Written by Econintersect
Early Bird Headlines 27 April 2018
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, published Monday, Wednesday and Friday, which has many more headlines and a number of article discussions to keep you abreast of what we have found interesting.
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​Global
- Asia markets higher as investors eye the inter-Korean Summit; Bank of Japan stays on hold (CNBC) Asia markets traded mostly higher on Friday, as investors watched for developments from the Korean peninsula. North Korean leader Kim Jong Un met South Korean President Moon Jae-in at the inter-Korean Summit for talks. That session followed after Wall Street saw gains, helped by strong quarterly results from some of the biggest U.S. companies. The dollar index traded up at 91.515 as of 11:19 a.m. HK/SIN. U.S. crude declined 0.43% to $67.9 a barrel while global benchmark Brent fell 0.4% to $74.44. Spot gold was unchanged at $1,316.92 per ounce at 0324 GMT. U.S. gold futures were unchanged at $1,317.60 per ounce.
- ‘Supermud’ bricks could help tackle the world’s housing crisis and cut carbon emissions that cause climate change (The Conversation) The world needs more affordable housing with a lower environmental impact. The stabilised supermud brick could be the answer.
U.S.
- Trump Wrong on Comey ‘Leak,’ McCabe Funds (Fact Check.org) President Donald Trump claimed a memo that former FBI Director James Comey gave to a friend “in order to get a special counsel against me” was “all classified … totally classified.” That’s wrong. It was unclassified at the time and remains unclassified.
In an April 26 interview on Fox News, Trump also claimed Dr. Jill McCabe, the wife of former FBI Deputy Director Andrew McCabe, “didn’t even spend” and “kept some of” the nearly $700,000 that her 2015 state Senate campaign received from political groups affiliated with Terry McAuliffe, a longtime friend of Hillary Clinton.
In fact, campaign records show that the money was spent on campaign-related expenses and contributions.
- Senate panel approves bill to protect special counsel (The Hill) The Senate Judiciary Committee approved legislation on Thursday to protect special counsel Robert Mueller. In a 14-7 vote, the panel approved the bipartisan proposal that deeply divided Republicans on the committee. With every committee Democrat backing the legislation, only one Republican was needed to secure passage.
In the end, four Republicans voted for the bill: Sens. Thom Tillis (N.C.), Lindsey Graham (S.C.), Chuck Grassley (Iowa) and Jeff Flake (Ariz.).
Republican Sens. Orrin Hatch (Utah), Mike Lee (Utah), John Cornyn (Texas), Mike Crapo (Idaho), Ben Sasse (Neb.), John Kennedy (La.) and Ted Cruz (Texas) opposed it.
- 800,000 people are about to flee New York and California because of taxes, say economists (CNBC) Conservative economists Arthur Laffer and Stephen Moore are predicting a new mass exodus of wealth from New York and California because of the new tax law. But academics who have studied taxes and migration call the forecast “pure nonsense“.
In an op-ed in The Wall Street Journal headlined “So Long, California. Sayonara, New York“, Laffer and Moore (who have both advised President Donald Trump) say the new tax bill will cause a net 800,000 people to move out of California and New York over the next three years.
- Five takeaways from Pruitt’s big testimony (The Hill) Scott Pruitt, the administrator of the Environmental Protection Agency (EPA), faced a barrage of tough questions from lawmakers Thursday as he testified in front of two House committees. The mnost important of the five takeaways, from Mr. Pruitt’s perspective: “He escaped disaster.”
- House Chaplain Was Asked to Resign. He Still Doesn’t Know Why. (The New York Times) The chaplain of the House said on Thursday that he was blindsided when Speaker Paul D. Ryan asked him to resign two weeks ago, a request that he complied with but was never given a reason for.
The sudden resignation of the chaplain, the Rev. Patrick J. Conroy, shocked members of both parties. He had served in the role since he was nominated in 2011 by Speaker John A. Boehner, a fellow Catholic. In an interview, Father Conroy was categorical: His departure was not voluntary.
- The Procyclical Forces Behind The Fed’s Rate Hike Train (Credit Writedowns) At least initially, rate increases can be procyclical. Moreover, in this particular cycle, fiscal and regulatory policy are acting procyclically too. That means you need a lot of rate hikes to get a big anti-cyclical effect. This is the reason that Edward Harrison is bullish on the economy for the next couple of years.
This is today’s links post. And I want to highlight a theme that runs through several links today. That’s pro-cyclicality. One reason I am not bearish on the US economy yet is because I think a lot of pro-cyclical activity accompanies the initial surge in interest rates. In this particular cycle, we are now seeing both fiscal and regulatory policy acting pro-cyclically as well with Trump as President.
Later in the cycle, as rates march higher, earnings will materially erode, financial distress will hit Ponzi borrowers, and default rates will start to rise. That’s when we will see layoffs and the potential for recession.
CNN’s Anderson Cooper: Trump’s Fox interview ‘like listening to the rantings of Richard Nixon’ (The Hill) See also next two items. Cooper’s comments on his show came after law professor Alan Dershowitz weighed in on Trump’s interview by focusing on Trump’s suggestion that he could interfere with the Justice Department’s investigations. Dershowitz said:
“I think it would go down a very bad road for us to start parsing the president’s words to determine whether or not the president of the United States is exercising his authority under Article II or violating the law.
“How do you ever interpret statements made by Donald Trump? He made a vague, general statement intended to convey different points to different people.”
- Trump’s Stormy Morning on ‘Fox & Friends’ (The New Yorker) The President’s call-in interview on the Fox News morning show may have thrown a wrench into the legal situation of Michael Cohen, one of Trump’s personal attorneys. See also The 53 most stunning lines from Donald Trump’s ‘Fox & Friends’ interview (CNN).
- The Full Morning Interview (Fox News, YouTube)
EU
- The myth of Franco-German friendship (Voxeu.org) Since Emmanuel Macron’s election as French president in May 2017, hope has lingered that a mythical friendship between France and Germany will help complete the gaps in the euro area architecture. As this column discusses, however, history provides no basis for such an expectation. National interests, always central to the decision calculus, have diverged even further. French leaders have a pressing task at hand: they need to rejuvenate their own economy and build domestic social cohesion. This may take a generation or more.
France
- Macron’s France presents new immigration bill as a centrist compromise – it’s nothing of the sort (The Conversation) France’s new immigration bill exposes the flaw in fixating on numbers rather than people’s lives.
The bill demonstrated an ambition to address all issues relevant to immigration, mixing categories of general immigration, asylum and integration. Yet in reality, it mainly addressed illegal immigration and asylum procedures. This reflects the current rise in asylum seekers who wish to be recognised as refugees in France.
Japan
- BOJ Maintains Stimulus While Removing Language on Timing of 2% (Bloomberg) The Bank of Japan left its stimulus program unchanged on Friday, while removing language from its statement declaring that it would reach 2 percent inflation around fiscal 2019. The decision to maintain the yield-curve control program and asset purchases was forecast by all analysts surveyed by Bloomberg.
As he enters his sixth year at the helm, Governor Haruhiko Kuroda has the BOJ pushing forward with stimulus even as other major central banks move further toward policy normalization, if at a more moderate pace.
North Korea
- Kim Jong Un makes history, crosses border to meet his rival (Associated Press) With a single step over a weathered, cracked slab of concrete, North Korean leader Kim Jong Un made history Friday by crossing over the world’s most heavily armed border to greet his rival, South Korean President Moon Jae-in, for talks on North Korea’s nuclear weapons. Kim then invited Moon to cross briefly north with him before they returned to the southern side.
Those small steps must be seen in the context of the last year – when the United States, its ally South Korea and the North seemed at times to be on the verge of nuclear war as the North unleashed a torrent of weapons tests – but also in light of the long, destructive history of the rival Koreas, who fought one of the 20th century’s bloodiest conflicts and even today occupy a divided peninsula that’s still technically in a state of war.
- Handshake That Made History (Twitter, BBC)
The handshake that made history. pic.twitter.com/JB09Ce9mHt
– BBC News (World) (@BBCWorld) April 27, 2018
China
- Exclusive: U.S. considers tightening grip on China ties to Corporate America (Reuters) The U.S. government may start scrutinizing informal partnerships between American and Chinese companies in the field of artificial intelligence, threatening practices that have long been considered garden variety development work for technology companies, sources familiar with the discussions said.
- All The Things China Market Analysts Got Wrong This Year (Bloomberg) Anyone who shorted Chinese stocks, went long the yuan and loaded up on the country’s government debt has unexpectedly won big in 2018. Strategists across the board have been blindsided by China’s financial markets this year, where extreme moves mean the nation has hosted both the world’s best and worst performing assets all at once. The Shanghai Composite Index is now 16% below December’s year-end targets, the 10-year bond yields 108 basis points (1.08%) less than forecast, and the currency is already stronger than almost all analysts had predicted.
Canada
- Canada’s Housing Bubble (Twitter)
