Written by Econintersect
Early Bird Headlines 12 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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​Special Notice:e Due to staff travel there will be no Early Bird Wednesday 13 June, Thursday 14 June, or Friday 15 June.
Global
- Asian stocks edge higher and dollar firms; Trump-Kim summit in the spotlight (CNBC) Most major Asian markets closed higher on Tuesday as a landmark meeting between U.S. President Donald Trump and North Korean leader Kim Jong Un took place in Singapore and ahead of central bank meetings in the coming days. The dollar index strengthened slightly to 93.746. Brent crude futures were trading at $76.56 per barrel at 0201, up $0.10 from their last close. U.S. West Texas Intermediate (WTI) crude futures were at $66.24 a barrel, up $0.14. Spot gold was down 0.2% at $1,297.68 per ounce at 0046 GMT.
- Bad Year for Cryptocurrencies (Twitter)
U.S.
- GOP centrists face decision day on Dreamer petition (The Hill) Republican centrists will have to show their cards on immigration cards Tuesday after a month of gamesmanship within the House Republican Conference. If the centrists demanding votes on legislation to protect “Dreamers,” who came to the country illegally as children, can get 218 signatures on their petition, it will force a vote this month that Republican leaders have sought to avoid. If they do not, they’ll miss a deadline, punting the issue to July and taking their foot off the accelerator.
- Trump economic adviser Larry Kudlow suffers heart attack (Associated Press) Larry Kudlow, the prominent economic commentator who joined the Trump administration this year as the president’s top economic adviser, has suffered a “very mild” heart attack, the White House said Monday night.
Kudlow was being treated at Walter Reed National Military Medical Center in Bethesda, Maryland, White House press secretary Sarah Huckabee Sanders told reporters in Singapore. She said Kudlow was in good condition and “doing well.”
- GOP, business groups slam Trump attacks on Canada (The Hill) Republicans and business groups are slamming President Trump and his advisers over scathing remarks about Canada following the Group of Seven (G-7) summit in Quebec over the weekend. The backlash comes after Trump and his White House doled out several harshly worded attacks aimed at Canadian Prime Minister Justin Trudeau, who promised after the president’s departure from the G-7 to retaliate against steep steel and aluminum tariffs.
- States that supported Trump would get hit hardest in a Canada trade war (CNBC)
- Voters who supported President Donald Trump in 2016 can be expected to cheer his tough stance on trade policy with Canada.
- A review of state-level trade data, though, may give many of them second thoughts.
- A CNBC analysis of 2016 voter turnouts and trade flows with Canada shows that states such as Ohio, Texas and Indiana that supported Trump generally enjoy a surplus in goods trade with Canada.
- By contrast, the biggest deficits in goods trade with Canada are in states such as California and Illinois that voted for Clinton.
- The Best Kept Secret: America’s Soaring Suicide Rates (EconMatters) EconMatters has contributed to GEI. On average, 123 Americans commit suicide every single day, and now suicide has become the 10th leading cause of death in the United States. But among Americans between the ages of 10 and 34, it is now the second leading cause of death. Of course it wasn’t always this way. Suicide rates used to be much, much lower. If you can believe it, suicide rates in the United States “have risen nearly 30 percent since 1999” according to the CDC.
- President Trump’s Plan to Address High Drug Prices (Journal of the American Medical Association) Hat tip to Roger Erickson. The plans specified by the president in the blueprint to remedy these problems present 2 marketplace-oriented approaches: trying to empower patients and payers to negotiate drug prices more effectively during patent-protected exclusivity periods and trying to promote more price competition. Although some of these directions could be helpful, most lack sufficient detail or power to be useful in the near term, and several long-discussed potential reforms, including those advocated by the president previously, were not put forward.
- Business Cycles Have Become Longer (UPFINA) The new trend shown in the chart below created by @Not_Jim_Cramer on Twitter is economic expansions appear to be getting longer. That observation might have some recency bias since we are in a long expansion right now. However, it’s clearly rooted in more evidence than the claim recessions are getting worse which was made in 2009.
Syria
- US-Backed Kurds Agree To “Unconditional Talks” With Syrian Government After Pentagon-Turkey Deal (Zero Hedge) In a huge weekend development which has gone largely unnoticed by mainstream media, the political wing of the US-trained and supported Kurdish Syrian Democratic Forces (SDF) announced it is open to entering into unprecedented direct negotiations with the Assad government over the future of the country.
North Korea
- Trump-Kim summit: US to offer unprecedented security deal (The Guardian) North Korea is to be offered unprecedented security guarantees when Kim Jong-un meets Donald Trump in Singapore, the US secretary of state has said on the eve of the summit. Mike Pompeo did not specify what security assurances Trump would offer Kim but made clear they would go even further than a 2005 agreement in which the US pledged not to attack North Korea with nuclear or conventional weapons.
- Trump says Kim is ‘very smart’, that North Korea to denuclearize ‘very, very quickly’ (Reuters) U.S. President Donald Trump and North Korean leader Kim Jong Un signed a “comprehensive” document on Tuesday following a historic summit in Singapore aimed at the denuclearization of the Korean peninsula. There were no immediate details on the contents of the document but Trump said he expected the denuclearization process to start “very, very quickly“.
- How Exactly Do North Koreans Make Money? (Bloomberg, Twitter)
How exactly does North Korea make its money? https://t.co/3YxbRGScZr pic.twitter.com/O6bwm4hEMb
– Bloomberg Economics (@economics) June 11, 2018
- Joint Statement from Trump and Kim (Reuters) Here is the agreement signed 12 June 2018:
Convinced that the establishment of new U.S.-DPRK relations will contribute to the peace and prosperity of the Korean Peninsula and of the world, and recognizing that mutual confidence building can promote the denuclearization of the Korean Peninsula, President Trump and Chairman Kim Jong Un state the following:
1. The United States and the DPRK commit to establish new U.S.-DPRK relations in accordance with the desire of the peoples of the two countries for peace and prosperity.
2. The United States and the DPRK will join their efforts to build a lasting and stable peace regime on the Korean Peninsula.
3. Reaffirming the April 27, 2018 Panmunjom Declaration, the DPRK commits to work towards complete denuclearization of the Korean Peninsula.
4. The United States and the DPRK commit to recovering POW/MIA remains, including the immediate repatriation of those already identified.
Having acknowledged that the U.S.-DPRK summit – the first in history – was an epochal event of great significance and overcoming decades of tensions and hostilities between the two countries and for the opening of a new future, President Trump and Chairman Kim Jong Un commit to implement the stipulations in this joint statement fully and expeditiously. The United States and the DPRK commit to hold follow-on negotiations led by the U.S. Secretary of State, Mike Pompeo, and a relevant high-level DPRK official, at the earliest possible date, to implement the outcomes of the U.S.-DPRK summit.
President Donald J. Trump of the United States of America and Chairman Kim Jong Un of the State Affairs Commission of the Democratic People’s Republic of Korea have committed to cooperate for the development of new U.S.-DPRK relations and for the promotion of peace, prosperity, and security of the Korean Peninsula and of the world.
Taiwan
- U.S. unveils de facto embassy in Taiwan amid China tensions (Reuters) The United States unveiled a new $256 million representative office in Taiwan’s capital on Tuesday, a de facto embassy that underscores Washington’s strategic ties with the democratic, self-ruled island as it faces escalating tensions with China. Washington cut diplomatic ties with Taipei in 1979 but remains the island’s strongest ally and sole foreign arms supplier. It opened the American Institute of Taiwan (AIT) to conduct relations between the two sides after severing ties.
In comments certain to rile Beijing, Taiwan President Tsai Ing-wen said the new complex was a reaffirmation of both sides commitment to a “vital relationship.”
China
- China is closely watching what kind of peace deal, if any, is brokered at the Tuesday meeting between North Korean ruler Kim Jong Un and President Donald Trump.
- Beijing’s security interests will be served if a potential agreement weakens the U.S. alliance with South Korea, reduces the U.S. military presence in Asia and limits the threat of refugees at Chinese borders, according to The Atlantic Council.
- Morgan Stanley Is Wrong: Goldman Warns China’s Credit Impulse Collapse Will “Drag On Growth” This Year (Zero Hedge) Goldman Sachs is warning that things are about to get a lot more problematic for China as a collapsing credit impulse wriggles its way thru the economy. Since 2008, there have been two and half distinct cycles in China credit. We see these cycles more clearly in the chart below, which plots net credit flows from lenders to borrowers against nominal IP growth in China.
Lower net credit flows from lenders to borrowers weigh on future activity growth
Canada
- As Trump attacks, Canada goes to Plan B: same as Plan A (Reuters) U.S. President Donald Trump’s blistering attack on Canadian Prime Minister Justin Trudeau has driven bilateral relations to their lowest point in decades and left Ottawa with few options for averting a trade war with its much bigger neighbor. Trump blew apart a G7 summit in Canada over the weekend, blasting Trudeau as “very dishonest and weak” and raising the prospect of tariffs against auto imports, a move that would imperil the Canadian economy.
His unexpected and extraordinary attack flummoxed Canadian officials, who have waged an 18-month campaign designed to cultivate allies among U.S. policymakers and business leaders in defense of Canada’s interests.
- Canada Trade and FDI (United States Department of AgricultureEconomic Research Service) Canada is a major participant in international agricultural trade. In 2015, Canada’s total agri-food and seafood exports to all countries equaled just over $48.0 billion, and corresponding imports approached $36.8 billion, according to Canadian statistics. The United States is Canada’s largest agricultural trading partner, buying 53 percent of Canadian exports and supplying 59 percent of Canadian imports. In addition, Canada is the leading agricultural trade partner of the United States, when exports and imports are combined. In 2015, Canada accounted for 16 percent of U.S. agricultural exports and 19 percent of imports, as defined and categorized by USDA.
Canada is also an important source of FDI for the U.S. food industry. At the end of 2016, Canada’s direct investment position in the U.S. food industry equaled about $4.9 billion on a historical cost basis, which makes Canada the third largest foreign investor in the U.S. food industry. After fluctuating during 1997-2008, Canada’s direct investment position in the U.S. food industry increased steadily, growing at a compound annual rate of 22.2 percent between 2008 and 2016. As with U.S. direct investment in Canada’s food and beverage industries, mergers and acquisitions involving large firms can result in substantial year-to-year changes in the Canadian direct investment position in the U.S. food industry.
