Written by Econintersect
Early Bird Headlines 09 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
Australian shares jumped nearly 1%; Miners slip on lower iron ore forecasts (CNBC) Asian shares were higher on Monday, following the Dow Jones coming within inches of hitting the 20,000 mark during last Friday’s session. The dollar index, which measures the greenback against a basket of six major currencies, last traded at 102.37. It had traded at a range of 101.3 to 103.82 last week. Against the dollar, the yen fetched 117.46 while the Australian dollar stood at $0.7307 compared to levels as low as 0.718 last week. The Chinese yuan was trading at 6.9333 against the greenback, after the yuan mid-point was set at 6.9262 compared to its last close at 6.933.
Oil prices fall as Iran crude tanker exports surge, U.S. adds more rigs (Reuters) Oil prices fell on Monday as increased exports from Iran undermined efforts by other oil producers to curb a global fuel supply overhang and as U.S. drillers increased activity for a 10th straight week. Brent crude futures LCOc1, the international benchmark for oil prices, were trading at $56.84 per barrel at 0535 GMT (00.35 a.m. ET), down 26 cents from their last close. U.S. West Texas Intermediate (WTI) crude oil futures CLc1 were trading at $53.70 per barrel, down 29 cents. Traders said the lower prices were a result of rising exports from Iran that come just as other members of the Organization of the Petroleum Exporting Countries (OPEC) cut supplies in an effort to end a global glut.
U.S.
Potential Fed Chairs Suggest They Would Pursue Tighter Policy (Bloomberg) Potential candidates to head the Federal Reserve in 2018 suggested that monetary policy would be tighter if they were in charge. Speaking at the annual American Economic Association meeting that ended Sunday, Glenn Hubbard of Columbia University, along with Stanford University’s John Taylor and Kevin Warsh, criticized the central bank for trying to do too much to help an economy struggling with problems that monetary policy can’t solve.
Trump acknowledges Russia role in U.S. election hacking: aide (Reuters) President-elect Donald Trump accepts the U.S. intelligence community’s conclusion that Russia engaged in cyber attacks during the U.S. presidential election and may take action in response, his incoming chief of staff said on Sunday. Reince Priebus said Trump believed Russia was behind the intrusions into the Democratic Party organizations, although Priebus did not clarify whether the president-elect agreed that the hacks were directed by Russian President Vladimir Putin.
Kansas Offers Cautionary Tale for Trump’s Tax Ambition (Bloomberg) The governor of Kansas has some wisdom for Donald Trump, from one Republican tax-cutter to another: The reductions may take longer than expected to give the economy a sustained lift. Like President-elect Trump, who said on the campaign trail that slashing taxes would jump-start growth, Sam Brownback in 2012 said steep cuts to personal income and small-business taxes in the Midwest state would provide the economy a“shot of adrenaline“. What followed wasn’t the promised jolt. The shortfall in revenue has instead forced the government to curtail spending on everything from health care to higher education. Econintersect: Sam Brownback was wrong in 2012 is still ignorant about fiscal policy in 2016. Kansas is a user of U.S. money; Washington is the creator of that money. Kansas cannot run deficits; the federal government can.
“Unequivocally Bad?” Gas Prices Soar Over 20% YoY – Most Since 2011 (Zero Hedge) In December 2014, as gas prices had plunged over 20% YoY, Janet Yellen proclaimed “from the standpoint of the U.S… the decline we’ve seen in oil prices is likely to be, on net, a positive,” and that narrative of slumping gas prices being “unequivocally good” for Americans was spewed everywhere across linear-thinking mainstream media. So we wonder, with gas prices up 22% year-over, the fastest spike since 2011, is that “unequivocally bad” for America? Remember when Janet Yellen, and all the tenured economists in her circles said that plunging gas prices are great for the consumer? See second graphic below for relationship between U.S. gasoline prices and U.S. macroeconomic data in 2010 and 2011.
UK
Pound at weakest level against dollar since October (Financial Times) The pound took a dip against the greenback in Asian trade to its softest level since October and primed London-listed equities for a boost at the open. Sterling was down 0.8% against the dollar at $1.2192 during the afternoon session in Asia, the lowest intraday level for the currency since October 31.
France
Thousands of British holidays face ruin as Alps declares drought zone (The Times) The northwestern Alps in France are experiencing the worts drought in 135 years. Resorts have been creating artificial snow cover on theotherwise bare mountain sides. But now they may be forced to stop that unless there is significant rain or snow this week because private reservoirs are depleted and snow making with water from public mains will be prohibited.
Iraq
Iraqi forces reach Tigris in Mosul as suicide bombs hit Baghdad (Reuters) Iraqi special forces battling Islamic State reached the eastern bank of the Tigris river in Mosul on Sunday for the first time in a three-month, U.S-backed offensive to capture the city from ISIS militants, who still control its entire western half. Meanwhile, ISIS claimed attacks at two Baghdad markets in which 20 people were killed, the latest in a spate of bombings, tactics to which Islamic State is resorting as it comes under pressure in Mosul, its last major stronghold in Iraq.
India
China nibbles at Samsung share to take 50 percent of India’s smartphone market (Reuters) Chinese brands took their largest ever slice of the $10-billion Indian smartphone market in late 2016, accounting for more than one in every two phones sold – a growing market share that ate into sales from top-selling Samsung Electronics. Samsung, the single most popular smartphone brand in India, commanded a roughly 30% market share just over a year ago. That slipped to 21% in November, according to tech research firm Counterpoint, the last month for which data is available. Meanwhile – thanks to low cost, improved technology and an advertising blitz – Chinese brands like Oppo, Lenovo, OnePlus, Gionee and Xiaomi took a combined share of over 50%, compared to just 19% a year ago.
Japan
Attack of the (Radioactive) Wild Boars! (Outside) Wild boars are aggressive, hard-headed animals, some of the most destructive creatures in the world, not only devouring crops, but destroying fields and root systems with their sharp teeth and trowel-like hooves from Kobe to Chiba City. It wasn’t always like this. Boars are a native species in Japan, but you could go years without seeing one there for most of the 20th century, thanks to diseases like cholera in the 1920s. Then, in the early 2000s, the animals began descending on cities and farmland in an almost plague-like fashion. In the contaminated area in and around the site of Fukishima’s 2011 nuclear meltdown, the boars’ voracious appetite and prolific breeding has led to an indeterminate number of animals (thousands? Tens of thousands?) becoming contaminated with radiation. Many of them are journeying into nearby prefectures. People have even stopped eating a kind of boar stew that used to be a specialty dish in some of these places, for fear of radiation contamination. The impetus for eradication is at red-alert levels.
North Korea
North Korea says can test-launch ICBM at any time: official news agency (Reuters) North Korea (Democratic People’s Republic of Korea) declared on Sunday it could test-launch an intercontinental ballistic missile (ICBM) at any time from any location set by leader Kim Jong Un, saying a hostile U.S. policy was to blame for its arms development. Kim said on Jan. 1 that his nuclear-capable country was close to test-launching an ICBM.
China
Chinese state tabloid warns Trump, end one China policy and China will take revenge (Reuters) State-run Chinese tabloid Global Times warned U.S. President-elect Donald Trump that China would take “take revenge” if he reneged on the one-China policy, only hours after Taiwan’s president made a controversial stopover in Houston. Taiwanese President Tsai Ing-wen met senior U.S. Republican lawmakers during her stopover in Houston on Sunday en route to Central America, where she will visit Honduras, Nicaragua, Guatemala and El Salvador. Beijing had asked Washington not to allow Tsai to enter the United States and that she not have any formal government meetings under the one China policy. A photograph tweeted by Texas Governor Greg Abbott shows him meeting Tsai, with a small table between them adorned with the U.S., Texas and Taiwanese flags. Tsai also met Texas Senator Ted Cruz.
China Is No Longer Manipulating Its Currency (Peterson Institute for International Economics) President-elect Donald J. Trump has vowed to label China a currency manipulator on his first day in office. That pledge is outdated as well as dubious legally. China did manipulate the renminbi from 2003 through 2014 in order to boost its exports and make imports more expensive. But China is no longer doing it. In fact, it is intervening to increase the value of the renminbi – an action that actually helps make US exporters more competitive. Labeling China a manipulator also has no legal impact.
