Written by Econintersect
Early Bird Headlines 26 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
- Stocks in Asia fall on trade worries but markets retreat from session lows (CNBC) Asian markets closed mostly lower on Tuesday as investors weighed an escalating trade dispute between the U.S. and China. The dollar index was steady at 94.331. U.S. West Texas Intermediate crude edged up by 0.48% to $68.41 per barrel and Brent crude futures tacked on 0.41% to $75.04. Spot gold was down 0.3% at $1,260.72 an ounce, as of 0800 GMT, after touching its weakest since Dec. 18, 2017 at $1,257.74 earlier in the session.
U.S.
- How Comey intervened to kill WikiLeaks’ immunity deal (The Hill) Last year there was the opportunity for the U.S. to make a deal with Julian Assange to limit exposure of classfied information. Comey killed it.
- Rising Dollar (The Daily Shot, Twitter)
- Immigration overhaul on life support in the House (The Hill) House GOP leaders will push ahead with a vote Wednesday on their compromise immigration bill, making one last effort to pass the measure even as key lawmakers express pessimism they have any shot of success. Lead negotiators took the weekend to make changes to the bill in an effort to secure 218 Republican votes. But even the revised measure is expected to fall short.
- The Fed’s effort to control the rise of its key interest rate is running into some problems (CNBC)
- The Fed in June approved a change in the interest it pays on excess reserves in an effort to control the rise of the funds rate, the benchmark by which the central bank sets rates broadly.
- However, the difference between the funds rate and IOER has gotten even closer since then, signaling that the move may not have worked as planned.
- For investors, the issue means that the Fed may have to ease its expected path of rate hikes in the future.
- When Politics Trumps Economics (Project Syndicate) The Trump administration seems to believe that America has reached a propitious moment in the economic cycle to play power politics. But can this approach offset the increasingly tenuous fundamentals of a saving-short US economy that continues to account for a disproportionate share of global military spending?
Like Trump, Xi does not do capitulation. Unlike Trump, Xi understands the linkage between economic and geostrategic power. Trump claims that trade wars are easy to win. Not only is he at risk of underestimating his adversary, but he may be even more at risk of over-estimating America’s strength. The trade war may well be an early skirmish in a much tougher battle, during which economics will ultimately trump Trump.
- The White House’s Misleading & Error Ridden Narrative on Immigrants and Crime (Cato Institute) Two graphics below, one directly from this article and the second from Twitter using the data in this article. The president is debunked:
President Trump recently held an event with some of the relatives of people killed by illegal immigrants in the United States. Afterward, the White House sent out a press release with some statistics to back up the President’s claims about the scale of illegal immigrant criminality. The President’s claims are in quotes and my responses follow.
UK
- Jeremy Corbyn Has a Terrible Economic Idea (Bloomberg) This article suggests that the use on monetary policy to effect productivity growth is a nonsensical idea:
The U.K. Labour Party’s plan to set the Bank of England a productivity target must rank among the worst ideas ever conceived for a central bank.
It runs against pretty much everything economists believe should be the role of a monetary authority. And it would amount to an outright admission of defeat by elected politicians, whose task it is to raise efficiency and prosperity rather than delegating this task to technocrats.
The plan, unveiled last week by shadow chancellor John McDonnell, is based on a report on the U.K. financial system authored by Graham Turner at GFC Economics. The basic idea is that the Bank of England should pair its 2 percent inflation target with a new 3 percent target for yearly productivity growth (which would be a joint aim with the government). The Bank would then report annually on progress.
Germany​
- Before crisis talks, industry chiefs tell Merkel coalition to end row (Reuters) Leading German industry groups called on the coalition parties to resolve a row over migrant policy, saying the wrangling threatened to undermine the stability of Europe’s biggest economy.
- Financial Repression in Germany (Twitter)
Turkey
- Recep Tayyip Erdogan won another term in office and gained far-reaching powers following an election Sunday.
- There are ongoing economic and societal problems in Turkey, however.
- The ruling AK Party did not gain an outright majority in parliament.
- Making Turkey Great Again (Twitter) The lira is down 75% over the last 10 years:
Syria
- Syrian army advances in southwest: monitor, state media (Reuters) The Syrian army has seized a chunk of territory from rebels in the southwest, Syrian state media and a war monitor said on Tuesday, the first major government advance in an offensive near the Jordanian border.
Iran
- Rouhani says Iran will not yield to pressure from Trump (Reuters) President Hassan Rouhani promised Iranians on Tuesday the government would be able to handle the economic pressure of new U.S. sanctions, a day after traders massed outside parliament to protest at a sharp fall in the value of the national currency.
Russia
- “THE RUSSIANS PLAY HARD”: INSIDE RUSSIA’S ATTEMPT TO HACK 2018 – AND 2020 (Vanity Fair) Econintersect: We believe the objective of the Russians has nothing to do with wanting any particular candidate to get elected, but to destroy Americans’ confidence in their government. The self-centered vanity of the president (resisting invetigation into this matter) plays right into the Russian scheme. See also FAKE NEWS IS ABOUT TO GET EVEN SCARIER THAN YOU EVER DREAMED.
China
- Why China Can’t Fix Its Housing Bubble (Bloomberg) The government has hatched another misguided response to sky-high prices.
Real estate is the driver of the Chinese economy. By some estimates, it accounts (directly and indirectly) for as much as 30 percent of gross domestic product. Keeping housing prices buoyant and development robust is thus an overriding imperative for China – one that is distorting policymaking and worsening its other economic imbalances.
Despite reforms in recent years, there’s little question that Chinese real estate is in bubble territory. From June 2015 through the end of last year, the 100 City Price Index, published by SouFun Holdings Ltd., rose 31 percent to nearly $202 per square foot. That’s 38 percent higher than the median price per square foot in the U.S., where per-capita income is more than 700 percent higher than in China. Not surprisingly, this has put homeownership out of reach for most Chinese.
- Chinese warships drill in waters near Taiwan (Reuters) A formation of Chinese warships has been holding daily combat drills for more than a week in waters near Taiwan, China’s state media said on Tuesday, amid heightened tension between Beijing and the self-ruled island.
- China Bear Market (Twitter)
