Written by Econintersect
Early Bird Headlines 20 February 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
Asia markets trade higher as investors eye details on Trump’s tax reform plans (CNBC) Asian markets finished mostly higher on Monday, searching for direction, as investors await further details from President Donald Trump on his economic policies, including tax reforms. On Monday at 3:21 p.m. HK/SIN, the dollar index, which measures the greenback against a basket of currencies, traded at 100.84, up from levels around 100.62 from Friday afternoon Asia time. Oil traded marginally higher, with U.S. crude up 0.34% at $53.58 a barrel, while global benchmark Brent added 0.43% to $56.05 at 3:23 p.m. HK/SIN. Spot gold edged down 0.1% to $1,234.28 per ounce by 0319 GMT, while U.S. gold futures fell 0.3% to $1,235.2.
OPEC Wins Investors Back as Cuts Prompt Record Bets on Oil Rise (Bloomberg) OPEC has never taken supply cuts so seriously, and hedge funds are loving it. Investor optimism reached an all-time high that West Texas Intermediate oil prices will rise as the Organization of Petroleum Exporting Countries delivers on pledges to reduce production. The International Energy Agency said the group has achieved a record 90% initial compliance with an output accord. The U.S. benchmark has traded between $50.71 and $54.34 since Jan. 10 as balancing forces — the OPEC curbs and the U.S. shale boom — have kept volatility to a minimum.
U.S.
Trump and the Rebirth of Press Freedom (Project Syndicate) This author says the press has allowed multiple presidential administrations to spoon-feed it information. News organizations in the United States have prioritized access to the corridors of power above all else, even when access is conditioned on avoiding uncomfortable questions or accepting evasive answers. He suggests that journalists should:
“Get out into the country and learn more about how people live, what they think, what helps and hurts them, and how the government and its actions appear to them, not to us.”
There’s one thing going right for Trump (CNN) A slew of economic data came out this week. Almost all of it was positive. Americans are still going to stores and spending big (retail sales came in better than expected for January). They’re also buying houses. And cars. And using their credit cards. On top of that, small and medium-sized business owners are giddy. The NFIB Small Business Optimism Index is at its highest level since 2004. Heck, even manufacturing has made a pretty big turnaround and looks almost healthy again. The Philly Fed Index, a survey on how well manufacturers are doing, just hit its highest level since 1984. And anyone with money in the market likely noticed the U.S. stock market set even more records this week. In fact, American stocks are on their best winning streak in 25 years. Econintersect: Our economic indicator reports indicate a slight improvement in the economic numbers, less “giddy” than all the sentiment reports. See also Americans brimming with optimism on the economy (The Hill)
The Most Vermin-Infested American Cities (Bloomberg) The household critters that lurk behind radiators and under shower drains are a nuisance for lay people, and an impossible math problem for public health researchers and pest control companies: How many rats live in New York? Cockroaches in New Orleans? Since the U.S. Census can’t talk to the creatures to get a head count, the government does the next best thing: It asks homeowners and renters.
UK
Kraft Heinz has “amicably agreed” to withdraw its $140bn mega-bid for Unilever (City A.M.) US food giant Kraft Heinz shocked the financial world last night, scrapping its $140 billion (£113 billion) takeover bid for Unilever just two days after news of the offer was leaked. Kraft said it had “amicably agreed” to abandon the proposed merger, which would have been the second largest in corporate history, and the largest ever acquisition of a UK-based company. It could have also proved a major headache for Prime Minister Theresa May. During her Tory party leadership bid last summer, May promised to take a more interventionist approach to foreign takeovers.
France
French Election Wide Open After the Weekend Everyone Stumbled (Bloomberg) France’s election is wide open with just nine weeks to go after a weekend of stumbles that saw independent Emmanuel Macron ensnared by the country’s colonial past and attempts to unite the left fizzle. After earlier signaling they would consider a possible joint candidacy, Socialist Benoit Hamon and far-left campaigner Jean-Luc Melenchon ended up trading barbs rather than bridging their differences. The weekend wasn’t any kinder to anti-euro candidate Marine Le Pen and Republican Francois Fillon, who were both blown off course by the persistent allegations that they misused public funds. As a result, the at-least-four-way race for the presidency, remains up for grabs.
Germany
Trump Worries Germans More Than Putin in Poll of Election Mood (Bloomberg) Trump is viewed with concern by 78% of respondents in Germany, an increase from 62% in January, according to the FG Wahlen poll for ZDF television. Fifty-eight percent (58%) take a similar view of Putin’s policies, while 40% expressed no major concern about the Russian president.
Sweden
Donald Trump is right, there was a recent attack in Sweden. By neo-Nazis on a refugee centre (Independent) The world reacted with confusion after Donald Trump cited a Swedish terrorist attack during a campaign-style rally in Florida that appeared never to have happened. However, despite widespread debunking of his claims, it has since emerged a largely underreported attack did, in fact, occur last month. Three suspected neo-Nazis were arrested in January after a Gothenburg Asylum centre became the target of a homemade bomb attack, leaving one person seriously injured. Security services said all three suspects had previously been members of the Nordic Resistance Movement (NMR), a group that openly promotes racist and anti-Semitic views and has vocally opposed non-white immigration to the country.
Trump Says Remark About Sweden Referred to Something on TV (Bloomberg) Swedes have been scratching their heads and ridiculing President Donald Trump’s remarks that suggested a major incident had happened in the Scandinavian country. The American president now says he was referring to something he saw on television. During a rally in Florida on Saturday, Trump said “look what’s happening last night in Sweden” as he alluded to past terror attacks in Europe. It wasn’t clear what he was referring to and there were no high-profile situations reported in Sweden on Friday night. On Sunday, Trump took to Twitter to explain: “My statement as to what’s happening in Sweden was in reference to a story that was broadcast on @FoxNews concerning immigrants & Sweden.” A White House spokeswoman, Sarah Huckabee Sanders, says that Trump was talking about rising crime and recent incidents in general, not referring to a specific issue.
Ukraine
Eastern Ukraine ceasefire set to take place — but will it hold? (CNN) A ceasefire aimed at putting an end to fighting between Ukrainian forces and Russian-backed separatists due to start Monday is in danger of failing even before it gets off the ground. The deal, announced by Russian Foreign Minister Sergey Lavrov, is a renewed attempt to enforce the Minsk peace protocol — an agreement that has repeatedly faltered since it was first partially implemented two years ago. But the sustainability of the fledgling peace deal was further thrown into doubt by Russian President Vladimir Putin, who effectively withdrew from the Minsk agreement by signing an executive order which will recognize travel documents issued by the de facto separatist authorities in the region, it said in a statement. Critics fear that recognizing the pro-Russian governments in eastern Ukraine is a step toward Putin’s government declaring the disputed regions independent states.
Japan
Japan’s Trade Deficit Widens on Drop in Car Exports, Oil Imports (Bloomberg) Japan posted a bigger-than-forecast trade deficit in January as auto exports declined and energy import costs increased. Economists cautioned against reading the single month’s figures negatively, noting that global demand should support Japanese exports this year.
Mongolia
How the World’s Fastest-Growing Economy Went Bust (Bloomberg) Not so long ago, Mongolia was the world’s fastest-growing economy. Now, by nearly every metric, it’s in a dire fix. Its debt has surged, its currency has plummeted, and its budget deficit has widened alarmingly. Foreign investment has dried up and economic growth all but ceased. Even the poor antelope are beset by plague. (Econintersect: Maybe either Genghis or Kublai Khan will come out of retirement?)
Making matters worse, some staggering bills are coming due. The government, along with a state-backed development bank, is on the hook for more than $1 billion in maturing bonds over the next year, starting with a $580 million payment due in March. By one account, locals are so anxious they’re donating their horses to help avoid default.
Thankfully, better options are available. This week, the government is negotiating with the International Monetary Fund for a bailout, its sixth in less than three decades. China also may be willing to lend a hand, at a price. Yet even if it avoids default, Mongolia should stand as a cautionary tale for the ages.
China
China Economic Policy Has Never Been More Uncertain. Sort of. (Bloomberg) Economic policy is always challenging to decipher in China, where Communist Party leaders steer one of the world’s most opaque central banks. Indeed, one measure of uncertainty has never been higher amid complications from Hong Kong’s politics to Donald Trump’s protectionism. The China-Hong Kong Economic Policy Uncertainty Index stands at a record 672.82 after soaring to more than five times its average in data stretching back 22 years.
