Written by Econintersect
Early Bird Headlines 11 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.
Please share this article – Go to very top of page, right hand side for social media buttons.
​Global
- Asian shares edge higher amid trade tensions and ahead of central bank meetings (CNBC) Markets in the region mostly closed higher on Monday, shrugging off the cautious mood seen earlier as investors focused on a mix of trade tensions and a landmark meeting between U.S. President Donald Trump and North Korean leader Kim Jong Un. The dollar index was unchanged at 93.443 at 3:02 p.m. HK/SIN. Brent crude futures were at $76.37 per barrel at 0010 GMT, down 0.1%. U.S. West Texas Intermediate (WTI) crude futures were down $0.12 (0.2%) at $65.62 a barrel. Spot gold was up 0.1% at $1,299.30 per ounce at 0339 GMT.
- G7 in disarray after Trump rejects communique and attacks ‘weak’ Trudeau (The Guardian) Donald Trump has left the G7 network of global cooperation in disarray after he pulled the US out of a previously agreed summit communique, blaming the Canadian prime minister Justin Trudeau whom he derided as “dishonest and weak”. The US president, who arrived at the summit in Canada late and left early to fly to Singapore to prepare for his summit with Kim Jong-un, shocked fellow leaders with a bellicose press conference on Saturday in which he attacked the trade policies of other countries.
The US had nevertheless appeared to agree a form of words on contentious issues thanks to an all-night negotiating session by officials from all sides.
But after leaving for Singapore, Trump tweeted personal attacks on Trudeau and said that he had told his representatives not to sign the summit communique, turning what had already been a tense meeting of the world’s leading industrialised democracies into a fiasco.
U.S.
- Trump rips ‘meek and mild’ Trudeau for criticizing US tariffs (The Hill) President Trump criticized Canadian Prime Minister Justin Trudeau on Saturday for acting “meek and mild” during their meetings at the weekend’s Group of Seven (G-7) summit, accusing the prime minister of changing his tone after Trump departed the summit for Singapore.
- Trudeau ‘stabbed us in back’ on trade, says Trump chief economic adviser (The Guardian) Donald’s Trump’s chief economic adviser, Larry Kudlow said on CNN’s State of the Union on Sunday, that the US pulled out of a G7 communique because the Canadian prime minister, Justin Trudeau, “stabbed us in the back” and accused the leader of one America’s most important allies of playing a “sophomoric political stunt for domestic consumption“. See video below where adviser Peter Navaro repeats the same accusations.
Trudeau used a media conference on Saturday to reject a US demand for a sunset clause in the North American trade agreement, Nafta, that Trump has at different times pressed to abolish or renegotiate. The prime minister also said Canada would “move forward with retaliatory measures” in response to the Trump administration’s move to impose tariffs on aluminium and steel imports from the European Union, Mexico and Canada.
- Europe and China are taking advantage of America’s strengthening domestic demand to boost surpluses on their U.S. trades.
- They are unwisely defying Trump’s attempts to reduce unsustainably large U.S. trade imbalances.
- Investors should take seriously the possibility of market destabilizing trade clashes.
- Five ways Mulvaney is cracking down on his own agency (The Hill) The acting director of the Consumer Financial Protection Bureau (CFPB) often says that the only reason he hasn’t burned the agency down is because it’s illegal.
Mick Mulvaney, the staunchly conservative White House budget director, has taken extensive steps to restrain and reform the CFPB while insisting he would do just enough to meet its legally mandated actions. He has worked to undo years of the bureau’s most controversial rules while laying the groundwork for a massive reduction in the CFPB’s reach and authority, including calling on Congress to strip its powers.
- Chinese Theft of US Navy’s Secrets Reveals DoD’s Lackadaisical Security (Observer) Yesterday brought stunning news of yet another security lapse by our Navy. As reported by The Washington Post, Chinese hackers in the first two months of this year penetrated the computers of an unnamed defense contractor, “stealing massive amounts of highly sensitive data related to undersea warfare” from the Naval Undersea Warfare Center in Newport, Rhode Island.
- The “Trump Tax Cut” Numbers Are Starting to Trickle In – and They’re Not Good… (Lee Adler, Sure Money) LA has contributed to GEI. Withholding tax collections rebounded from a deep trough in April, in the month ended May 31. The new tax cuts took effect in January, but the IRS did not publish new withholding tables until mid-February. We see the effects there. A new range in the year to year comparison is now being established. May now shows a slight acceleration vs. April. So far, it’s not material.
While we cannot accurately adjust for the impact of the tax change in year to year comparisons, it is clear that, so far, the tax cuts apparently are not acting as stimulus. Year to year revenue growth is running well below pre-tax cut levels. The growth rate is fluctuating between -4% and +2%, whereas prior to the tax cut the growth rate was +2% to +10%.
EU
- Trump’s tariffs have provoked a crisis with the EU (Fox News) David O’ Sullivan, European Union ambassador to the U.S., on German Chancellor Angela Merkel’s comment that EU countries have agreed not to allow Russia to return to the G-7 meeting and why he disagrees with President Trump’s recently imposed tariffs.
UK
- ‘Backstop’ option for Irish border after Brexit – the difference between EU and UK proposals explained (The Conversation) As Brexit negotiations near their end point, Theresa May’s government has been trying to find the balance between two seemingly irreconcilable goals. The UK aims to leave the single market and the customs union, without returning to a hard border on the island of Ireland. This article discusses just how hard that will be.
Italy
- Italian Bonds Keep Falling (Twitter)
Russia
- Xi Jinping presents friendship medal to Vladimir Putin (YouTube) Hat tip to Frank Li. While the G-7 was meeting in Canada, this was going on in China. From YouTube:
Chinese President Xi Jinping is presenting the country’s first friendship medal to Russian President Vladimir Putin in the Great Hall of the People. It is the country’s highest honor for recognizing people from other countries that have boosted China’s cooperative efforts in the world and have made distinguished contributions to China’s modernization and world peace.
India
- Nirav Modi applies for asylum in U.K., claims “political persecution” (The Hindu) Nirav Modi, the billionaire jeweller at the heart of a more than ₹13,578-crore ($2 billion) Punjab National Bank (PNB) fraud case in India, has fled to the UK, where he is claiming political asylum, the Financial Times reported on Sunday, citing Indian and British officials. Britain’s Home Office said it does not provide information on individual cases. Nirav Modi could not be contacted by Reuters for comment on the FT report.
PNB, India’s second-largest State-run bank, said earlier in 2018 that two jewellery groups headed by Modi and his uncle Mehul Choksi had defrauded it by raising credit from overseas branches of other banks using illegal guarantees issued by rogue PNB staff at a Mumbai branch over several years.
North Korea
- Trump: ‘Excitement in the air’ ahead of Kim meeting (The Hill) President Trump said on Sunday that there is “excitement in the air” in Singapore as he prepares for the summit meeting with North Korean leader Kim Jong Un. Econintersect: Just like on good reality TV.
- When the US and North Korea say ‘denuclearization,’ they mean two very, very different things (CNBC)
- Divergent understandings of the term denuclearization could complicate negotiations at the June 12 Trump-Kim summit.
- According to Pyongyang’s interpretation of the idea, it will only give up nuclear weapons if Washington meets certain conditions, which includes removing American troops from South Korea.
China
- China See Spiking Commodity Prices and Rising PPI (Twitter) Remember the several years when producer prices in China were deflating? Seems not ot be a problem any more.
Canada
- Why Canadian milk infuriates Donald Trump (The Guardian) Trump’s latest trade war target is Canada’s protected dairy industry. But Canadians have no intention of abandoning it – because it works. And it seems to have no negative effect on U.S. dairy farmers:
In 2016, Canada imported dairy products from the US worth five times more than the small amount it exported there.
- U.S.-Canada Trade Facts (Office of the United States Trade Representative) Here is the official statement on the U.S. Canada trade balance. (Be careful with this though, the accounting is tortuous.)
U.S. goods and services trade with Canada totaled an estimated $673.9 billion in 2017. Exports were $341.2 billion; imports were $332.8 billion. The U.S. goods and services trade surplus with Canada was $8.4 billion in 2017.
- Canadian Dollar Gets Crushed (Twitter) The loonie goes crazy.
