six of its wells were “high risk” and should be abandoned – even though they complied with state regulations, the utility wrote in a rate filing.
The previous year, Pacific Gas & Electric pointed to an absence of safety standards for storage wells as reason to launch its own monitoring program that went beyond state rules, according to an internal document obtained by Reuters.
The industry’s rising concern underscores the scant oversight of 400 underground natural gas storage facilities in 30 U.S. states. Most storage fields are regulated by states, but national industry groups have pushed for federal oversight – unusual in an industry better known for fighting regulation.
EU
ECB chief Mario Draghi sends dove to tame bear market by hinting at ramp up of stimulus package (City A.M.) Mario Draghi went some way to taming bear markets yesterday by hinting that the European Central Bank (ECB) will ramp up its trillion-euro stimulus package as soon as March. The ECB chief said that, with “downside risks” increasing, it will be “necessary to review and possibly reconsider our monetary policy stance at our next meeting“. The dovish message pushed up markets throughout the continent. The FTSE rose 1.77% to 5,773.79, while the German Dax rose a further 1.94% to 9,574.16 points, building on earlier gains. The French Cac 40 also climbed another 1.97%. The euro plummeted almost a full cent against the dollar, falling as low as $1.08 from $1.09 before recovering to $1.084.
UK
Saving Britain’s steel industry: what can be done, and is it even worth it? (The Conversation) The causes of the crisis in the steel industry are well-documented. Energy costs are on the rise, and the price of steel has halved in the last year, amid accusations that low-cost steel from Chinese producers is being dumped on the European market. But for South Wales, this is merely the latest episode of a protracted and sometimes painful transition away from an economy based on heavy industries, towards one based on services and knowledge. This raises the question: should the government intervene?
Wait for a bus and then tell me the market knows best (The Guardian) Deregulation of buses in 1986 was a disaster for those unable to afford a car. Municipalization is the key to a fairer system. Econintersect: A paraphrase of this columnist’s message: Privatization is taking the “public” out of “public utility”; in some cases it can also remove the “utility”. The economic value of some functions like power and transportation can be large even when they do not, in isolation, make a profit – and forcing these functions into a condition to turn a profit can come at great cost to the economy.
Russia
Putin’s disturbing message for the west: your rules don’t apply (The Guardian) The UK judicial findings about the death of Alexander Litvinenko further highlight Russian president’s paranoid nationalism and international indifference.
China
Chinese Firms Are Deep in an Overseas Shopping Frenzy (Bloomberg) China’s listed firms are in the midst of their biggest-ever overseas shopping spree, taking advantage of a wide and attractive valuation gap between domestic shares and foreign assets.
