Written by Econintersect
Early Bird Headlines 16 May 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
- Most Asian stocks slip after bond yields rise, with North Korea uncertainty in focus (CNBC) Most stocks in Asia closed lower on Wednesday as markets processed new geopolitical uncertainty related to North Korea and the U.S. 10-year Treasury yield rising to its highest level in seven years overnight. The dollar index last stood higher at 93.263 at 2:52 p.m. HK/SIN. U.S. crude futures edged down by 0.46% to trade at $70.98 per barrel and Brent crude futures shed 0.29% to trade at $78.20. Spot gold rose 0.3% to $1,293.89 per ounce at 0330 GMT, after shedding 1.7% and marking the lowest this year at $1,288.31 in the previous session.
U.S.
- But Who the Heck Bought the $1.2 trillion in New US Debt Over the Past 12 Months? (Wolf Street) China increased its holdings of US Treasury bonds, notes, and bills by $11 billion in March to $1.19 trillion, the highest since October last year, according to the Treasury Department’s TIC data released Tuesday afternoon. Japan however has been systematically cutting its exposure to Treasuries. Since July 2016 it has slashed its holdings by $111 billion, including $16 billion in March, to $1.04 trillion. Over the past 12 months, foreign holdings gained $220 billion. The Fed has reduced its holdings. This means that Americans have bought $891 billion in treasuries over the last 12 months.
- Ex-Trump lawyer says president shouldn’t have hired Giuliani (The Hill) One of President Trump’s former lawyers said Tuesday that the president made an error in hiring former New York City mayor Rudy Giuliani to his legal team amid the ongoing special counsel investigation into possible collusion between the Trump campaign and Russia.
Jay Goldberg, a longtime lawyer for Trump who represented the president during his 1992 divorce from Ivana Trump, told MSNBC‘s “The Beat with Ari Melber” that Giuliani is trying to “aggrandize himself” and hog the spotlight instead of representing the president to the best of his ability.
- Goldman: Something strange is happening with the US economy that could cause interest rates to jump (CNBC) America’s budget deficit and unemployment rate are heading in opposite directions – something that’s never happened during post World War II peacetime and could cause a significant jump in interest rates. Goldman Sachs projects, for instance, that the 10-year Treasury note could be yielding 3.6% next year.
EU
- EU concerned about ‘collateral damage’ from U.S.-China spat: commissioner (Reuters) Europe is concerned about the collateral damage it may suffer from America’s escalating trade dispute with China, Phil Hogan, the European Union agriculture commissioner, said on Wednesday on the sidelines of a food trade show. Hogan outlined his concerns in a meeting with U.S. Undersecretary for Agriculture Ted McKinney this week in Shanghai, he told a media briefing.
UK
- Theresa May warned her Brexit customs plan might not be legal (The Sunday Times) David Davis has told the prime minister that her favoured plan for a customs partnership with the EU could be illegal under international trade law, The Times has learned.
The Brexit secretary, who backed the Leave campaign, is understood to have raised the threat of a legal challenge in a letter to Theresa May setting out his opposition to the proposal.
- Boorish Boris Johnson is now a one-man rogue state (The Guardian) John Crace writes:
As the lone believer in his own genius, the foreign secretary seems safe in the knowledge that no one will dare sack him.
A latter-day Toby Young on speed who roams the world losing friends and alienating people at an alarming rate. His motto: there’s no bad situation that can’t be made worse.
Italy
- 5-Star, League want ECB to forgive 250 billion euros of Italy debt: draft (Reuters) The anti-establishment 5-Star Movement and far-right League plan to ask the European Central Bank to forgive 250 billion euros ($296 billion) of Italian debt, according to a draft of a coalition program the parties are working on. See also Struggling to agree on government pact, Italy’s League turns on EU.
Israel
- Global protests grow after Israeli killing of Palestinian demonstrators (The Guardian) International condemnation of Israel’s killing of 60 Palestinian protesters in Gaza has escalated as tens of thousands of people rallied in the coastal enclave to bury the dead. The killings took place on Monday during demonstrations at the Gaza border fence, which coincided with a high-profile ceremony to mark the transfer of the US embassy from Tel Aviv to Jerusalem, which overturned decades of US foreign policy.
On Tuesday Palestinians marked the Nakba, or “catastrophe”, commemorating the more than 700,000 Palestinians who fled or were expelled in the 1948 war surrounding Israel’s creation.
Ukraine
- Ukraine is about to make another crucial step toward Europe (CNBC) This Thursday, the Verkhovna Rada (the parliament of Ukraine) considers a historic proposal to replace 25-year-old foreign exchange legislation with an entirely new law that will open our country to international investors and make it easier for Ukrainian businesses to operate globally.
Technical though it may seem, liberalization of our arcane foreign exchange controls will make Ukraine a much more investor-friendly place and will help the country take its rightful spot amongst the major European and global economies.
Iran
- Shi’ite cleric’s election win puts Iran to the test in Iraq (Reuters) Already pressured by the U.S. withdrawal from the nuclear deal, Iran faces a major test in managing Shi’ite cleric Moqtada al-Sadr, a formidable opponent who beat Tehran’s longtime allies to achieve a shock victory in Iraq’s parliamentary election.
Japan
- Global Synchronous Recovery Collapses As Japanese GDP Plunges In Q1 (Zero Hedge) Despite all the hype of a global synchronous recovery, Japan’s Q1 Real GDP tumbled 0.6% QoQ (on an annualized basis) – the worst drop since Q4 2015 – and well below expectations. And after 8 straight quarters of improvement – that was the longest stretch of uninterrupted growth since a 12-quarter run that ended in 1989 – Japan’s economy shrank again in Q1…(and the previous quarter got revised sharply lower). Under the hood it’s just as ugly…
- Nominal GDP dropped 0.4% QoQ (vs expectations of a 0.1% gain)
- Business Spending dropped 0.1% QoQ (vs expectations of a 0.4% rise)
- Private Consumption was unchanged QoQ
North Korea
- North Korea will join ‘efforts for a total ban on nuclear tests’ (Reuters) North Korea will join international efforts to ban nuclear tests, its ambassador to the United Nations in Geneva, Han Tae Song, told the Conference on Disarmament on Tuesday.
- N. Korea threatens to cancel US summit: KCNA (AFP) North Korea threatened Wednesday to cancel the forthcoming summit between leader Kim Jong Un and President Donald Trump if Washington seeks to push Pyongyang into giving up its nuclear arsenal. See also next article.
- Asian shares fall as North Korea suspends talks, U.S. yields climb (Reuters) Pyongyang abruptly called off talks with Seoul, throwing a U.S.-North Korean summit into doubt, while surging bond yields revived worries about faster U.S. interest rate hikes that could curb global demand. Econintersect: Kim Sung Un is playing South Korea and President trump like violins. See also North Korea says may reconsider summit with Trump, suspends talks with South.
South Korea
- For Pentagon, South Korea drills became a crucial but quiet endeavor (Reuters) Before North Korea’s condemnation of U.S.-South Korea military drills, even U.S. policy wonks who follow every twist and turn of events on the Korean peninsula probably did not know much about them. That was no accident. The Pentagon made a point of keeping the annual exercises off the front pages, even as U.S. military leaders including Defense Secretary Jim Mattis saw them as critical to the U.S.-South Korean alliance. Mattis set an explicit policy of going quiet on North Korea.
China
- U.S. lawmakers push back on Trump talk of helping China’s ZTE (Reuters) U.S. lawmakers on Tuesday rejected any plan by President Donald Trump to ease restrictions on China’s ZTE Corp (000063.SZ), calling the telecommunications firm a security threat and vowing not to abandon legislation clamping down on the company.
- Is China Straight-up Bribing Donald Trump? (Vanity Fair) The president suddenly softens on a Chinese business after Beijing bankrolls a Trump Organization project. the president’s total about-face on China came just 72 hours after the developer of a theme park outside Jakarta, known as MNC Lido City, with whom the Trump Organization has an agreement to license its name, signed a deal to receive $500 million in Chinese government loans, in addition to another $500 million from government banks.
Mexico
- Mexican leftist frontrunner extends lead for presidency: poll (Reuters) Mexican presidential frontrunner Andres Manuel Lopez Obrador extended his lead to more than 12 points over his nearest rival ahead of the July 1 vote, according to a poll published on Tuesday.
