Written by Econintersect
Early Bird Headlines 05 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 markets mostly higher; HSI leads with 1.3 pct gain (CNBC) Asia markets traded higher on Friday, with traders likely encouraged by the Bank of England‘s decision to cut interest rates for the first time since 2009. However, gains were likely to be capped ahead of the key July non-farm payrolls report in the U.S., due Friday morning local time.
On Eve of Olympics, Top Investigator Details Secret Efforts to Undermine Russian Doping Probe (ProPublica) The former chief investigator for the World Anti-Doping Agency claims his efforts to investigate Russian doping were repeatedly delayed by WADA’s president, who preferred to privately settle matters with Russian officials. Jack Robertson, who left the agency in January, said he was forced to leak information to the media in order to pressure WADA president Sir Craig Reedie to act and, even then, he says, the agency sat on credible allegations that suggested Russian doping extended far beyond track and field.
U.S.
U.S. Officials Literally Laughing at Donald Trump’s ‘Top Secret’ Iran Video Claim (The Daily Beast) U.S. national security officials are literally laughing at Donald Trump’s claim that he watched a “top secret” Iranian military-produced video showing its government scurrying to grab pallets filled with hundreds of millions of dollars. The Donald apparently made up a story to present at a Wednesday campaign speech. Why couldn’t it possibly have happened? The pallets of money were delivered to a Swiss bank at which point the money was transferred to Iran electronically.
What the Job Market Really Needs (Twitter)
EU
Alarm! 18 European Nations Now Have Negative 2 Year Sovereign Yields (UK Approaching 0%) (Confounded Interest) Hat tip to Lee Adler, Wall Street Examiner. Even some longer term issues have gone south of the border: At the 10 year maturity, Switzerland, Germany and the European Financial “Stability” Facility (EFSF) all have turned negative.
UK
Bank of England cuts rates for first time since 2009 (Business Standard) The Bank of England cut interest rates for the first time since 2009 on Thursday and said it would buy £60 billion ($78 billion) of government debt to ease the blow from Britain’s June 23 vote to leave the European Union. The central bank said it expected the economy to stagnate for the rest of 2016 and suffer weak growth throughout next year, and lowered its main lending rate to a record-low 0.25% from 0.5%, in line with market expectations.But it also launched two new schemes, one to buy £10 billion ($13 billion) of high-grade corporate bonds and another – potentially worth up to £100 billion – to ensure banks keep lending even after the cut in interest rates.
UK is most corrupt country in the world, says mafia expert Roberto Saviano (Independent) Britain is the most corrupt country in the world, according to journalist Roberto Saviano, who spent more than a decade exposing the criminal dealings of the Italian Mafia. He says:
‘It’s not the bureaucracy, it’s not the police, it’s not the politics but what is corrupt is the financial capital’
Italy
JPMorgan wanted to buy Italy’s BMPS: sources (Taipei Times) JPMorgan Chase & Co originally wanted to buy troubled Italian rival Banca Monte dei Paschi di Siena SpA (BMPS), but abandoned the plan over fears it would be vetoed by US regulators and opposed in Italy, people close to the deal said on Wednesday. JPM now has a two-fold plan to bail the Italian lender, involving the resolution of bad debts and injection of funds.
Russia
Rio 2016: At least 271 Russian athletes cleared to take part in Olympic Games (Independent) Russians who have served a doping ban will not be eligible, while all the country’s weightlifters and all but one of its track and field competitors have already been banned.
India
BS Poll: Rajan may opt for status quo on rate (Business Standard) The Reserve Bank of India (RBI) is likely to maintain status quo in its third bi-monthly monetary policy on Tuesday, considering the recent flare up in inflation, said all the 10 economists polled by Business Standard. Most economists said Tuesday’s policy, also the last by current governor Raghuram Rajan, could remain silent on important reforms measures but may reaffirm issues like the need for continued liquidity and RBI’s preparedness to meet the redemptions of foreign currency non-resident (FCNR-B) deposits worth $20 billion. (Subscription required to read full article.)
Wait, GST is not a reality yet: It still has to cover 7 grueling steps (The Economic Times) The Rajya Sabha clearance to the GST Bill, touted as the biggest tax reform since India’s Independence, lifted market mood on Thursday, but only briefly. The bill is set to improve the government’s revenue and help it achieve better transmission of prices. It is expected that certain goods, such as capital goods, would become cheaper by 12-14%, increasing demand for them, raising investment and, thus, economic growth. However, the landmark legislation still needs to clear some more hurdles before the bill becomes a law, enforceable by the April 1, 2017 deadline. Econintersect: GST stands for “Goods and Services Tax”, essentially a value added tax to be shared between the national government and the states. See also next article.
No impact on inflation even if GST rate is 18-20%: FinMin (Business Standard) See also preceding article. The Finance Ministry Thursday said that all efforts are being made to roll out GST from April 1, 2017, and allayed fears that it will have an impact on inflation even if the rate is kept at 20%. In the biggest tax reform since Independence, the Rajya Sabha last night approved the Goods and Services Tax (GST) bill to replace a raft of different state and local taxes with a single unified value added tax system to turn the country into world’s biggest single market. Se next article.
A New Start for India’s Economy (Bloomberg Editorial Board) Hat tip to Roger Erickson. The tax reform just approved by India’s parliament could transform the country’s economy. Talked about for years, the plan would replace a crazy jumble of national, state and local taxes with an integrated value-added tax. If well-executed, the idea could make India a truly single market — with enormous potential gains for the world’s third-largest economy. Winning support for this new goods and services tax (GST) requires a constitutional amendment, making this week’s vote a historic victory for Prime Minister Narendra Modi. However, it’s only the start of a process that will take months at best, and success isn’t guaranteed.
China
Chinese regulators crack down on fake banks (China Economic Review)
China’s banking regulator has warned companies not to use the word “bank” in their names following a series of scandals and multi-billion-dollar investment scams. The Financial Times reports several outfits posing as accredited financial institutions have been exposed by the regulator in the past year, among them a China Construction Bank operating out of a convenience store in a village in Shandong province. An international trade union spotted a company whose name included the words “Goldman Sachs” operating in Shenzhen, bordering Hong Kong, last year. The China Banking Regulatory Commission’s Beijing office cautioned against use of the word – either in Chinese or in English – in titles and advertising and also warned against illegal capital-raising.
Shanghai shows that China reforms are possible (Financial Times) This piece was written by Liao Min, China Banking Regulatory Commission. Mr. Min writes that the latest banking data from Shanghai tells a story of resilience. The region’s non-performing loan (NPL) ratio has declined for eight consecutive months to 0.79% at the end of June, much lower than the 1.81% ratio for China’s commercial banks as a whole. Outstanding NPLs shrank by Rmb3.6 billion ($537 million) since the beginning of 2016. Special mention loans – at risk of becoming NPLs – have also declined in number and as a ratio of total loans.
Recession Hits China – Along With 10% Growth (Bloomberg) Growth is vastly divergent across China. The rust belt province of Laioning is in recession, while some provinces are growing at 10%.
