Written by Econintersect
Early Bird Headlines 21 June 2016
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 extends gains; Nikkei reverses losses as yen weakens (CNBC) Japanese markets traded higher on Tuesday as most of Asia extended Monday’s global rally on easing Brexit concerns and gains in oil prices. The benchmark Nikkei 225 traded up 0.51% by mid-morning Asia time, retracing its early losses of more than 1 percent on the back of fresh strength in the yen. Elsewhere stocks were generally higher, except for Shanghai.
U.S.
A divided Senate answers Orlando with gridlock on gun curbs (Reuters) A divided Senate blocked rival election-year plans to curb guns Monday, eight days after the horror of Orlando’s mass shooting intensified pressure on lawmakers to act but knotted them in gridlock anyway – even over restricting firearms for terrorists. In largely party-line votes, senators rejected one proposal from each side to keep extremists from acquiring guns and a second shoring up the government’s system of required background checks for many firearms purchases.
American attitudes on refugees from the Middle East (Brookings) Below are summary findings from a Brookings poll. For more details click American attitudes on refugees from the Middle East.
EU
‘Brexit’ likely to fail but EU will change (USA Today) Even if the Leave vote falls short, the Brexit debate and the fact that a substantial minority of British voters think the country would be better off on its own has already changed the dynamic in the EU. Britain, and perhaps a fair number of other European countries, no longer accept – if they ever did – the goals of full-fledged political and economic integration in a European superstate that is implied in the EU treaties. At the very least, there is likely to be an evolution toward a two-speed Europe, with those countries that choose to remain in the euro proceeding toward greater integration, and other countries receding back to a looser affiliation with a common market.
Did negative rates in Europe trigger massive cash hoarding? (Brookings) For a long time, economists believed that negative interest rates – charging savers to keep money in the bank instead of paying them interest – were close to impossible. If confronted with negative rates, people and institutions would hoard currency, economists reasoned. After all, earning zero interest on $500 in currency is better than paying a fee to keep $500 in the bank. Recently, however, central banks in Denmark, Sweden, Switzerland, the euro zone and Japan cut their rates below zero, testing those long-standing beliefs. As seen in the graph below, there has been negligible effect on cash as a result of negative rates. Brookings offers some possible reasons:
The most obvious reason that households haven’t begun to hoard cash is that, in most countries, negative rates haven’t affected most ordinary customers – just the banks themselves. That’s in part because of the way central banks have structured negative rates and in part because of business decisions that banks have made to shield their retail customers. Another reason is that rates are only slightly negative – the most negative rate is the Swiss National Bank’s minus 0.75 percent on bank reserves. That may not be enough to justify the costs involved in storing large amounts of cash – buying safes, arranging insurance and so on.
UK
EU referendum: Pound gets a lift from Remain lead (City A.M.) Share prices and sterling both rallied yesterday after weekend polls swung in favour of voters opting to remain in the European Union. The FTSE 100 posted its biggest one day rise since early February, up 3% by the close, tracking wider European markets higher. The German Dax rose by 3.4% and the French CAC 40 added 3.5%t. The Stoxx Europe 600 index climbed 3.7%. Sterling recorded its biggest one day leap in eight years against the dollar, up over 2%, as it breached $1.47 for the first time since May.
‘Big Bang’ to Brexit: The City of London Fears End to Golden Age (Bloomberg) Geese don’t come much more golden than the City of London. ‘Nobody has a clue what ‘Out’ looks like’ for banks, funds and the financial firms of The City. Video shows a summary of Brexit issues.
How illegal firearms find their way onto British streets despite tough laws (The Conversation) There are still illegal guns in Great Britain inspite of strict firearm legislation. But the number of incidents of firearms offenses (including those using airguns and air rifles) have fallen from a high of 24,094 in 2004 to 7,866 in 2015.
India
Hoping Jobs for India Follow, Modi Clears Investors’ Path (The New York Times, CNBC) The Indian government announced sweeping changes on Monday to throw open its economy to foreign investment, providing a new path for global titans like Apple and Ikea to capitalize on the country’s growth, the fastest among the major emerging markets.
Japan
Japan on high alert amid signs North Korea is preparing new missile launch (Reuters, CNBC) Japan’s military is on alert for a possible North Korean ballistic missile launch, a government source said, with local media reporting its navy and anti-missile Patriot batteries have been told to shoot down any projectile heading for Japan. Tension in the region has been high since North Korea conducted its fourth nuclear test in January and followed that with a satellite launch and test launches of various missiles, including one in May.
Brazil
Australian Paralympian robbed at gunpoint in Rio (BBC News) An Australian athlete who has competed in six Paralympic Games has been robbed at gunpoint in the Brazilian city of Rio de Janeiro. Liesl Tesch said a man brandishing a gun pushed her off her bicycle and stole it on Sunday. Australian Paralympic team physiotherapist Sarah Ross also lost her bicycle in the attack. The Australian Olympic Committee has said Rio must improve security in the city in the aftermath of the robbery.
Venezuela
Venezuela starts validating recall referendum signatures (BBC News) Venezuelan opposition leader Henrique Capriles has said that more than 70,000 people who endorsed a petition for a referendum to oust President Nicolas Maduro had their signatures validated on Monday. Just under 200,000 valid signatures are needed for the process to go ahead. Mr Maduro was elected in April 2013 and his term runs until 2019. The opposition blames his socialist policies for rampant inflation and the shortage of food and basic goods. Mr Capriles said the massive presence of voters on the first day of the validation process was a clear sign that Venezuelans wanted a change of government.
