Written by Econintersect
Early Bird Headlines 08 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 mixed; Nikkei reverses course on relatively weaker yen (CNBC) Asia markets were mixed on Friday, with the Japanese benchmark index reversing losses to trade up over 1% early on the back of a relatively weaker yen. The Nikkei weakened in the pm to close up less than half a percent.
Wikileaks goes on tweeting bender, accuses everyone from George Soros to the US government of being behind Panama Papers leak (City A.M.) It’s no secret Wikileaks is pretty put out by the fact it wasn’t the one to leak the Panama Papers. The organization, which has been behind some of the biggest whistleblowing data leaks over the past few years, has spent much of the past week making it known how disgruntled it is, with tweets like “WikiLeaks didn’t lead the #PanamaPapers so most docs will not be released and you won’t get a searchable database“. Now, now. This morning the organization went into full attack mode, “revealing” those who funded the leak of the 11 million documents, which details those who have used Panamanian law firm Mossack Fonseca to create offshore companies. Among those already named in the documents are new Fifa president Gianni Infantino and David Cameron’s late father, as well as costing the Icelandic Prime Minister his post.
IMF: Better polices help emerging economies against capital flow slowdown (Xinhuanet) Net capital flows to emerging economies have slowed since 2010, while better polices narrow the impact, said the International Monetary Fund (IMF) on Wednesday. In the analytical chapters of its biannual World Economic Outlook report, the IMF said weaker inflows and stronger outflows have slowed down net capital flows to most emerging economies since 2010. “Much of the decline in flows can be explained by the narrowing differential in growth prospects between emerging market and advanced economies,” said the IMF. The current slowdown is similar in size and breadth to episodes in the 1980s and 1990s that were associated with a high incidence of debt crises, said the report. But “improved policy frameworks” have made the incidence of external debt crises to emerging countries in the ongoing episode so far much lower, said the IMF.
U.S.
U.S. Braces for Worst Earnings Season Since 2009 Crisis: Chart (Bloomberg) U.S. corporate profits are expected to drop the most in 6 1/2 years in the first quarter, led by a wipeout in the embattled energy sector. Earnings for companies in the Standard & Poor’s 500 Index will fall 9.8% year-over-year, which would be the sharpest decline since the third quarter of 2009 and a fourth consecutive quarter of contraction, according to Bloomberg data. Results will be insufficient to justify current stock valuations, says Alex Bellefleur, head of global macro strategy and research at Pavilion Global Markets.
EU
EU watchdog expands oversight of energy market trading (The Business Times) The European Union started on Thursday to amass information about all so-called over-the-counter trades in the region’s energy markets in a bid to crack down on suspected price manipulation.
ECB Underlines Readiness to Act Amid Europe’s Manifest Fragility (Bloomberg) European Central Bank officials underlined their readiness to further ease monetary policy as political, banking and sovereign fault lines showed the region remains vulnerable six years after the start of the debt crisis. In Frankfurt, the ECB’s home city, and Brussels, Europe’s nominal capital, policy makers said they’ll take whatever measures are required to help the economy and boost inflation. But helicopter money is not being pushed.
UK
Panama Papers: Prime Minister David Cameron accused by Labour of hypocrisy after he confirms he did have a stake in his father’s offshore trust (City A.M.) Questions had been raised over his links to the huge data leak from a Panamanian law firm last weekend. Prime Minister David Cameron’s late father Ian Cameron was among the thousands of names contained within 11.5m documents leaked from Mossack Fonseca. The PM told ITV’s Robert Peston this evening that Blairmore Investment, the trust set up by his father, was not established so as to avoid tax. But Labour’s deputy leader Tom Watson said that while the Prime Minister shouldn’t be blamed for his father’s actions,
“he can for hypocrisy. He said that sunlight is the best disinfectant and wasn’t entirely straight with the British people about what his own financial arrangements were”.
Greece
Migrant crisis: Deportations resume from Greece to Turkey (BBC News) A second group of migrants is being sent back from Greece to Turkey as part of an EU deal to reduce the numbers reaching Europe. Three protesters dived into the water to try to stop a ferry carrying 45 Pakistani men as it left Lesbos but were fished out by coastguards. Other protesters tried to enter the gates of the port, Mytilene. Some 200 mainly Pakistanis were deported on Monday but the process stalled as asylum applications surged.
India
Banks in no hurry to cut lending rates (Business Standard) India’s banks are not passing on the RBI (Reserve Bank of India) rate cut to customers, waiting instead for rates paid to depositors to come down.
Japan
Japan pledges action against one-sided currency moves as U.S. dollar plunges vs. yen (Xinhuanet) The Japanese government said on Thursday that it would take action to rebalance one-sided currency movements if deemed necessary as the U.S. dollar tumbled to a fresh 17-month low versus the Japanese yen. Japan’s top government spokesperson said that one-sided currency movements had been seen in the market and could lead to excess volatility and impact both financial and economic stability.
What the Bank of Japan will do now that negative rates have disappointed (CNBC) The Bank of Japan’s (BOJ) foray into negative interest rates hasn’t yielded positive results, and the central bank’s arsenal is getting thin. That’s spurring analysts to speculate the BOJ’s next attempt at easing may target scooping up more assets in the stock market.
China
How Bad Is China’s Debt Problem, Really? (Bloomberg) For months now, China’s regulators have been warning about the dangers of rapidly expanding credit and the need to deleverage. With new plans to clean up bad loans at the country’s banks, you might conclude that the government is getting serious about the risks it faces. But there’s reason to doubt the effectiveness of China’s approach. In fact, it’s running a serious risk of making its debt problems worse.
After the financial crisis, China embarked on a credit binge of historical proportions. In 2009, new loans grew by 95 percent. The government offered cheap credit to build apartments for urban migrants, airports for the newly affluent and roads to accommodate a fleet of new cars.
Yet as lending grew at twice the rate of gross domestic product, problems started bubbling up. Companies gained billion-dollar valuations, then collapsed when they couldn’t profit. Enormous surplus capacity drove down prices. Excessive real-estate lending led to the construction of “ghost cities.” Asset bubbles popped and bad loans mounted.
Australia
Conduct risk rising for Australian banks says Fitch (The Sydney Morning Herald) Global credit rating agencies are on alert for the rising cost of conduct breaches at Australia’s banks. Interest-rate manipulation, problems with claim payments in life insurance and poor financial advice in wealth management businesses prompted Fitch Ratings to highlight the “increased regulatory scrutiny on conduct and culture” facing Australia’s banks.
