Written by Econintersect
Early Bird Headlines 24 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
- Asian shares trade lower as trade concerns return to focus (CNBC) Asian stocks traded lower on Thursday, with investors cautious over fresh trade-related developments as the trade dispute between the U.S. and China remained in focus. The dollar index was up and steady at 93.906 at 12:05 p.m. HK/SIN. International benchmark Brent futures were down $0.15 (0.19%) at $79.65 per barrel at 0103 GMT. U.S. West Texas Intermediate (WTI) crude futures were down %0.10, or 0.14%, at $71.74 a barrel. Spot gold was up 0.1% at $1,294.58 per ounce at 0046 GMT, after gaining nearly 0.2 percent in the previous session. U.S. gold futures for June delivery were up 0.3% at $1,294 per ounce
- U.S. Inventories Drive Oil Lower (Bloomberg, Twitter)
- Global Imbalances Tracker (Council on Foreign Relations) The CFR Global Imbalances Tracker can be used to gauge, through time, the vulnerability of individual countries and the global economy to the buildup of imbalances in the current account (of which trade deficits or surpluses are the largest component). Click title link toview data interactive graphic (below) at the source.
The Country Tracker below shows current account imbalances on a country-by-country basis. Shades of red indicate deficits; shades of blue, surpluses. Hover your mouse over (or tap on) a country to see its most recent current account balance and import and export figures. The chart just above the map shows movements in the selected country’s current account through time.2
U.S.
- Bowing to pressure, White House to host bipartisan briefing on Russia investigation (The Hill) {Sounds like ‘separate but equal’.} The White House is planning a separate meeting for bipartisan House and Senate leaders to receive classified information related to the Russia investigation, responding to pressure over a decision to exclude Democrats from a highly anticipated Thursday briefing. The group, known as the Gang of Eight, will huddle with officials representing the Justice Department, law enforcement and intelligence on Thursday afternoon – two hours after the same group of officials will hold a solo meeting with Republican lawmakers. Thursday’s planned meeting with only House Republicans “will proceed as previously scheduled,” White House spokesman Raj Shah said – with no Democrats present. It is set for 12 o’clock Thursday afternoon, according to the Justice Department.
- 8 signs pointing to a counterintelligence operation deployed against Trump’s campaign (The Hill) It may be true that President Trump illegally conspired with Russia and was so good at covering it up he’s managed to outwit our best intel and media minds who’ve searched for irrefutable evidence for two years. (We still await special counsel Robert Mueller’s findings.) But there’s a growing appearance of alleged wrongdoing equally as insidious, if not more so, because it implies widespread misuse of America’s intelligence and law enforcement apparatus. Here are the 8 signs the author identifies:
- Operation had a code name
- Numerous wiretaps
- Use of ‘National Security Letters’
- Unmasking
- Changing rukles to make surveillance easier
- Leaders have joined media
- Leaks
- Involving friends, informants, and snoops
- Trump administration launches vehicle import probe (BBC News) President Donald Trump has ordered a national security probe into vehicle imports, which could bring new tariffs. Mr Trump said the US car industry was “critical to our strength as a nation” and ordered the Department of Commerce to investigate. The probe rests on 1960s legislation which lets the president restrict imports if they threaten national security. It is the latest move in Mr Trump’s America First trade agenda.
- “Blue Wave” Crashes On Shores Of Reality: GOP Takes Lead In Midterms Poll For First Time (Zero Hedge) In the latest Reuters poll, more people said they would vote for a Republican candidate over a Democrat in the upcoming midterm election, a reversal of previous trends. Of the 1,139 people surveyed earlier this month, 41.1 percent said they would vote for a Republican in their district in November, up from 31.7% at the end of March. Only 35.2% percent of respondents said they planned to vote for a Democrat in their district in the upcoming election, down from 45.8% in early April. See Thinking about the elections in 2018, if the election for U.S. Congress were held today, would you vote for the Democratic candidate or the Republican candidate in your district where you live? (Reuters)
- Republicans Announce They’re Going After Hillary, Comey, Lynch, And Others in DOJ and FBI For Crimes (YouTube) Econintersect: The best defense is a good offense?
- Fastest Growing U.S. Cities are Suburban (Twitter)
EU
- First Brexit, now Italy – the EU power balance is shifting (City A.M.) The left-wing M5S has campaigned for a universal basic income, while the right-wing League has proposed a flat tax of 15% to reduce middle-class taxation. But one thing both coalition agree on is the EU’s responsibility for Italy’s fiscal problems. Both want to renegotiate the EU treaties, agree a reduction in Italy’s contribution to the next EU budget, and seek debt relief of €250bn from the European Central Bank. See also articles under Italy.
- Euro zone business slowdown suggests best days may be over (Reuters) Euro zone economic growth slowed much more sharply than expected this month, a business survey showed, which along with weaker inflation has intensified concerns there will be no return to the bloc’s recent boom times. The European Central Bank will end its asset purchase programme this year and hike interest rates in 2019, a Reuters poll found last month, although policymakers may be concerned to see inflation easing along with growth.
While the expansion still remained relatively strong, growth slowed to a 20-month low in the bloc’s largest economy, Germany, and the lowest in a year in a half in No. 2 economy France, according to the latest IHS Markit purchasing managers’ surveys.
French unemployment also rose in the first three months of 2018, confounding economists’ expectations for a decline, according to separate official data.
UK
- UK deficit drops by £5.7bn in the last year to lowest level since 2007 (City A.M.) See also next article. According to the ONS, borrowing between April 2017 and March 2018 was £40.5 billion (€48.5 billion or $56.7 billion), £4.7 billion less than official expectations from the Office for Budgetary Responsibility (OBR), the lowest net borrowing since the financial year ending March 2007. Meanwhile, public sector net borrowing decreased by £1.6 billion in April 2018, compared with April 2017, also the the lowest April net borrowing since 2008.
The deficit for the financial year now stands at two per cent of GDP – the smallest budget deficit as a share of GDP since 2002. Over the next year, the OBR expects the public sector to borrow £37.1bn, around a quarter of what it borrowed at the peak of the financial crisis in 2010.
- NHS needs £2,000 in tax from every household to stay afloat – report (The Guardian) British households will need to pay an extra £2,000 a year in tax to help the NHS cope with the demands of an ageing population, according to a new report that highlights the unprecedented financial pressures on the health system. Two thinktanks – the Institute for Fiscal Studies and the Health Foundation – have said there can be no alternative to higher taxation if there are to be even modest improvements to care over the next 15 years, adding that demands on the health service will continue to rise. Econintersect: But the government is reducing the deficit. See preceding article.
- Brexit has cost UK households £900 each – “which is a lot of money,” says Bank of England governor Mark Carney (City A.M.) Households are £900 (€1100 or $1290) worse off since the Brexit vote, Bank of England governor Mark Carney has claimed. Despite global and European economies being “much, much stronger” than they were when the Bank made its economic predictions ahead of the 2016 referendum, and a “very large stimulus provided by the Bank of England“, the UK’s economy is “up to two per cent lower than it would have been”, he said this morning, adding: “That is a reasonable difference.”
“If you map that into household incomes… Real household incomes are about £900 lower than we forecast in May 2016, which is a lot of money.”
Germany
- ‘The U.S. President Is Destroying the American World Order’ (Der Spiegel) In an interview with DER SPIEGEL, former German Foreign Minister Joschka Fischer talks about the danger of war against Iran, the deterioration of trans-Atlantic relations under U.S. President Donald Trump and the serious need for Germany to invest massively in the European Union’s future.
Italy
- Italy president names novice Giuseppe Conte as populist PM (BBC News) Italy’s President Sergio Mattarella has accepted a political novice as prime minister, paving the way for two populist parties to form a government. The anti-establishment Five Star Movement and right-wing League chose law professor Giuseppe Conte in a bid to end 11 weeks of political deadlock. The 53-year-old has faced claims that he embellished his CV, which he denies. Concerns remain over the two parties, which reject years of EU austerity and want to renegotiate Italy’s debt.
- Italy’s populists prepare to wage war over the ECB’s budget rules (City A.M.) The coalition in Italy between the Five Star Movement and the Northern League has not been formally finalised, but looks likely to go ahead (well, as likely as anything can be in Italian politics).
Italians have got used to broken political promises, but if the coalition agreement is implemented, it could blow apart the EU’s fiscal rules. By some estimates, it would push the budget deficit towards six per cent of GDP, compared with the EU Stability & Growth Pact limit of three per cent.
The combination of flat tax proposals (a two-tier income tax rate system of 15 per cent and 20 per cent), a citizen’s income of €780 per month, and reversing pension reforms by scrapping increases in the retirement age might have been expected to alarm financial markets. Italy already has the second largest public debt to GDP ratio in the EU, at 132 per cent.
Strangely, the alarm bells have not really sounded yet. Yes, Italian 10-year bond yields have increased, but at 2.3 per cent they are still way below the seven per cent levels reached in 2011-12. And yes, spreads have widened against German bunds and Spanish bonds, but not dramatically.
Russia
- Putin wants growth but we won’t sacrifice stability, Russia’s central bank governor says (CNBC) President Vladimir Putin has set ambitious growth targets for Russia but the country must not sacrifice macro-economic stability to get there, central bank governor Elvira Nabiullina told CNBC:
“Our president has set us the objective whereby the Russian economy grows at rates above world levels, this means almost 4 percent. Of course this requires a rise in the potential growth rates. It requires structural reforms, in terms of labor productivity, private investment and then the economy can grow at higher rates than it is now.”
Japan
- Japan women see turning point on sexual harassment after scandal (Reuters) Japanese women, long accustomed to enduring sexual harassment in silence, are speaking out after a high-profile scandal involving a top bureaucrat stirred debate and protests. In interviews with Reuters, six prominent women said they hoped Japan was at a turning point in attitudes towards harassment, but urged steps to shrink social, political and economic gender gaps to get at the root causes of the problem.
Administrative Vice Finance Minister Junichi Fukuda resigned in April after accusations that he had sexually harassed a female reporter. Fukuda denied the allegations, and no lawsuits were filed, but the finance ministry later acknowledged the harassment and docked 20 percent of his pay for six months.
North Korea
- North Korea calls US Vice-President Pence ‘stupid’ (BBC News) A senior North Korean official has accused US Vice-President Mike Pence of being “stupid” and warned of possible “nuclear showdown” if diplomacy fails. Choe Son-hui said Pyongyang would not “beg the US for dialogue” nor try to persuade them to attend talks. In recent days, both sides have warned that the 12 June Trump-Kim meeting could be delayed or even called off. Pyongyang said it would reconsider going if the US insisted on it giving up nuclear weapons unilaterally.
Choe Son-hui has been involved in several diplomatic interactions with the US over the past decade. In an article carried by state news agency KCNA, she said Mr Pence had made “unbridled and impudent remarks” in the media in recent days, including his comments that North Korea “may end like Libya“.
