Written by Econintersect
Early Bird Headlines 03 January 2017
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
Asian markets higher; HK gaming stocks tumble on Macau revenue declines (CNBC) Asian markets gained on Tuesday after a key indicator of China’s private manufacturing showed robust gains in December, while Hong Kong gaming stocks tumbled on Macau gambling revenue declines. (See more under China later, below.) During Asian trade, U.S. crude rose 0.58% to $54.04 per barrel , while global benchmark Brent was up 0.56% at $57.14.
Solar Could Beat Coal to Be the Cheapest Power on Earth (Bloomberg) Solar power is now cheaper than coal in some parts of the world. In less than a decade, it’s likely to be the lowest-cost option almost everywhere. In 2016, countries from Chile to the United Arab Emirates broke records with deals to generate electricity from sunshine for less than 3 cents a kilowatt-hour, half the average global cost of coal power. Now, Saudi Arabia, Jordan and Mexico are planning auctions and tenders for this year, aiming to drop prices even further. Taking advantage: Companies such as Italy’s Enel SpA and Dublin’s Mainstream Renewable Power, who gained experienced in Europe and now seek new markets abroad as subsidies dry up at home. Since 2009, solar prices are down 62%, with every part of the supply chain trimming costs. That’s help cut risk premiums on bank loans, and pushed manufacturing capacity to record levels. By 2025, solar may be cheaper than using coal on average globally, according to Bloomberg New Energy Finance.
The Most Popular Investor Picks for Emerging Markets in 2017 (Bloomberg) The favorite emerging markets for 2017 include Russia, South Africa, Mexico, Brazil, Chile, India, and Indonesia. All the BRICS are here, excepting China.
U.S.
Dollar Rally Adds to Uncertainty as Fed Weighs 2017 Rate Hikes (Bloomberg) The dollar’s appreciation may represent the U.S. economy’s biggest speed bump in 2017, and that could be good or bad, depending on whether President-elect Donald Trump follows through on measures aimed at accelerating growth. The Bloomberg Dollar Spot Index, which tracks the greenback against 10 global currencies, has gained 5.7% since the Nov. 8 election, largely on expectations for lower taxes, higher government spending and looser regulations under Trump. All these could goose growth and pose questions for the Federal Reserve.
House Republicans To Gut Ethics Watchdog (The Huffington Post) As one of their first actions in the new Congress, House Republicans are planning to significantly change the Office of Congressional Ethics, removing the entity’s independence, barring it from investigating anonymous complaints and even changing the group’s name. Less than 24 hours before the House convenes and votes on its rules for the 115th Congress, Republicans adopted an amendment Monday night, 119 to 74, from Judiciary Chairman Bob Goodlatte (R-Va.) that would fundamentally change the OCE. The independent ethics board investigates complaints against members and issues reports to the Ethics Committee. Specifically, the amendment would place the OCE under the “oversight” of the lenient Ethics Committee and rename it the Office of Congressional Complaint Review. The new group would no longer be able to release information to the public, employ anyone “for a position involving communications with the public,” or directly contact law enforcement without approval. It would also be prohibited from investigating anonymous complaints. Minority Leader Nancy Pelosi (D-Calif.) said the change would “functionally destroy” the office. Econintersect: Drain the swamp? What swamp? See also House Republicans just voted to gut their own oversight (Reuters, Business Insider)
EU
Potential new banking crises are a concern in Europe: Analyst (CNBC) While the first days of the 2008 financial crisis are long gone, the large level of bad loans continues to be a drag on the European banking system and could spark new crises in the coming year, an analyst told CNBC. Investors are currently focusing on the recapitalization process at the oldest lender in the world, the Italian Monte dei Paschi, which is set to become a template for how the rest of the Italian banking system can be overhauled. But, given that Italy is not the only EU country with high bad loans in banks’ balance sheets, analysts are worried that further banking crisis will emerge in Europe.
UK
Economists gloomy on UK prospects for 2017 (Financial Times) Growth will slow markedly in 2017, household incomes will be squeezed by higher inflation and businesses will hold back on investment decisions because of uncertainty about Brexit, according to the majority of economists in an annual Financial Times survey. The UK is thought to have been one of the fastest-growing advanced economies in 2016. Growth remained resilient in the immediate aftermath of the vote to leave the EU. But most of the 122 economists who responded now expected growth to slow – from about 2.1% in 2016 to no more than 1.5% in 2017.
Italy
A massive volcano is rumbling…right under one of Italy’s biggest cities: Report (CNBC) A volcano in the south of Italy could be coming closer to erupting, putting the lives of more than half a million people in danger, an article from Nature Communications has warned. Scientists believe that magma at the Campi Flegrei volcano in Naples is reaching a level designated by “critical degassing pressure” (CDP). This is characterized by sudden release of water-rich gases in vast volumes, which could lead to rock failure and explosion of the volcano, the report, released late last month, said.
Israel
Israeli Investigators Question Netanyahu Over Graft Suspicions (Bloomberg) Israel’s Prime Minister Benjamin Netanyahu was questioned Monday night by police for about three hours at his residence in Jerusalem over long-running allegations of receiving graft. The team of investigators questioned the 67-year-old Israeli leader “under caution,” police spokeswoman Luba Samri said in a text message, meaning that anything he says could be used in court if he is eventually prosecuted. Netanyahu said earlier in the day that the police would fail to find anything criminal.
Indonesia
Indonesia Ends JPMorgan Partnerships on Downgrade, Okezone Says (Bloomberg) Indonesia’s government terminated all business partnerships with JPMorgan Chase & Co. after the U.S. bank downgraded its assessment of Southeast Asia’s largest economy following Donald Trump’s surprise U.S. election win, according to a report on the Okezone news portal. The finance ministry ended the partnerships from Jan. 1, saying the bank’s November research report downgrading Indonesia to underweight was potentially destabilizing to the nation’s financial system.
China
China Caixin manufacturing PMI climbs to 51.9 in December, fastest improvement since January 2013 (CNBC) The China Caixin manufacturing Purchasing Managers’ Index (PMI) climbed in December, marking its fastest rate of improvement in three years, figures released Tuesday showed. In December, the Caixin PMI reading came in at 51.9, up from November’s 50.9. A reading above 50 indicates expansion, while a reading below signals contraction. That compared with China’s official manufacturing PMI, released Sunday, coming in at 51.4, down slightly from November’s 51.7. The official non-manufacturing PMI, which takes a reading on the services sector, came in at 54.5 in December, down from November’s 54.7. The official figures tend to focus on larger companies (many are government owned), while the private Caixin data focus on smaller and medium-sized, mostly private, firms.
Don’t Poke the Dragon (Twitter)
China Gets Strict on Forex Transactions to Stop Money Exiting Abroad (Bloomberg) At risk of capital flight, China marked the new year with extra requirements for citizens converting yuan into foreign currencies. The State Administration of Foreign Exchange, the currency regulator, said in a statement Dec. 31 that it wanted to close loopholes exploited for purposes such as money laundering and illegally channeling money into overseas property. An estimated $689 billion flowed out of the country in the first 10 months of 2016, according to a Bloomberg Intelligence gauge. While quotas of $50,000 per person per year were left unchanged, citizens must give extra information under bank forms introduced Jan. 1. Key elements:
Customers must pledge money won’t be used for overseas purchases of property, securities, life insurance or investment-type insurance. While such rules aren’t new, citizens previously didn’t have to sign such a pledge
Customers must give a more detailed account of the planned use of funds, such as business travel, overseas study, family visits, medical treatment, merchandise trade or purchases of non-investment insurance policies, including the timing, by year and month
Violators of foreign-exchange rules will be be added to the currency regulator’s watch list, denied foreign-exchange quota for three years, and subjected to anti-money-laundering investigations
Customers must confirm compliance with restrictions on money laundering, tax evasion and underground bank dealings
Customers must now confirm they aren’t lending or borrowing quotas to or from other citizens
