Written by Econintersect
Early Bird Headlines 01 April 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 markets lose ground despite better-than-expected China PMI (CNBC) Asian markets started the new quarter on the back foot Friday, trading lower despite better-than-expected China manufacturing surveys, as a reading on Japan’s economy disappointed and traders awaited U.S. nonfarm payrolls data later.
The World May Have Too Much Food (Bloomberg) For the first time in history, more people are obese than underweight. The past 40 years have seen an unprecedented increase in the number of obese adults worldwide, climbing to about 640 million from 105 million in 1975. If the current trend continues, about one-fifth of adults will be obese by 2025.
Bucking the trend (The Economist) The dollar’s long rally seems to have halted and emerging market currencies are rallying.
U.S.
Larry Summers: Corporate profits are near record highs. Here’s why that’s a problem. (The Washington Post) Larry Summers says high profits and high stock valuations are in conflict with his theory of secular stagnation. So he says the data (high profits and stock valuations) presents a problem. Econintersect: This sounds like the idea that if the data and the theory disagree, the data must be wrong.
Musk Unveils Tesla’s $35,000 Model 3 in Push for Mass Market (Bloomberg) Elon Musk described the Model 3 base unit:
“You will not be able to buy a better car for $35,000, or even close. It’s a really good car, even with no options.”
UK
Poor economics (The Economist) This article argues that an increase in the minimum wage in Great Britain, already the highest in the world, may have economic benefits via increased capital investment and improved productivity. But the benefit to the lowest skill levels (who are the lowest paid, in general) will actually be negative as they will be disproportionately displaced by increased use of capital (automation). The damage will be confounded by the very poor economics of simultaneously reducing welfare. The argument there is based on the idea that those needing welfare will benefit most from the increased minimum wage – but just the opposite will be the case, according to the argument made here.
The national living wage is a ticking time bomb of hidden costs for British businesses (City A.M.) The national living wage is expected to hit British businesses with hundreds of millions in hidden costs this year, in addition to the £804m already estimated – hindering investment and creating a time bomb that will blast through bottom lines by 2020. Figures from the government’s regulatory watchdog show employers may find themselves dealing with the fallout of a “wage spillover”, having to boost the pay of other staff to maintain pay bands. Econintersect: Note the divergence of opinion from the article from The Economist, preceding. The previous article suggested that the higher age would encourage investment (automation) and reduce employment. That doesn’t seem to be considered in this article. In actuality, there will likely be companies that fall in both categories.
China
Despite disputes, U.S., China strike climate, nuclear deals (USA Today, MSN News) Despite ongoing disputes over cyber espionage, intellectual property, and the South China Sea, the United States and China struck deals Thursday on nuclear security and climate change. The two nations agreed to sign the new global climate change agreement on April 22, the day it becomes operational; the agreement reached in Paris late last year calls on countries to develop plans to reduce greenhouse gas emissions. Also, the United States and China issued a joint statement pledging more cooperation on efforts to improve the storage and security of nuclear material in an effort to prevent nuclear terrorism.
China Builds an Empire of Electricity With Australia as Target (Bloomberg) It generates more revenue than Apple Inc. and Boeing Co. combined and serves one in seven people on the planet. Meet State Grid Corp. of China, the world’s largest utility company that may be buying power assets near you. The name may say “State Grid” but their objective is a “Global Grid”.
Australia
The Economist: Aussie housing 40% over-valued (Macro Business) Housing bubbles in some of the world are far more inflated than the 2007 bubble in the U.S. – and Australia is among the highest fliers, expecially against income (first graphic below).
Panama
Panama Canal to inaugurate much anticipated expansion on 26 June (Seatrade Maritime News) The Panama Canal Authority (ACP) announced on Wednesday that the Panama Canal expansion will be officially inaugurated on Sunday 26 June. The expansion program is currently 97% complete. Final testing will be conducting in the following weeks. The new Panama Canal locks will allow containerships as large as 13,000 teu to 14,000 teu to use the waterway for the first time.
Brazil
Brazil prosecutors charge billionaire Safra in bribery scheme (Reuters) Brazilian prosecutors on Thursday charged Joseph Safra, the world’s richest banker, in connection with an alleged scheme to pay bribes to government officials in return for waiving tax debts. In a statement, prosecutors said that Safra had knowledge of a 2014 plan by executives at his Banco Safra SA to pay 15.3 million reais ($4.2 million) in bribes to federal tax auditors. The accusation is based on tapped phone calls between Banco Safra executive João Inflcio Puga and tax officials.
