Written by Econintersect
Early Bird Headlines 05 June 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 markets trade mixed as recent rally fades; trade concerns linger (CNBC) Asian markets were narrowly mixed on Tuesday, with most major indexes in the region making tepid moves after rallying in the last session amid improved investor sentiment. The dollar index, which tracks the greenback against a basket of currencies, stood unchanged at 94.079. U.S. crude futures were up 0.62% at $65.15 per barrel. Brent crude futures were up 0.32% at $75.53 after settling 2% lower on Monday. Spot gold was nearly unchanged at $1,291.40 per ounce by 0112 GMT.
- Global gross domestic product (GDP) growth could take a hit of around one percent if tariff threats escalate into a trade war, S&P Global’s chief economist forecast Monday.
- The OECD and the International Monetary Fund have both issued forecasts expressing confidence in global growth while highlighting a trade war as a major downside risk.
- While S&P’s outlook remains positive and underpinned by strong market fundamentals, cracks seem to be appearing a more visibly than before.
U.S.
- GOP, Trump at odds on pardon power (The Hill) Republican lawmakers on Monday pushed back at President Trump’s claim that he has the power to pardon himself. Trump’s assertion sparked a new round of Republican angst with the White House. See also The Memo: Trump’s ‘pardon’ storm grows deeper.
- Paul Manafort tampering with witnesses, say Mueller investigators (The Guardian) Federal investigators have accused Donald Trump’s former campaign manager, Paul Manafort, of tampering with potential witnesses while on bail ahead of his federal bank fraud and tax case. Prosecutors asked that the judge overseeing his case “revoke or revise” the order releasing him ahead of trial.
In a court filing on Monday, prosecutors working for the special counsel Robert Mueller, who is investigating possible collusion between the Trump campaign and Russia, said Manafort and an associate “repeatedly” attempted to contact witnesses using his phone and an encrypted messaging application. They allege it happened shortly after a grand jury returned a new indictment against him, violating the terms of his house arrest.
- Trump Team Pushed False Story Line About Meeting With Kremlin-Tied Lawyer, Memo Shows (The New York Times) For nearly a year, the denials from President Trump’s lawyers and spokeswoman were unequivocal. No, the president did not dictate a misleading statement released in his son’s name. “He certainly didn’t dictate,” said the White House press secretary , Sarah Huckabee Sanders. “The president was not involved in the drafting of that statement,” his lawyer Jay Sekulow told NBC News .
But in a confidential, hand-delivered memo to the special counsel, Mr. Trump’s lawyers acknowledged that, yes, Mr. Trump had dictated the statement, which attempted to deflect questions about a meeting with a Kremlin-tied lawyer at Trump Tower. Prosecutors are asking whether the statement was part of an effort by the president to obstruct a federal investigation.
- GOP senators: A president can obstruct justice (The Hill) Several GOP senators said on Monday that a president could obstruct justice, breaking with an argument backed by President Trump’s legal team.
- Washington state sues over election ads (Seeking Alpha) While the tech giants hope to resolve the suit with transparency tools, Washington state has sued Facebook (NASDAQ:FB) and Google (GOOG, GOOGL) for allegedly violating state campaign finance law by failing to maintain information about who buys election ads.
Federal law requires that political ads in print and on TV indicate who purchased them, but digital ads don’t yet require the same disclosures, except in Washington state.
- About Half of Americans Say U.S. Moral Values Are ‘Poor’ (Gallup) Forty-nine percent of Americans say the state of moral values in the U.S. is “poor” — the highest percentage in Gallup’s trend on this measure since its inception in 2002. Meanwhile, 37% of U.S. adults say moral values are “only fair,” and 14% say they are “excellent” or “good.”
- The Democratic Party is flying blind on economics (The Week) The Democratic party has no economics in its platform. They don’t seem to know much about economics. Perhaps this is better than pretending that they do know something and being wrong. But can they win with that? This author says:
The Democratic Party has developed a strong consensus on social justice issues like gay marriage, transgender rights, and police brutality. On foreign policy, it seems somewhere in the middle – not exactly favoring imperialist wars of aggression, but not terribly interested in a new paradigm either. But the party as such makes virtually no attempt to put forward a consistent party line on economic issues. On political economy, what up-and-coming Democrats believe and say depends largely on forces outside the party, and the candidates who are the clearest thinkers are the ones who have done their own reading and research.
- Projections of Federal Spending on Major Health Care Programs (Congressional Budget Office) Hat tip to Roger Erickson. This presentation explains how much the federal government spends on the major health care programs: Medicare, Medicaid, the Children’s Health Insurance Program, and marketplace subsidies and related expenditures. In 2018, about 155 million people were enrolled in those programs. CBO projects that net outlays for the programs will grow from about $1.0 trillion in 2018 to about $2.0 trillion in 2028. The medical expenditure by the federal government share of GDP will grow from about 5.2% in 2018 to 6.8% in 2028. The government will carry a little more than a third of all medical expenditures.
EU
- Will Eurozone Inflation Reach Its Target? (U.S. Global Investors) Hat tip to TalkMarkets. Although Europe has experienced strong economic expansion in recent years, inflation remains below the central bank’s target of 2%. Joanna Sawicka, emerging Europe research analyst, explains that lower inflation has been due to poor wage growth, fewer loans being taken out and declining productivity of workers. However, newly released May data reports eurozone inflation at 1.9%, up from 1.2% in April, just shy of the 2% target.
UK
- The government is selling off 7.7 per cent of its stake in RBS overnight to take the bank one step closer to privatisation (City A.M.) UK Government Investments (UKGI), the corporate finance arm of the government responsible for managing its stake in RBS, advised chancellor Philip Hammond today that he should resume selling down the 70.1% the government has owned since the height of the financial crisis. The sale of 925m shares, the price of which will be determined through an accelerated bookbuilding process where shares are offered to institutional investors over a short time period, will reduce the Treasury’s stake in RBS to 62.4%.
- Clarity on Brexit plan now urgent, business bosses tell Theresa May (The Guardian) Business chiefs have warned Theresa May that they urgently needed clarity on the government’s plans for Brexit to help them prepare their companies after the UK leaves the European Union in just 10 months.
France
- Macron’s chief of staff investigated by anti-corruption police (The Guardian) Anti-corruption police have opened a preliminary inquiry into allegations that French president Emmanuel Macron’s chief of staff violated conflict of interest rules while he was a civil servant at the finance ministry. The inquiry, which is being carried out by the prosecutor’s office for the national financial crime unit, is examining Alexis Kohler’s links to a Swiss – Italian shipping company that is a major client of one of France’s main shipyards.
India
- Worrying Macro Ripples Cast a Cloud on Modi’s Political Prospects in 2019 (The Wire) Hat tip to Sanjeev Kulkarni. Narendra Modi’s post-demonetisation drive to effect greater formalisation and financialisation, hailed by global businesses, makes India’s real economy even more vulnerable than before in the event of a global financial crisis. Major exposures arise from increasing oil prices and from decreasing U.S. dollar liquidity.
China
- US ‘double agent took $800,000 to spy for China’ (The Guardian) An official from the US Defense Intelligence Agency (DIA) has been charged with selling US secrets to China in exchange for at least $800,000. The justice department alleges Ron Rockwell Hansen was carrying classified information when he was taken into custody on Saturday while on his way to board a flight to China.
It is the latest in a series of arrests of American officials on charges of spying for Beijing. Hansen, from Syracuse, Utah, the charges said, had retired from the US army where he worked in signals intelligence.
- China increasingly challenges American dominance of science (The Washington Post) Hat tip to Roger Erickson. See also next article. The United States spends half a trillion dollars a year on scientific research – more than any other nation on Earth – but China has pulled into second place, with the European Union third and Japan a distant fourth.
China is on track to surpass the United States by the end of this year, according to the National Science Board. In 2016, annual scientific publications from China outnumbered those from the United Statesfor the first time.
- The U.S. is risking an academic brain drain (Axios) Hat tip to Roger Erickson. Linsen Li is a Chinese-born, 30-year-old specialist in advanced batteries – a postdoc in MIT’s material science and engineering program. He received his Ph.D in chemistry from the University of Wisconsin, in all spending the last seven years in the U.S. His infant son, William, is an American citizen.
But he’s reluctantly going home: Li tells Axios that, having received no teaching offers in the U.S., he’s accepted a $65,000-a-year teaching slot at Shanghai’s Jiao Tong University, along with the equivalent of a fat $900,000 in research funding, in addition to $250,000 to buy a house.
- Yin Jinbao, the man found dead in his office last month, served on the boards of Tianjin Rural Commercial Bank and Tianjin Binhai Rural Commercial Bank.
- Yin’s apparent suicide came at a time when both banks he served at were being investigated by China’s Central Commission for Discipline Inspection.
- His death has put the spotlight on troubled banks in China which may be small in size, but could still pose risks to the country’s economic progress.
Guatemala
- Guatemala volcano: at least 62 killed and 300 injured after Fuego erupts (The Guardian) At least 62 people, including three children, have been killed and nearly 300 injured in the most violent eruption of Guatemala’s Fuego volcano in more than four decades, officials said. Fuego, whose name means “fire”, spewed an 8km (five-mile) stream of lava and belched a thick plume of black smoke and ash that rained on to the capital and other regions. Dozens of communities on the southern slopes of Fuego were buried in a searing mix of mud, ash and rocks as the explosions continued for over 16 hours.
- NOAA Satelite imagry of Fuego Volcano (Twitter) Hat tip to Sig Silber.
#GOESEast got an impressive view of #FuegoVolcano erupting in #Guatemala yesterday – one of the most active volcanoes in Latin America. Latest satellite imagery: https://t.co/P1F11zXUHI pic.twitter.com/M74vaJnD1P
– NOAA Satellites (@NOAASatellites) June 4, 2018