Written by Econintersect
Early Bird Headlines 21 May 2019
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 mostly turn around as US-China trade tensions take a breather (CNBC) Stocks in Asia were mostly higher on Tuesday as a temporary reprieve in U.S.-China trade tensions provided a breather. The U.S. dollar index was higher at 98.081 after touching an earlier low of 97.909. Brent crude futures contract rose 0.11% to $72.05 per barrel, while U.S. crude futures added 0.36% to $63.33 per barrel. Spot gold fell 0.2% to $1,275.61 per ounce at 0334 GMT. The 10-year Treasury yield was slightly lower at 4.414%.
- OPEC+ Top Priority: Don’t Crash Oil Prices (OilPrice) OPEC+ is reportedly considering increasing production in the second half of the year, but the main priority for this group remains the avoidance of another oil price crash.
- Rise in global sea levels could have ‘profound consequences’ (BBC News) The long-held view has been that the world’s seas would rise by a maximum of just under a metre by 2100. This new study, based on expert opinions, projects that the real level may be around double that figure. This could lead to the displacement of hundreds of millions of people, the authors say. See Ice sheet contributions to future sea-level rise from structured expert judgment (PNAS).
U.S.
- Judge upholds House panel subpoena for Trump financial records (The Hill) A district judge on Monday upheld a subpoena issued by the House Oversight and Reform Committee for President Trump’s financial records, dealing a blow to White House efforts to resist the Democrats’ investigations. In a 41-page opinion, Judge Amit Mehta, an Obama appointee, found that the panel, under the leadership of Chairman Elijah Cummings (D, MD), had valid reasons for requesting the president’s financial records from the accounting firm Mazars, even though they predated his entering office.
- Nadler prepares to punish Don McGahn after White House directs former counsel not to testify (CNN) Former White House counsel Don McGahn will not appear Tuesday before the House Judiciary Committee, his lawyers said in a letter Monday, defying the committee’s subpoena. It’s a move that appears to set the stage for another contempt vote to retaliate against the Trump administration for rejecting the demands of Congress, as committee Chairman Jerry Nadler threatened late Monday to do whatever was necessary to make McGahn appear before his panel.
- House Freedom Caucus votes to condemn Amash’s impeachment comments (The Hill) The conservative House Freedom Caucus took an official position condemning Rep. Justin Amash’s (R-Mich.) call for impeachment on Monday evening, Rep. Jim Jordan (R-Ohio) told reporters.
While members did not discuss whether they should hold a vote to oust him from the powerful group he helped found, many expressed frustrations with his position. Amash said he determined the president committed “impeachable offenses” after having read the full redacted copy of Mueller report.
- Homebuilder stocks have outperformed tech stocks so far this year (Yahoo! Finance) The S&P Homebuilders sector (XHB) is up roughly 23% so far this year, outpacing the S&P 500 Technology sector’s (XLK) 19.8% gain. There are a few factors behind this trend:
- Housing is less affected by Trade wars;
- Mortgage rates have been falling;
- Household formation numbers are rising;
- Home builders are recovering from a loss of 26.5% in 2018.
EU
​UK
- Back To The Future: Labor Party Looks To Renationalize UK Utilities (OilPrice) The British Labor Party, headed by Jeremy Corbyn has announced plans to re-nationalize the nation’s electric, gas and water utilities that were privatized by Prime Minister Margaret Thatcher in 1990. In particular Labor has its eye on the gas and electric transmission lines, the international interconnections and the local gas and electric distribution companies.
If adopted this would reverse a great deregulatory experiment that placed almost the entirety of the UK’s utility infrastructure in private ownership. Once privatized, the UK’s utility managers were permitted to operate under a generous regulatory formula allowing rather handsome profits in a notoriously low risk business with completely captive customers. For years the Labor Party claimed, not without some justification, that utilities were “ripping off” UK consumers. Nevertheless Tony Blair’s “New Labor” government kept the Thatcherite deregulatory structure in place.
- British Steel on verge of administration (BBC News) The UK’s second-biggest steel maker had been trying to secure £75m in financial support to help it to address “Brexit-related issues”. If the firm does not get the cash it would put 4,500 jobs at risk and endanger 20,000 in the supply chain. Company sources said that the direction of talks with the government would become clearer in the coming hours.
Iran
- On The Cusp Of War: Why Iran Won’t Fold (Naked Capitalism) Iran has been on the move on many fronts this month with many aggressive actions resulting in damage to non-Iranian oil interests in the Middle East. As pointed out in this article, for some reason these have not been reported in the press. This is due in part to successful supression of information by Saudi Arabia. A rocket landing near the U.S. embassy in Baghdad was given coverage but not the other incidents which involved bombings of oil facilities, crude transport vessels, etc. And Iran is taking ever more firtm positions of further negotiations with the “current toxic U.S. government”. See also article with the same title in OilPrice.
- Trump: U.S. will respond with ‘great force’ if Iran attacks interests (Reuters) President Donald Trump warned on Monday Iran would be met with “great force” if it attacked U.S. interests in the Middle East, and government sources said Washington strongly suspects Shi’ite militias with ties to Tehran were behind a rocket attack in Baghdad’s Green Zone.
Nepal
- Sherpa climbs Everest twice in a week, setting record 24 ascents (BBC News) A Nepalese Sherpa has set a new Mount Everest record, making it to the top for the 24th time – with his second summit in only seven days. Kami Rita Sherpa, 49, successfully scaled the world’s tallest mountain on Tuesday morning. It was his second record in seven days, having reached the summit for the 23rd time on 15 May. He says he has no plans to retire, and hopes to clock up more ascents in the years to come.
China
- Why China Hasn’t Slapped Tariffs On U.S. Oil Imports (OilPrice) China has levied tariffs on a wide variety of U.S. products, from liquefied natural gas to cotton, soybeans, machinery, grains and aircraft parts. Despite the growing tension, however, so far China has yet to impose any tariffs on U.S. oil.
Yes, China has decreased the amount of U.S. oil that they import, but so far, they have held back on placing any outright tariffs on U.S. crude. This move (or lack thereof) comes as part of what is likely a very intentional strategy not to limit China’s sources for the crude oil it is so thirsty for.
- China’s latest trade war card isn’t as strong as Beijing thinks (CNN) China’s monopoly on rare earths is also not what it seems. While it plays a major role in current global trade, this is largely due to relatively lax environmental regulations in the past which made extraction and refinement in China cheaper and easier than other countries. That advantage, if it could be described as such, has shrunk in recent years as Beijing has cracked down on domestic companies and illegal extractors.
China holds around one-third of remaining reserves, roughly equivalent to those of Brazil and Vietnam combined, but is also one of the leading consumers of rare earths in order to fuel its own technology industry. By 2025, China is expected to be net importer of rare earths, a factor that may lead Beijing to hesitate to drive up global prices or set a precedent of using rare earths as a political tool.
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