Written by Econintersect
Early Bird Headlines 26 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 mixed; Nikkei sells off following disappointing inflation data (CNBC) Asia markets traded mixed on Friday, with traders eyeing a speech from U.S. Federal Reserve chair Janet Yellen later Friday for clues on the direction of monetary policy.
U.S.
As central bankers gather, some at Fed make interest rate rise case (Reuters) Dallas Fed President Robert Kaplan and Kansas City Fed President Esther George are both uttering hawkish words on the eve of the annual Jackson Hole Conference. As central bankers converge on this mountain resort Thursday for discussions of monetary policy, the two top regional Federal Reserve officials took the chance to renew a push for interest-rate hikes, citing improvement in employment and inflation.
A risk to economy in corporate debt (Associated Press, The Columbian) Of the $1.8 trillion in cash that’s sitting in U.S. corporate accounts, half of it belongs to just 25 of the 2,000 companies tracked by S&P Global Ratings. Outside of Apple, Google and the rest of the corporate ‘one percent’, cash has been falling over the last two years even as debt has been rising. It now covers only $15 of every $100 they owe, less than it did even during the financial crisis in 2008 when finances were crumbling. The number of companies that have defaulted so far this year has already passed the total for all of last year, which itself had the most since the financial crisis. Even among companies considered high-quality, or investment grade, credit-rating agencies said a record number are so stretched financially that they’re one bad quarter or so from being downgraded to “junk” status. Econintersect: While politicians rail against the national debt, it is the “free” market that is going to take us down.
Judge orders search of new Clinton emails for release by September 13 (Reuters) A U.S. judge ordered the State Department on Thursday to release by Sept. 13 any emails it finds between Hillary Clinton and the White House from the week of the 2012 attack in Benghazi, Libya, among the thousands of additional emails uncovered by federal investigators. The order came after the Federal Bureau of Investigation gave the department a disc earlier this month containing 14,900 emails to and from Clinton and other documents it said it had recovered that she did not return to the government. Clinton, the Democratic presidential nominee, has been criticized for using an unauthorized private email system run from a server in the basement of her home while she was secretary of state from 2009 to 2013, a decision she says was wrong and that she regrets.
UK
Why the Norway model is a flawed blueprint for Brexit (The Conversation) Brexiteers keen to follow Norway’s example face an awkward dilemma. The Norway option contradicts most claims of “taking back control” made during the referendum campaign. This is because, in order to benefit from membership of the single market, Norway has to accept the free movement of persons, along with goods, services and capital. Free movement within the EEA is a package deal.
Turkey
Turkey fires on U.S.-backed Kurdish militia in Syria offensive (Reuters) Two U.S. allies, the Kurds and Turkey, are heating up hostilities. Turkish troops fired on U.S.-backed Kurdish militia fighters in northern Syria on Thursday, highlighting the complications of an incursion meant to secure the border region against both Islamic State and Kurdish advances. Syrian rebels backed by Turkish special forces, tanks and warplanes entered Jarablus, one of Islamic State’s last strongholds on the Turkish-Syrian border, on Wednesday. But President Tayyip Erdogan and senior government officials have made clear the aim of “Operation Euphrates Shield” is as much about stopping the Kurdish YPG militia seizing territory and filling the void left by Islamic State as it is about eliminating the ultra-hardline Islamist group itself.
Turkey’s dangerous game of Russian roulette in Syria (The Conversation) Ankara’s real target in Syria is the Kurds, but is Turkey getting bogged down on too many fronts? After having its military shaken by the recent coup attempt, Turkey may have difficulty with simultaneous campaigns against Syria, IS, and the Kurds while standing by their commitment to support Ukraine as well as other NATO obligations.
Iran
Iran says will cooperate with OPEC to stabilize the oil market: IRNA (Reuters, CNBC) Iran’s oil minister said on Friday that Tehran will cooperate with Organization of the Petroleum Exporting Countries (OPEC) to stabilize the world market, but expects others to respect its rights, the ministry’s news agency SHANA quoted him as saying. Asked about an oil output freeze plan, Bijan Namdar Zanganeh also said that Iran supports any effort to bring stability to the market.
India
Urjit Patel to maintain Raghuram Rajan’s anti-inflationary stance: Goldman Sachs (The Economic Times) Ecerybody is praising the new Reserve Bank of India Governor; now it is Goldman Sach’s turn.
Japan
Japanese seek bargains as economy limps, Abenomics loses shine (Reuters) Three years of so-called “Abenomics”, Japanese Prime Minister Shinzo Abe’s bold stimulus programme, has failed to dislodge a deflationary mindset among businesses and consumers. As the world’s third-largest economy falters again – with a stronger yen gnawing at overseas profits and domestic consumption sapping companies’ confidence to invest or sufficiently raise wages – firms that increased their prices in the hope of a sustained recovery are rethinking their strategy. Many consumers, with little extra to go around, are opting for cheaper products – welcome news for the discount retailers who flourished during two decades of economic stagnation. Econintersect: You can inflate finance all you want – there won’t be consumer inflation unless you get money to consumers. After 20 years of consumer deflation in Japan, don’t you think the truth should dawn on someone?
China
Chinese Takeovers Trigger Global Backlash Ahead of G-20 Summit (Bloomberg) Forget about Yankee go home. Now it’s Chinese go home. From Australia blocking a bid for a power network to the U.K.’s review of a proposed Chinese-funded nuclear plant, opposition to China’s outward push is opening a thornier and potentially more treacherous front in the country’s economic tug-of-war with the rest of the world. And it’s coming as China prepares to host a Sept. 4-5 summit of Group of 20 leaders. Unlike festering frictions over trade, the new front is in an area — investment — where the global rules of engagement are more amorphous and where national security interests are more prominent. That raises the risk of a rapid escalation of tensions that can’t be so easily contained.
China, Hong Kong trade gap jumps to record as outflow pressures mount (The Business Times) The gap between China’s imports from Hong Kong and the city’s exports to the mainland jumped to its biggest on record in July, a sign that capital outflow pressures are mounting. While Hong Kong’s statistics showed exports to China fell 6.2% in July, Chinese customs data showed imports from Hong Kong jumping 122.9%. That put the gap at US$2.4 billion, its biggest since 2006 when data was available. The previous peak was US$2.23 billion in May. Statistical discrepancies have always existed between China’s and Hong Kong’s respective cross-border trade numbers, but a spike usually suggests that speculators are moving funds from the mainland because of a weakening currency. Econintersect: The Chinese move large amounts of money abroad through Hong Kong by paying for imports that were never received (fake invoices).
