Written by Econintersect
Early Bird Headlines 10 May 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.
Asia closes mixed; Nikkei leads with 2.2% gain (CNBC) Asia markets closed mixed on Tuesday, with the Japanese benchmark index leading gains in the region. The Nikkei 225 closed up 349.16 points, or 2.15%, at 16,565.19.
Sotheby’s Sale Plunges 61% as High-End Art Market Cools Off (Bloomberg) Sotheby’s auction house may be in New York but it sells to the world and in 2016 the world just ain’t buying as much.
Panama Papers affair widens as database goes online (BBC News) The Panama Papers affair has widened, with a huge database of documents relating to more than 200,000 offshore accounts posted online. The database became accessible from 18:00 GMT at offshoreleaks.icij.org. The Panama Papers have shown how some wealthy people use offshore firms to evade tax and avoid sanctions. The papers belonged to Panama-based law firm Mossack Fonseca and were leaked by a source simply known as “John Doe”. The company denies any wrongdoing. See more about this under India later, below.
Riding the ‘Solarcoaster’ as Shares Plunge Even More Than Coal (Bloomberg) For all the upbeat forecasts about the growth of solar power, this is a punishing year for the industry. And it won’t improve anytime soon. SunEdison Inc., the world’s biggest clean-energy company, is bankrupt. Yingli Green Energy Holding Co., once the top panel maker, warned it may be inching toward default. A Bloomberg index of 20 major solar companies has plunged more than 30 percent this year, with every member in the down column. Solar shares are performing even worse than coal stocks. Econintersect: This is an example of how deflation (falling prices) can wreck businesses, especially those that are commodity and process cost intensive. Products built with 6 – 12 month ago costs, which were profitable at prices at the time, are losing money at current selling prices. If anybody asks what is wrong with deflation, this is one example. And then those that are wise enough to avoid this trap also add to the deflationary spiral by not investing because the future value of the investment is lower. Put another way, the dollar not invested today will be worth more tomorrow.
Fed’s Kashkari says current U.S. interest rates ‘about right’ (Reuters) Minneapolis Federal Reserve Bank President Neel Kashkari on Monday signaled his support for the cautious and patient approach to rate hikes laid out by Fed Chair Janet Yellen, saying the current stance of monetary policy is “about right.” While a rate hike in June is “possible,” Kashkari sounded happy to keep rates low for now in order to continue bringing workers who have not worked in months or years back into the labor force.
Ryan moves to cool Trump tensions (The Hill) Speaker Paul Ryan and Donald Trump dialed back their rhetoric Monday after a weekend of sniping between the nation’s highest-ranking elected Republican and the party’s presumptive presidential nominee. But the bad blood – and stark policy differences – between the two GOP heavyweights left some observers questioning whether Ryan (Wis.) ever will find it in himself to back Trump before the November election. The two are scheduled to meet on Thursday. See also Ten public policy issues that divide Trump and Ryan.
U.S. government and North Carolina escalate legal fight over transgender law (Reuters) A fight between the Obama administration and North Carolina over a state law limiting public bathroom access for transgender people escalated on Monday as both sides sued each other, trading accusations of civil rights violations and government overreach. The U.S. Justice Department’s complaint asked a federal district court in North Carolina to declare that the state is violating the 1964 Civil Rights Act and order it to stop enforcing the ban. Hours earlier, North Carolina’s Republican governor, Pat McCrory, and the state’s secretary of public safety sued the agency in a different federal court in North Carolina, accusing it of “baseless and blatant overreach.” At the core of the dispute is a new North Carolina law requiring transgender people to use rest rooms labeled for their sexual identification before they “trans-ed”. Econintersect: We call this the “bearded men in the ladies’ room” and “stiletto heels in the men’s room” law.
Syria conflict: Aleppo ceasefire extended again (BBC News) A truce in place since last Thursday in the Syrian city of Aleppo has been extended for two days until midnight on Wednesday, Syrian state TV says. The truce had been due to run out at 01:00 local time on Tuesday. It has already been extended once. Deadly clashes in the two weeks leading to the truce had killed 300 people. The US and Russia see Aleppo as key to bolstering a nationwide truce they brokered between the army and non-jihadist rebels in February. That cessation of hostilities had come under increasing pressure with numerous violations, not least in Aleppo.
Iran Is Almost Ready to Talk to Limits on Oil (Bloomberg) Iran says it’s almost ready to talk with other OPEC members about limiting oil production as the country’s exports recover to levels reached before international sanctions crippled crude sales. Morgan Stanley and Barclays Plc say no agreement is in the cards for now. With prices up 65% from the 12-year low in January, joint action by members of the Organization of Petroleum Exporting Countries may not be needed
37,000 India files in new Panama papers released (The Hindu) The International Consortium of Investigative Journalists (ICIJ) late on Monday released 2.6 terabyte of Panama papers data on over 11.5 million financial and legal records, including about 37,000 files related to India. The India-related documents pertain to 22 offshore entities, 1,046 individuals, 42 intermediaries and 828 addresses. The ICIJ website carries a disclaimer that …
“… there are legitimate uses for offshore companies and trusts. We do not intend to suggest or imply that any persons, companies or other entities included in the ICIJ Offshore Leaks Database have broken the law or otherwise acted improperly. Many people and entities have the same or similar names. We suggest you confirm the identities of any individuals or entities located in the database based on addresses or other identifiable information.”
The crisis in Nepal (The Hindu)
Once again, Nepal appears to be on the brink of leadership change. The past few days have seen frenetic activity, driven by Maoist leader Prachanda’s desire to oust Prime Minister K.P. Sharma Oli just months after he took charge. While the attempt has been stalled for the moment, it may be only a matter of time before the number-crunchers get to work to forge an alternative coalition in the 601-member Parliament. There is a difference of only 24 seats between Mr. Oli’s Communist Party of Nepal (UML) and the Nepali Congress. With their 83 seats, the Maoists can always tip the balance.
New Philippine leader seen as emancipator, looming dictator (Associated Press) Rodrigo Duterte, the bombastic mayor of a major southern Philippine city, was poised Tuesday to become the nation’s president-elect after an incendiary and populist campaign that projected him alternatively as an emancipator and a looming dictator. Sen. Grace Poe, one of his biggest rivals, was the first to concede Duterte’s victory in the early hours of Tuesday. And his harshest critic conceded that Duterete, known for his off-color sexual remarks and pledges to kill criminal suspects, emerged the unquestioned winner in Monday’s election.
Change the Philippines Doesn’t Need (Bloomberg Editorial)
Like Donald Trump, to whom he’s often compared, the Philippines’apparent president-elect Rodrigo Duterte won over voters with a crude and bombastic persona — or, if you will, his big mouth. What the country he may soon inherit needs most, however, is a steady hand.
Duterte, a mayor who has proudly advertised his links to vigilante death squads in Davao City and threatened a “bloodbath” for criminals once he’s in power, has tapped into a deep vein of frustration with the political status quo. In truth, though, the Philippines are in better shape than they’ve been in for years. The country is forecast to grow faster than its neighbors this year, aided by low oil prices and continued healthy consumption. Remittances are strong, while a booming outsourcing sector could soon replace them as the country’s largest source of dollar revenues.
China April inflation data sharpens debate on need for more easing (Reuters) China’s consumer inflation remained modest in April, while producer prices’ four-year slump moderated as commodity prices rebounded, easing concerns about deflationary risks to the world’s second-largest economy. But analysts disagreed on whether the price trends alone are compelling enough for the central bank to shift to a more cautious stance on interest rate cuts just yet, after lowering them six times since late 2014.
US warship challenges China maritime claims (Financial Times) The U.S. Navy keeps asserting its right of free passage in the South China Sea. An American warship on Tuesday morning sailed close to Fiery Cross Reef, a contested feature in the South China Sea, in the latest US pushback against Chinese claims in the disputed maritime region.
The World’s Most Extreme Speculative Mania Unravels in China (Bloomberg) From the Dutch tulip craze of 1637 to America’s dot-com bubble at the turn of the century, history is littered with speculative frenzies that ended badly for investors. But rarely has a mania escalated so rapidly, and spurred such fevered trading, as the great China commodities boom of 2016. Over the span of just two wild months, daily turnover on the nation’s futures markets has jumped by the equivalent of $183 billion, outpacing the headiest days of last year’s Chinese stock bubble and making volumes on the Nasdaq exchange in 2000 look tame.
Alberta officials say oil sands city saved from fire’s worst (Associated Press) Alberta premier’s declared Canada’s oil sands city saved and said a plan will be put together within two weeks so 88,000 residents forced to evacuate can return to their homes. At least two neighborhoods in Fort McMurray were scenes of utter devastation with incinerated homes leveled to the ground from a wildfire that the city’s fire chief called a “beast … a fire like I’ve never seen in my life.” But the wider picture was more optimistic as Fire Chief Darby Allen said 85% of the city remains intact, including the downtown district.