Written by Econintersect
Early Bird Headlines 04 August 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 trades higher; Japanese stocks waver amid yen strength (CNBC) Japanese markets see-sawed in the morning session on Thursday, as stocks came under some pressure from a relatively stronger yen. The benchmark Nikkei 225 wavered between gains and losses before trading up 0.23%. The Topix was up 0.23%. The Japanese yen traded at 101.11 as of 11:18 a.m. HK/SIN, coming off levels as low as 101.35 and hitting a session high of 100.84. The yen strengthened in recent days as some investors were left disappointed by details of Prime Minister Shinzo Abe’s fiscal stimulus plan which followed on the heels of a lower-than-expected monetary policy stimulus announced by the Bank of Japan. Rest of Asian markets traded mostly higher.
U.S.
EIA: Gasoline Stockpiles Decrease, Crude Inventories Increase (Oil Pro) Analysts expectations for a decrease in US crude inventories were dashed Wednesday morning when the US Energy Information Administration released its latest report. According to the report, US crude oil refinery inputs averaged about 16.9 million barrels per day during the week ending July 29 which is 266,000 barrels per day more than the previous week’s average. US crude inventories rose 1.4 million barrels during that time, despite analysts’ expectations they would see a decrease of that same amount, according to a report by Reuters. For more see Imports, Imports, Imports! Today’s EIA report...
Obama just commuted the sentences of a record number of inmates (The Washington Post) President Obama granted clemency to a record 214 inmates on Wednesday, far surpassing his previous single-day record, as part of an ongoing effort to release federal inmates serving prison terms deemed to be unduly harsh. To date, Obama has commuted the sentences of 562 federal inmates, more than the previous nine presidents combined. The White House said in a statement that the president will continue commuting the sentences of inmates through his remaining months in office.
Pioneer’s Permian Oil Costs Compete With Saudi Arabia – Is That A Lie? (Oil Pro) Pioneer CEO Scott Sheffield made headlines last week when he claimed that his company’s Permian production costs “…can compete with anything that Saudi Arabia has.” The author wants to knowm if that’s a lie.
Republicans Stuck With Trump Despite Fears That He’ll Destroy Them (Bloomberg) With just under 100 days until Election Day, tensions between Donald Trump and the Republican Party have reached a boiling point in the wake of his feud with the parents of slain Muslim American soldier Humayun Khan. Republican strategists and former elected officials are deeply perplexed by their nominee’s self-destructive impulses, his penchant for courting controversy and his move to further inflame intra-party chaos this week by refusing to endorse House Speaker Paul Ryan or Arizona Senator John McCain for reelection. Econintersect: From a promotional point of view, Trump’s campaign is ingenious. He’s getting all the headlines and Clinton is left with scraps. Tonight he held a rally in Jacksonville, FL, which drew an estimated 16,000 to pack the arena, 15,000 seats plus standing room filled, with thousands more outside unable to fit inside. See Trump’s Jacksonville Rally Draws 15,000 (Breitbart News). Full rally video:
Who will win the presidency? (FiveThirtyEight) Three days ago Nate Silver had the probabilities of election approximately 50:50. Today, the probabilities are drastically changed: Clinton 73%, Trump 27%. This is the projection based only on polls. The probability for Clinton’s election with polls plus comparison to historical data are currently slightly lower at 69%. Silver’s now-cast (if the election were held today) has Clinton at 89% probability.
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UK
Bank of England rate cut ‘a foregone conclusion’ after UK business activity suffers ‘biggest ever’ fall (The Telegraph) UK business activity suffered its biggest fall ever, data from Markit showed this morning. The Business Activity Index fell to 47.4 in July, from 52.3 in June, signaling a fall in UK services output. This was the first contraction since December 2012, and the rate of decline was the strongest since March 2009. Moreover, the month-on-month decline in the Index in the latest period, at 4.9 points, was the largest observed since the survey began in July 1996.
A rate cut could wipe £1.4bn off operating profits at the UK’s top banks (City A.M.) Profits will be decimated at the UK’s top banks if, as widely expected, the Bank of England cuts interest rates to a historic low of 0.25% today. New analysis by the banking practice of consultants Simon-Kucher and Partners predicts that lower rates would wipe £1.4 billion ($1.8 billion) off the operating profits at the UK’s top 21 retail bank lenders and building societies, equivalent to around 10% of last year’s earnings.
Italy
Mafia Holds Rome Hostage – With Garbage (The Daily Beast) Cleaning up the city’s catastrophic garbage crisis was supposed to be the priority for Rome’s new mayor, Virginia Raggi, when she was elected in June. But already, more than a month into her mandate, the neo-mayor is struggling against a wall of corruption that is as high as the piled-up trash. And what could make matters worse is growing concern that Paola Muraro, the woman Raggi just tapped as the garbage czar to manage the crisis, has been embroiled in the criminal scandal that caused the problem in the first place.
Iran
Obama administration denies Iran cash payment was a ransom (Reuters) The Obama administration said on Wednesday that $400 million in cash paid to Iran soon after the release of five Americans detained by Tehran was not ransom as some Republicans have charged. The five, including Washington Post reporter Jason Rezaian, were released on Jan. 16 in exchange for seven Iranians held in the United States for sanctions violations. The prisoner deal coincided with the lifting of international sanctions against Tehran. At the time, the United States said it had settled a longstanding Iranian claim at the Iran-U.S. Claims Tribunal in The Hague, releasing $400 million in funds frozen since 1981, plus $1.3 billion in interest that was owed to Iran. The funds were part of a trust fund Iran used before its 1979 Islamic Revolution to buy U.S. military equipment that was tied up for decades in litigation at the tribunal.
Japan
Japan’s New Stimulus Is Just the Same Old Thing (Bloomberg) Noah Smith thinks the only option that has any chance of success for Japan is productivity improvement. (Econintersect: That is shorthand for more output from fewer people. This would be very damaging to the structure of Japanese society and also have the negative effect of reducing consumption demand. What Smith suggests would increase the deflationary pressures in Japan, pressures that have been throttling the economy of that country for more than two decades. Smith points out that Japanese stimulus packages have always been much smaller than announced (see graphic) and suggests this time will be the same. Smith is not including helicopters in his sphere of analysis – and such action by the BoJ could make this stimulus package play out to an extent not done before. If Japan could increase consumption to break the deflationary grip, then seeking improved productivity might have room to succeed. We argue that the larger stimulus must come first, before productivity moves, or failure would be assured.)
China
China Starts to Lose Its Taste for McDonald’s and KFC (Bloomberg) When it comes to China’s multi-billion dollar fast food industry, Yum! Brands Inc. and McDonald’s Corp. are living large, enjoying a combined 38% share of the market in 2015. Yum’s KFC restaurant chain and the Golden Arches have long enjoyed a run of super-sized growth as consumers craved a taste of Americana. Now, as both these giants eye spinoffs of their mainland operations, analysts are wondering whether the glory days might be over. There are signs that both companies’ absolute dominance of a fast food industry they helped create is starting to slip away as consumers shift to healthier options and Chinese-style food chains – from huoguo (hot pot) to tangbao (steamed dumplings) – proliferate.
