- Union Budget 2018 live: Government will implement MSP for all crops, says Jaitley
11.05 a.m.Finance Minister Arun Jaitley presents the Union Budget. 10 a.m.Finance Minister Arun Jaitley with the Union Budget 2018, to be presented in the Parliament later in the day. 9.50 a.m.Railways wish listSince last year, the Railway budget has become part of Union Budget. Ask any common person on what they expect from this budget, the answer would be a change in income tax slabs. Trade bodies and economists have been batting for a new personal income tax structure with exemption upto Rs.
- India wants the world to buy its weapons but are they good enough?
While Prime Minister Narendra Modi has held steady against geopolitical rivals, including with in a Himalayan face-off last year, his administration hasn’t fixed a broken defense procurement system in the world’s largest arms importer. A spokesman for Modi didn’t respond to calls or texts for comment on India’s defense procurement. India wants to transition from an importer of weapons systems to an exporter, Ajay Kumar, the government’s secretary of defense production, said at a recent panel discussion. Flawed StructureModi’s government wants to build up its defense industry through it’s “Make in India” program, hoping to create jobs and cut huge import bills. ‘Obsolete’ EquipmentLast year, the Indian Army rejected an Indian-made rifle for the second year in a row after it reportedly failed quality tests.
- India January factory PMI cools to 3 months low on weaker demand
Retail inflation rose to a 17-month high of 5.21% in December, the latest official reading showed, possibly pressuring the central bank to tighten monetary policy. Photo: BloombergBengaluru: Indian factory growth cooled to a three-month low in January as weaker domestic demand dragged on output despite firms keeping price increases to a minimum, a business survey showed on Thursday. And output growth eased last month to a three-month low and could wobble in the months ahead on GST woes. But strong global growth is tipped to keep foreign demand intact, a factor duly reflected in the PMI survey which showed new export orders rose at their fastest pace in almost 1-1/2 years. Retail inflation rose to a 17-month high of 5.21% in December, the latest official reading showed, possibly pressuring the central bank to tighten monetary policy.
- Jan manufacturing PMI growth at a three-month low on weaker demand
Indian cooled to a three-month low in January as weaker domestic demand dragged on output despite firms keeping price increases to a minimum, a business survey showed on Thursday. The Nikkei Purchasing Managers' Index, compiled by IHS Markit, fell to 52.4 last month from December's 54.7. "Following December's stellar performance, growth in the Indian lost some impetus, reflected by slower growth in output, new orders and employment," Aashna Dodhia, an economist at IHS Markit, said in a release. That suggests the is still struggling to recover from a weaker demand trend seen since the ban of high-value currency notes in November 2016 and the chaotic roll out of a (GST) last year. And output growth eased last month to a three-month low and could wobble in the months ahead on GST woes.
- Castro freezes Cuban private sector, throws future in doubt
HAVANA — Two years after taking office, President Raul Castro widened the niche for private enterprise in Cuba’s state-dominated economy. And the booming private economy reached into the Communist-led bureaucracy — paying off inspectors, buying stolen state goods and recruiting talented employees with salaries dwarfing those in the public sector. But summer stretched into fall, fall into the new year, and six months later, Cuba’s private economy remains frozen. “Many of us think that these measures aren’t just to organize private enterprise better, as they’ve said, but to restrict it. Over the fall, about six successful private restaurants were closed after police raids.
- Exclusive: With Roman law doctrine, India moves to stub out tobacco industry rights
If applied, the doctrine - which harkens back to Roman law - would have far reaching implications: in denying an industry’s legal standing to trade, it gives authorities more leeway to impose restrictions. Balasubramanian, however, said the government is not discussing banning tobacco and the goal of invoking the Roman law doctrine was only to curtail the industry’s legal rights. But a court in southern Karnataka state last month quashed those labeling rules after the tobacco industry successfully argued the measure was “unreasonable” and violated its right to trade. The industry estimates 45.7 million people in India depend on tobacco for their living. The industry will lose significant ground as your protection of right to trade is gone.”
- Former Fed chair Alan Greenspan sees bubbles in stocks, bonds
Former Fed chair Alan Greenspan sounded an alarm on forecasts that the US government deficit will continue to climb as a share of GDP. “There are two bubbles: We have a stock market bubble, and we have a bond market bubble,” Alan Greenspan, 91, said on Wednesday on Bloomberg Television with Tom Keene and Scarlet Fu. “At the end of the day, the bond market bubble will eventually be the critical issue, but for the short term it’s not too bad,” Greenspan said. Greenspan sounded an alarm on forecasts that the US government deficit will continue to climb as a share of gross domestic product. Well the fact, that, essentially, we’re beginning to run an ever-larger government deficit,” Greenspan said.
- Gold inches down as Fed keeps interest rates unchanged
Gold prices inched down early on Thursday after the US Federal Reserve left interest rates unchanged but hinted at hikes later this year. Gold prices rose over 3 per cent in January, their best month since August, largely due to weakness in the dollar. At Fed Chair Janet Yellen's last policy meeting as head of the central bank, the Fed left interest rates unchanged. But expectations that the Fed will raise interest rates to fight inflation make gold less attractive because it does not pay interest. SPDR Gold TrustSPDR Gold Trust , the world's largest gold-backed exchange-traded fund, said its holdings fell 0.49 per cent to 841.35 tonnes on Wednesday from 845.49 tonnes on Tuesday.
- Taiwan appoints deputy Yang Chin-Long as new central bank governor
Taiwan central bank deputy governor Yang Chin-long is to succeed governor Perng Fai-nan, signalling continuity in monetary policy. [TAIPEI] Taiwan central bank deputy governor Yang Chin-long is to succeed governor Perng Fai-nan, signalling continuity in monetary policy. Mr Yang, 64, will replace Mr Perng, one of the world's longest-serving central bank governors, cabinet spokesman Hsu Kuo-yung said at a briefing in Taipei on Thursday. Selecting Mr Yang, a top lieutenant to Mr Perng who joined the central bank in 1989, signals policymakers are aiming for consistency and stability.
- Messages Show Ousted Catalan Leader Losing Heart in Face of Spain Government
Messages Show Ousted Catalan Leader Losing Heart in Face of Spain GovernmentBARCELONA The ousted president of the Catalonia region, who is currently in Brussels to avoid arrest in Spain for his alleged involvement in a separatist referendum and subsequent unilateral declaration of independence, said he felt he had been sacrificed by other Catalan politicians and the regions independence bid was over, according to messages posted Wednesday by Spanish television. In a series of text messages that were filmed and published by broadcaster Telecinco, Carles Puigdemont said Catalonias fight for independence was over and expired and his fellow politicians had sacrificed him and the former cabinet members that fled with him to Brussels last year. Puigdemont is currently in the midst of a legal battle to be reinstated to his former post at the head of the regions parliament, after Spain responded to the declaration of independence by dissolving the government and calling for fresh elections. Pro-independence parties won a slim majority in the vote and unanimously elected Puigdemont to again head the chamber, but the Spanish government claims that he must attend a debate and investiture session in Barcelona in person in order to be named president. He has instead been fighting to be able to take oath through teleconference, as, should he set foot in Spain, he would be immediately arrested and placed in pre-trial detention on charges of sedition, rebellion and misuse of public funds.
- Chile to Leave Venezuela Dialogue if "Democratic, Transparent" Elections Not Guaranteed Soon
HOME | Venezuela (Click here for more Venezuela news)Chile to Leave Venezuela Dialogue if "Democratic, Transparent" Elections Not Guaranteed SoonFrom the Chile Ministry of Foreign RelationsSANTIAGO -- Given the uncertainty of the process of dialogue between the government and the Venezuelan opposition that takes place in the Dominican Republic, the delegation of Chile was not chaired by the foreign minister on January 29, due to the obstacles that have arisen for the achievement of a serious and credible agreement between the parties, which allows the realization of free and democratic presidential elections. The Government of Chile has participated as a companion in the dialogue seeking to contribute so that the presidential elections can be carried out with full guarantees, including the presence of independent international observers. The Government of Chile recognizes and highly values the effort led by President Danilo Medina of the Dominican Republic and his Foreign Minister Miguel Vargas, with whom we have maintained a permanent and constructive communication. In this context, the Government of Chile will indefinitely suspend its participation as a companion of the Venezuelan government-opposition dialogue, to which it was invited, if the conditions between the parties for the realization of democratic, transparent and conforming to international standard presidential elections are not specified as soon as possible. Enter your email address to subscribe to free headlines (and great cartoons so every email has a happy ending!)
- Unemployment in Brazil Dips Slightly to 11.8%
Unemployment in Brazil Dips Slightly to 11.8%BRAZIL The unemployment rate in Brazil during the last quarter of 2017 was 11.8 percent, equating to 12.3 million people out of work, the official Brazilian Institute of Geography and Statistics (IBGE) said Wednesday. The fourth-quarter rate was down 0.6 percent from 12.4 percent in the July-September period. The median jobless rate for 2017 as a whole was 12.7 percent, the highest since 2012, the IBGE said. The government of President Michel Temer attributes lingering high unemployment to the crisis of 2015-2016, when Brazils gross domestic product contracted by 8 percent amid economic stagnation and political turmoil, including the congressional ouster of President Dilma Rousseff. Early official estimates show that the Brazilian economy grew by roughly 1 percent in 2017, while both government and private forecasters expect growth of around 1.8 percent this year.
- Santanders Brazil Unit Worried about Halt to Reform Agenda after Elections
Santanders Brazil Unit Worried about Halt to Reform Agenda after ElectionsSAO PAULO The chief executive officer of the Brazilian unit of Spains Banco Santander said on Wednesday he was concerned the winner of this years presidential election in the South American country would not be committed to a fiscal stability agenda. Failing to continue the current fiscal stability agenda would be national suicide, he added. What happens if after the elections we clearly see a non-reformist government, if the pension reform doesnt go forward? The scenario that could happen is precisely (a return) to what were coming out of, Rial said. On Wednesday, the nations central bank said Brazils public sector posted a primary budget deficit (excluding interest payments) last year of 110.6 billion reais, well under the maximum target for 2017 of 163.1 billion reais and down from a record high of 155.8 billion reais in 2016.
- Venezuelan Government Claims Accord Reached, Opposition Denies It
No preliminary agreement has been signed here. Venezuelan government and opposition representatives had arrived Wednesday at the Dominican Foreign Ministry for their third consecutive day of talks seeking an agreement that would end their countrys political and economic crisis. The government and the divided opposition resumed their dialogue after the controversial moving up of the presidential elections in which Maduro hopes to win re-election. SANTO DOMINGO Venezuelan government representatives said that they reached a preliminary agreement with the opposition during their talks in Santo Domingo on Wednesday, a statement that was denied by the latter, who said that several issues remain to be resolved.No preliminary agreement has been signed here. Enter your email address to subscribe to free headlines (and great cartoons so every email has a happy ending!)
- Fed Leaves Interest Rates Unchanged in Yellens Last Meeting as Chair
Fed Leaves Interest Rates Unchanged in Yellens Last Meeting as ChairWASHINGTON The US Federal Reserve left benchmark overnight funds interest rate unchanged between 1.25 percent and 1.5 percent on Wednesday in the last meeting to be presided over by Chairperson Janet Yellen before she turns over her post to Jerome Powell this weekend. The Fed has said that it will probably raise interest rates three times this year, depending on the health of the US economy, where unemployment stands at 4.1 percent, the lowest level in 18 years. The Fed meeting was the last at which Yellen, who had led the US central bank for the past four years, will preside. She will turn over the chairmanship to Powell, who was nominated by President Donald Trump and who is expected to maintain Yellens policies. The next meeting of the Fed is scheduled for March 20-21, after which Powell will offer his first press conference as chairman.
- Experts project 25% return for nation’s equity market in 2018
While identifying critical factors that will boost performance of the nation’s stock market this year for enhanced competitiveness, the company in its “Economic Review and Outlook For 2018” also noted some headwinds that can moderate the market performance in the period, unless they are managed. The nation’s investment and confidence in shares significantly improved in 2017, given the improved investor sentiments towards the Nigerian economy. Significant improvement in corporate earnings for companies listed on the stock market also drove investment back to the market, even as Foreign Portfolio Investors (FPI) came back into the country on the back of a more stable and predictable foreign exchange market. He noted that market capitalisation rose by 47 per cent in 2017 to N13.62 trillion against N9.26 trillion posted in 2016, adding that CBN policies increased liquidity in the foreign exchange market. He argued that global oil prices have gradually risen over the last year leading to a significant revenue increase in many oil exporting nations, while consumers in many importing countries will have to pay more to heat their homes or drive their cars.
- ‘Merchant banking opportunities remain untapped’
Now, in terms of merchant banking, I think the opportunities are enormous. We have not done so much in terms of infrastructure, which offers tremendous opportunities for merchant banks. In 2013, the demarcation between commercial and merchant banking was brought back following the review of the Universal Banking license. Like I mentioned that we are the first merchant bank that does not have any legacy history associated with it, as we are a greenfield merchant bank. We are starting fresh from day one by hiring very efficient and result minded people that are cut for merchant banking.
- JGBs prices slip as stocks' bounce weighs, 10-year auction well received
TOKYO, Feb 1 (Reuters) - Japanese government bond prices slipped on Thursday, weighed by a strong bounce in Tokyo stocks, although losses were limited by a 10-year debt auction that attracted ample demand. The five-year yield rose 1 basis point to minus 0.075 percent and the 10-year yield climbed 1 basis point to 0.090 percent. Thursday's 2.3 trillion yen ($21 billion) 10-year JGB auction still attracted ample demand with the Bank of Japan seen committed to easy monetary policy for the foreseeable future. The bid-to-cover ratio, a gauge of demand at auctions, rose to 4.58 at Thursday's 10-year auction from 3.74 at the previous sale in January. ($1 = 109.3300 yen) (Reporting by the Tokyo markets team; Editing by Eric Meijer)
- Rupee weakens to 63.67 ahead of Union Budget
The rupee weakened by 9 paise to 63.67 against the US dollar in the opening trade at the interbank foreign exchange market ahead of the Union Budget today. According to a currency dealer, a strong dollar in overseas markets also weighed on the Indian currency. Yesterday, the rupee had ended 2 paise higher at 63.58 against the US dollar. Foreign investors withdrew Rs 136 crore from stocks yesterday, according to provisional FPI data. Meanwhile, the benchmark BSE Sensex rose 171.38 points or 0.47 per cent to 36,136.40 in the opening trade.
- "Mr. BOJ" to appear in Japanese Parliament, 05:00 GMT
Masayoshi Amamiya, the Bank of Japan's Executive Director, will be appearing in Japan's Parliament from 05:00 GMT, or 2 pm Tokyo time, where he is expected to join the growing list of Japanese officials stressing to markets the need to not expect any changes to the BoJ's fiscal policies. As Bloomberg points out, "He may join the coordinated efforts to push back expectations for policy normalization." Director Amamiya is often referred to as "Mr. BOJ" within the central bank due to his integral nature in normal operations. Mr. BOJ is largely responsible for managing interest rates and keeping consumer prices plodding towards the central bank's 2% targets. Director Amamiya is likely to be slated to take over the helm of the BoJ for Governor Kuroda, who's term is slated to end soon.
- Federal Reserve leaves key rate unchanged at Janet Yellen's final meeting
At Janet Yellen’s final meeting as chair Wednesday, the Fed kept its key short-term rate in a still-low range of 1.25 per cent to 1.5 per cent. Mr. Powell has been a Yellen ally and among the Fed’s consensus-builders in 5 years on the central bank’s board. Powell to be sworn in on MondayIn a separate statement Wednesday, the Fed said Mr. Powell would be sworn in on Monday. Mr. Trump chose Mr. Powell for the post rather than offer Ms. Yellen a second term despite widespread praise for her performance as chair. Marvin Goodfriend, a conservative economist, has been nominated by Mr. Trump for one of the vacant board seats.
- Nikki Haley praises PM Modi, says sky is the limit for India-US relationship
Photo: Getty ImagesWashington: Noting that President Donald Trump is very fond of his country’s growing relationship with India, a top American diplomat has said that “sky is the limit” for this bilateral relationship. It makes sense for the two countries to be friends, the top Indian-American in the Trump administration said. “We’re seeing a growing interest, and a growing relationship and seeing that happen. The president is very very fond of what is happening with India, growing that relationship trying to make sure that we do more with India,” Haley said. “He very much wants to streamline and do all of these reforms, that are very true for this (Trump) administration too.
- Brexit haunts May as she seeks China trade post-EU
BEIJING: Hounded by Brexit rows at home, Prime Minister Theresa May was due to meet Chinese President Xi Jinping on Thursday (Feb 1) to forge deeper trade ties after Britain leaves the EU. May began her trip with plans to announce £9 billion (US$12.7 billion) in business deals, an agreement to end a ban on British beef and promises to seek more trade opportunities. Both leaders championed a "golden era" of relations between their countries as they seek new trade opportunities. AdvertisementAdvertisement"We are determined to deepen our trading relationship even further and we are ambitious for what our future trade relationship will be," May said. Wooing China is part of her government's broader strategy to seek deeper trade ties with countries beyond Europe's borders after Britain leaves the EU next year.
- Commentary: Behind Trump's State of Union address, two deeply worrying actions
Donald Trump's State of the Union address called for unity. Again, it did not feature in Mr Trump’s speech. Mr Cha also spoke in defence of the US-South Korea trade agreement, which Mr Trump wants to scrap. (Photo: AFP/GREG BAKER)By Mr Trump’s measure, Mr Cha was a dove. DEEPLY ABNORMAL SITUATIONThe contents of Mr Trump’s speech may have been forgettable.
- Rupee opens lower against US dollar ahead of budget 2018
India’s 10-year bond yield was at 7.44% from its Wednesday’s close of 7.43%. Photo: HTMumbai: The Indian rupee on Thursday weakened against US dollar ahead of the announcement of the Union budget for fiscal 2018-19. India’s 10-year bond yield was at 7.44% from its Wednesday’s close of 7.43%. All eyes will be on what the government projects it’s fiscal deficit to be for fiscal 2017-18, borrowing programme and announcements surrounding banking and infrastructure reforms. Some analysts expect the government to stick to a fiscal deficit target of 3% for 2018-19, while others say that the fiscal deficit target may be higher due to recent surge in international crude oil prices and lower-than-expected collections of goods and services tax (GST).
- Morning News Call - India, February 1
11:00 am: Finance Minister Arun Jaitley to present the federal budget for next FY in New Delhi. 7:00 pm: Oil Minister Dharmendra Pradhan at India Energy Congress in New Delhi. • NTPC Q3 profit falls 4 percent, misses expectations Power producer NTPC reported a 4 percent fall in quarterly profit on Wednesday, missing analysts' estimates. • Indian government bonds are likely to remain steady as investors await the federal budget presentation later in the day. • Gold prices inched down after the U.S. Federal Reserve left interest rates unchanged but hinted at hikes later this year.
- Asia: Markets mostly up as dollar holds gains after Fed
[HONG KONG] Most Asian markets mostly rose on Thursday, kicking off February on a positive note after recent losses, while the dollar ticked up on expectations the Federal Reserve will speed up interest rate hikes this year. On equity markets Tokyo rose more than one percent by the break thanks to a weaker yen and on bargain-buying following a six-day losing streak. Hong Hong added 0.1 per cent and Sydney was 0.7 per cent higher while Seoul also put on 0.1 per cent. Singapore was flat and Taipei jumped 0.8 per cent but Shanghai fell 0.3 per cent. Regional stocks have mostly fallen this week on profit-taking following a blistering January that saw many indexes hit record or multi-year highs.
- EU threatening sanctions to stop Britain undercutting EU economy after Brexit – FT
The Financial Times (FT) reported the latest headlines from a leaked strategy paper earlier today, citing that the EU is threatening to impose sanctions on the UK economy after Brexit. Key Quotes:“The EU is threatening sanctions to stop Britain undercutting the continent's economy after Brexit, including "tax blacklists" and penalties against state-subsidized companies, according to a leaked strategy paper. The measures, outlined in a presentation to EU27 member states last week, show the bloc wants unprecedented safeguards after the UK leaves to preserve a "level playing field" and counter the "clear risks" of Britain slashing taxes or relaxing regulation.”
- Theresa May in talks with Chinese president Xi Jinping
Image copyright Getty ImagesTheresa May is to meet President Xi Jinping for talks later on the second day of her visit to China. She will also raise environmental concerns - and present Mr Xi with a box-set of the BBC's Blue Planet II series, with a personal message from presenter Sir David Attenborough. The prime minister said Mr Xi's initiative to establish overland transport links between China and Europe would be discussed. Mr Li said China would further open up its markets to the UK, including to agricultural products and financial services. Residency move opposedEarlier this week, the EU set out what it was prepared to offer the UK in the Brexit transition period.
- Will Budget 2018 signal India’s commitment to fight climate change?
Our ability to mitigate the impact of climate change depends partly on global action to fight climate change. But it also depends on what actions the government takes to fight climate change, and to invest in climate mitigation efforts. But it has been lackadaisical in utilizing proceeds from such taxes for fighting climate change, an analysis of budget documents show. What makes matters worse is that the resources to fight climate change are under threat since most of these were in the form of fuel taxes. India’s fight against climate change cannot be sustained unless there is a coherent framework to deal with this challenge backed by adequate resources.
- Nikkei down again, but lacking conviction as prices plays near 23,275.00
Nikkei continues slide from record-setting highs, down to 23,275.00 in Tokyo. Global slide in equities hasn't erased impressive gains in stock market indexes. The Nikkei has struggled to regain its composure during the global equities pullback, currently trading at 23,275.00 in the Tokyo market. While bonds have receded from the highs of their recent yield ranges, equities have been slow to pick back up where they left off. Despite the recent downturn in equities markets, the Nikkei is still trading near all-time highs, while January saw the S&P 500 and Dow Jones Industrial Average both lock in their best-performing months since 2016.
- The January jobs report is never good news
First, there can never be a real gain in jobs during January. Before seasonal adjustments, the real economy actually lost 2.89 million real jobs that month. In January 2015, the US announced an impressive gain of 257,000 jobs — but the actual, unadjusted number was a loss of 2.8 million jobs. But, again, beneath the surface, the real January number will be a loss of 2 million to 3 million jobs. That’s why a strong jobs figure (after seasonal adjustments) is the worst thing for Wall Street right now.
- Dollar holds gains after Fed’s hawkish stance
“The Fed's message was a little hawkish, but dollar reaction was limited as such a stance did not come as too much of a surprise,” said Shin Kadota, senior strategist at Barclays in Tokyo. The dollar was steady at 109.170 yen after bouncing 0.4 per cent overnight to pull away from a four-month low of 108.280 plumbed on Friday. The dollar index against a basket of six major currencies was at 89.077 having crawled back from a three-year trough of 88.438 set last week. The pound was a shade higher at $1.4202 after surging 5 percent against the dollar in January. The Australian dollar was little changed at $0.8062 after slipping about 0.4 percent the previous day.
- MARKETS LIVE: Union Budget 2018 awaited, Sensex, Nifty likely to open flat
Benchmark indices and are likely to open flat as caution crept into the ahead of the federal budget, to be presented by Finance Minister Arun Jaitley today. Investors are eagerly awaiting the federal budget, as the government aims to woo back rural voters and small businesses ahead of state elections. To keep investors’ confidence, however, Modi’s government will need to be seen containing the fiscal deficit, while also increasing spending in key areas of the slowing economy. will be focused on how much India widens its fiscal deficit beyond the 3% of gross domestic product projected for 2018/19. Meanwhile, India’s annual economic growth in the fiscal year that ended in March 2017 was unchanged at 7.1%, a government statement showed on Wednesday.
- January 2018 Market Wrap-Up
The VIX is overlayed on this chart and price remains above near-term support of 13.00. Momentum has dropped below the zero level, and a hold below this signals weakness ahead for the Russell. The momentum indicator has risen a bit from yesterday and remains above the zero level. A drop and hold below zero, as well as the 200 price level, would indicate accelerating selling pressure in equities. WORLD MARKET HEAT MAP Lastly, world markets paused on Wednesday, for the most part, following yesterday’s large-scale sell-off.
- Australian dollar off after soft data, hawkish Fed; NZ$ down
The Australian dollar eased for a fourth straight session on Thursday following weaker-than-expected economic data and as the U.S. dollar climbed on expectations of faster interest rate rises in the world's largest economy. [SYDNEY] The Australian dollar eased for a fourth straight session on Thursday following weaker-than-expected economic data and as the U.S. dollar climbed on expectations of faster interest rate rises in the world's largest economy. The Australian dollar was down 0.2 per cent at US$0.8040, drifting away from a 2-1/2 year peak of US$0.8136 set last week. Thursday's weakness came after domestic data showed building approvals tumbled 20 per cent in December against expectations of an 8 per cent fall. Across the Tasman Sea, the New Zealand dollar slipped from a one-week high of US$0.7420 to last trade around US$0.7360.
- RBA forecast for 2018 - Capital Economics
Capital Economics provided a lengthy analysis of what their expectations are for the Reserve Bank of Australia and their interest rate policy for 2018. The critical takeaways and key points are provided below. The rising Australian dollar has already tightened financial conditions and the outlook for inflation is still weak. Our money is on the RBA leaving interest rates at 1.5% at all eleven policy meetings this year. Governor of the RBA Philip Lowe will be speaking at the A50 Australian Economic Forum dinner on Thursday, February 8th, and the RBA publishes their first Statement of Monetary Policy for the year the day after, on Friday the 9th.
- Maybe the Economy Isn’t as Great as We Think
If the economy were truly running at capacity, companies would be bidding up prices for workers and inflation would be climbing. So why does everyone think that the economy is running at full capacity, with GDP bumping right up against potential GDP? Jared Bernstein points to a new paper that suggests the problem is with the way potential GDP is being calculated. That, in turn, leads policy makers, like those meeting across town as we speak, to underestimate the size of potential GDP. But it’s a serious paper, and if the authors are right it would solve one of the paradoxes of the current economy: the reason inflation isn’t picking up yet is because the economy isn’t close to its current capacity yet.
- EU, Eurozone Unemployment Rates Remain Steady, Latest Figures Show
EU, Eurozone Unemployment Rates Remain Steady, Latest Figures ShowBRUSSELS Unemployment rates in the European Union and in the eurozone remained steady at 7.3 percent and 8.7 percent, respectively, over the course of the previous month, according to a report published Wednesday by the blocs statistics office. Although unchanged compared to the previous month, the figures pertaining to Dec. 2017 represented a one-point drop year-on-year for both the EU and the member states that use the euro currency, Eurostat said. There were 17,96 million people registered as unemployed in the EU during Dec., some 14,13 million of whom lived in eurozone countries. The countries with the lowest number of people out of work were the Czech Republic (2.3 percent), Malta and Germany (both with 3.6 percent) while the highest once again were Greece (20.7 percent according to Oct. figures) and Spain (16.4 percent). Spains rate of unemployment dropped by 2.1 percent compared to the same period the previous year.
- Taiwan GDP Grows by 2.84% in 2017
Taiwan GDP Grows by 2.84% in 2017TAIPEI Taiwans GDP grew by 2.84 percent in 2017 with respect to the previous year, the Directorate General of Budget, Accounting and Statistics said on Wednesday. The Q4 GDP grew by 4.17 percent in 2017 with respect to the previous quarter, and 3.28 percent year-on-year. Meanwhile, real exports of goods and services grew by 6.01% (year-on-year), mainly driven by a strong demand from abroad for electronic components and machinery, the statement said. Despite the positive data, experts said a recent increase in the value of the dollar may negatively affect export the main driver of the islands economy and slow down economic growth in 2018.
- A private indicator of China's economy just came in better than expected
The Caixin/Markit manufacturing Purchasing Managers' Index for January came in at 51.5. Economists polled by Reuters expected the private Caixin/Markit PMI to come in at 51.3 in January versus 51.5 in December. The official manufacturing Purchasing Managers' Index for the month missed expectations, coming in at 51.3. China's economy surprised on the upside in 2017, but economists expect a managed slowdown this year to hit growth. Caixin/Markit is set to release its China services PMI reading for January next Monday.
- Caixin PMI confirms Chinese slippage
Via Caixin:China’s manufacturing sector continued to expand at the start of 2018, with production rising to the greatest extent in just over a year. Growth was supported by further, albeit slightly softer, increases in total new work and new export sales. Capacity pressures meanwhile persisted, with backlogs of work rising to the greatest extent since early-2011. January data signalled a solid and accelerated increase in Chinese manufacturing output, with the rate of growth the strongest since December 2016. A number of companies mentioned that improving demand conditions and rising new work led them to raise output.
- Harvard Trained Economist: Gold Is Rising Just As I Forecast It Would
And rising gold prices. Rising growth suggests rising inflation and rising inflation means higher T-bond yields, which have already been the case as the chart shows. This is typical and comes from rising wages with tighter labor availability and rising commodity prices in the late stages of a boom. With this trend of mildly rising inflation, gold prices and T-bond yields will likely continue moving upward until there are signs of an economic slowdown and/or a bubble burst in stocks. Rising T-Bond Yields aren’t good for stock or real estate valuations.
- China Manufacturing PMI Holds Steady In January - Caixin
(RTTNews) - The manufacturing sector in China continued to expand in January, and at a steady pace, the latest survey from Caixin showed on Thursday with a Manufacturing PMI score of 51.5. That was in line with expectations and unchanged from the December reading. It also remained above the boom-or-bust line of 50 that separates expansion from contraction. Individually, growth was supported by further, albeit slightly softer, increases in total new work and new export sales. Higher production requirements led firms to increase their buying activity, while employment fell at the weakest pace in nearly three years.
- ‘We’ve got a story to tell,’ Pence tells Republicans, urging them to tell it
Vice President Pence and House Speaker Paul D. Ryan (R-Wis.) await the start of the State of the Union address at the U.S. Capitol in Washington on Jan. 30, 2018. (Mandel Ngan/AFP/Getty Images)Vice President Pence urged Republicans lawmakers, gathered here at a luxury resort for their annual policy retreat, to sell voters on a year of prosperity and policy triumphs as the midterm elections approach in November. But he told the Republicans that would not come to pass if they “tell the story” of the tax cuts. Pence recalled seeing Manchin at a Chamber of Commerce event in West Virginia last year while the tax bill was being crafted. I’m disappointed in his comments but will continue to work to make Washington work so West Virginia and our country work.”Read more at PowerPost
- China's Caixin Manufacturing PMI steadies in January, but surprises positively
China's Jan Caixin manufacturing PMI came at 51.5 vs 51.3 expected and 51.5 last, with the output growth hitting fresh 13-month highs in the reported month. SummaryChina’s manufacturing sector continued to expand at the start of 2018, with production rising to the greatest extent in just over a year. Higher production requirements led firms to increase their buying activity, while employment fell at the weakest pace for nearly three years. The sub-indices of output and employment continued to rise, reflecting improving production conditions. “However, overall new business and new export orders increased at a slower pace than in the previous month, pointing to slightly moderating demand.”
- Theresa May gives upbeat view of post Brexit economy
Britain's economy will have a ‘better future’ outside the EU, Theresa May said yesterday. But, with Britain’s departure from the EU now just over a year away, she outlined a strikingly upbeat vision of our future outside. Mrs May said leaving the EU would leave Britain well-placed to embrace emerging technologies, such as artificial intelligence. He said: ‘The first step of the negotiations of Brexit was the easiest, even if it was difficult. He added: ‘The UK decided to leave the EU - Brexit means Brexit.
- Australian dwelling prices: slippage continues - Westpac
Highlights of analysis from Westpac IQ about housing costs in major cities throughout Australia. Analysts will be waiting for February data to develop a clearer picture of housing inflation expectations in Australia for 2018. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. Investing in Forex involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility.
- Taiwan Manufacturing PMI Rises To 56.9 In January - Nikkei
(RTTNews) - The manufacturing sector in Taiwan continued to expand in January, and at a slightly faster rate, the latest survey from Nikkei showed on Thursday with a Manufacturing PMI score of 56.9. That's up from 56.6 in December, and it moves further above the boom-or-bust line of 50 that separates expansion from contraction. Individually, production and new orders both rose sharply, while new export sales expanded at the fastest pace in seven years. Strong demand for inputs led to further deterioration in supplier performance.
- Thailand Manufacturing PMI Inches Higher To 50.6 - Nikkei
(RTTNews) - The manufacturing sector in Thailand continued to expand in January, and at a slightly faster rate, the latest survey from Nikkei showed on Thursday with a Manufacturing PMI score of 50.6. That's up from 50.4 in December, and it moves further above the boom-or-bust line of 50 that separates expansion from contraction. Individually, both output and new orders expanded faster, while export sales returned to growth. Optimism was at its highest level in more than a year.
- Trump’s $1.5 Trillion Infrastructure Plan Is Light on Federal Funds, and Details
Senate Democrats called last year for a $1 trillion infrastructure program, financed by closing tax loopholes. They seemed unimpressed by the latest details of Mr. Trump’s plan. An ambitious infrastructure program has been a frequent theme of Mr. Trump’s economic agenda since he took office. Several Senate Democrats and their aides noted that the administration appeared to be rejecting their longstanding call for much more federal spending. White House officials did not rule out an alternative funding mechanism proposed by Congress, including a possible gas tax increase.
- Korea's exports jump 22.2% in Jan. on memory chips
BUSINESSSouth Korea's exports soared 22.2 percent in January from a year earlier on brisk sales of memory chips and petrochemical products, government data showed Thursday. Outbound shipments came to $49.21 billion for January, up from $40.25 billion a year earlier, according to the data compiled by the Ministry of Trade, Industry and Energy. Exports rose for the 15th month in a row, posting double-digit growth for the first time in four months. Imports also jumped 20.9 percent on-year to $45.48 billion last month. Workers deliver packages at a cargo terminal at Incheon International Airport, South Korea`s gateway, on Jan. 1, 2018.
- Commentary: In State of Union address, Trump promises to fix trade? Try competing first
In his State of the Union speech, US President Donald Trump promises strong trade enforcement. The United States, meanwhile, sits on the sidelines. In his State of the Union address on Tuesday (Jan 30), Trump again promised “strong enforcement of our trade rules". If successful in these endeavours, Canada would have secured or updated trade agreements with more than 40 countries. Trade agreements are tools that shape globalisation.
- Hong Kong Shares May See Additional Support
(RTTNews) - The Hong Kong stock market on Wednesday snapped the two-day slide in which it had given away almost 550 points or 1.6 percent. The Hang Seng Index now rests just above the 32,880-point plateau and it may add to its winnings on Thursday. The global forecast for the Asian markets suggests mild upside after the FOMC left interest rates unchanged. The modestly higher close on Wall Street came after the Federal Reserve announced its widely expected decision to leave interest rates unchanged. Closer to home, Hong Kong will provide December data for retail sales later today; in November, sales were up 6.9 percent on year.
- Stephen Collins: Britain’s fate is in the hands of Tory diehards
A leading Tory who opposed moderation in all its forms had a deep suspicion of foreigners, and pursued a policy designed to undermine his own government and the interests of Ireland. On the positive side, the Ditchers of a century ago didn’t actually die in the last ditch to protect the hereditary rights of the Lords. Fine wordsThe only sensible approach for the Irish Government is to prepare for the worst while hoping for the best. The outgoing German ambassador to the UK, Peter Ammon, stated the obvious this week when he questioned how the Irish Border issue could be resolved if the UK was outside the customs union. It will certainly take flexibility all around to avoid the most damaging kind of Brexit, but all the creative thinking in the world will not be enough if the Tory diehards call the shots.
- GBP/JPY holds onto gains, parks at 155.00 as Tokyo opens
Little economic data expected. GBP/JPY is currently trading just over the 155.00 handle, testing 155.10. The pair gained for the second straight day, making a new high for the week. The British Sterling has gained on the Yen appreciably since August of 2017, adding 11% to its value in six months. GBP/JPY Technical LevelsThe Sterling has gained againt the Yen impressively over the last six months, but long-term traders will note most of those gains occured last September, and upward momentum for GBP/JPY has been halting at times.
- Trump doesn’t deserve the credit for the economy. Neither does Obama.
So the question on everyone’s mind is: Who deserves the credit — President Trump or his predecessor, Barack Obama? In a Post/ABC News poll released Jan. 21, Obama won, 50 to 38. And to the extent they do, Obama deserves more props for the economy than Trump, because the current positive trends all got started under his administration. As a board member of the Fed, Yellen supported Bernanke’s use of unconventional recession-fighting policies, including a near-zero interest rate and a multitrillion-dollar bond-buying operation. If and when that happens, we’ll find out if Jerome Powell is made of the same stern stuff as Janet Yellen.
- A Questionable Trade Policy Narrative Deserves Meaningful Debate
Trade policy is complex and nuanced, which makes it fertile ground for spinning narratives. Since the beginning of the Trump administration, the establishment trade policy narrative has been shaped considerably by the words and opinions of a Peterson Institute scholar named Chad Bown. But Bown’s narrative implies that once Trump is gone, U.S. trade policy will reclaim its exalted international status as a beacon of fairness and humility, treading lightly and rocking no boats. In the 134 cases against the United States, the ADA and ASCM were cited 92 times. But how does filing a WTO complaint about U.S. trade remedy procedures in any way mitigate the potential loss of preferential access?
- USD/JPY: steady in Tokyo, consolidating FOMC activity
USD/JPY is steady in the Tokyo open after reaching a high of 109.44 overnight on the back of the FOMC outcome before selling off to a NY low of 108.99. Currently, USD/JPY is trading at 109.19, up 0.02% on the day, having posted a daily high at 109.27 and low at 109.10. FOMC reviewAnalysts at NBF Bank explained that the last FOMC meeting presided by Janet Yellen provided no major surprises, as the Fed opted to leave the fed funds rate unchanged at 1.25-1.50%. The FOMC still thinks near-term risks to the economic outlook are “roughly balanced”, but warned about “further” gradual interest rate increases." As a result of the FOMC today, the Fed Funds are capped at 2.5% still with three hikes projected for the year.
- UK minister in Edinburgh for Brexit talks
Image copyright Reuters Image caption New Cabinet Office minister David Lidington is heading to EdinburghNew Cabinet Office minister David Lidington is to meet Scottish ministers in Edinburgh for talks about Brexit. Scottish Brexit minister Mike Russell and Deputy First Minister John Swinney will set out their concerns over devolved powers and Brexit legislation. The Scottish parliament will not put forward the EU Withdrawal Bill for a consent vote until the row is resolved. Prior to meeting Mr Lidington, he added: "On the EU Withdrawal Bill, we are becoming increasingly exasperated by the UK government's approach. We want to agree an amendment to the EU Withdrawal Bill which we can then bring forward in the Lords."
- Fed Stands Pat, But More Rate Hikes Are On The Way
As anticipated, the Fed left rates unchanged at the conclusion of yesterday’s FOMC meeting. The statement was little changed but the handful of revisions point to continuing rate hikes. The Fed remains on track for three 25bp rate hikes in 2018. For the most part, the turnover at the Fed combined with ongoing solid data has left the remaining doves sidelined. The low inflation warnings of last year were largely a head fake as the Fed was always positioned to continue raising rates as long as there looked to be continuing downward pressure on unemployment.
- US safeguards could hurt trade talks with Korea: ex-negotiator
BUSINESSThe United States' recent issuance of safeguard measures against washers and solar panels could hurt the prospects of amending a bilateral free trade agreement with South Korea, a former US negotiator said Wednesday. Wendy Cutler, former chief negotiator for the Korea-US free trade agreement, raised the concern as bilateral talks are under way to renegotiate the five-year-old pact. Seoul has vowed to sue the US at the World Trade Organization short of a bilateral settlement. Former Acting Deputy US Trade Representative Wendy Cutler (Korea Press Foundation-Yonhap)"This dispute is healthy ... because if you try and address that issue in this KORUS amendment process, it complicates the negotiations," Cutler said at a forum hosted by the Korea Economic Institute of America. Seoul's chief delegate, Yoo Myung-hee, told reporters after the talks that her team had raised the safeguard issue and would discuss it again Thursday.Trump has labeled KORUS a "disaster" that increased the US trade deficit with South Korea and took away 200,000 American jobs.
- Venezuela sets initial digital currency value at US$60
[Caracas] Venezuela on Wednesday set the initial value of a digital currency it created to overcome a liquidity crisis at US$60, but its price will fluctuate based on the oil market, authorities said. The currency's initial price is based on the cost of a barrel of Venezuelan oil in mid-January, and the currency will be backed by the country's vast oil reserves. The Petro's value will then be "subject to change, depending on fluctuations in the (oil) market," said Hugbel Roa, the minister of science and technology. sentifi.com Market voices on:President Nicolas Maduro announced in early December that Venezuela - which is under sanctions from the US as well as the EU - was creating the digital currency. "This is going to allow us to move toward new forms of international financing for the country's economic and social development," the president said at the time.
- After Four Years of High Achievement, Janet Yellen May Be Leaving the Fed at the Right Time
Having spent fourteen years at the Fed, and having been the first woman to lead it in its hundred-and-five-year history, Yellen is leaving with a record of high achievement. In February, 2014, when Yellen took office, the unemployment rate was 6.7 per cent; today, it is 4.1 per cent. If the unemployment rate fell below a certain key level, the textbooks said, prices would start rising. Only when the jobless rate fell below the level previously considered safe did hourly wages rise by more than the inflation rate. It could be argued—and it has been argued—that, with such a low inflation rate, the Fed has no business raising rates, even slowly.
- Trump’s optimism faces reality check in divided Congress and GOP
After Trump’s speech, conservatives expressed alarm that Trump had offered to put more than 1 million young undocumented immigrants on a path to citizenship. Most Republicans, as they mingled at the Capitol on Tuesday after Trump’s speech, talked up infrastructure as public-private partnerships driven by tax credits for corporations. Referring to Trump’s comments on funding, Durbin added: “To me, it’s a throwaway line, it avoids coming up with serious funding.”On spending, Republicans face similar fractures. Moderate Senate Republicans, meanwhile, are urging their colleagues to let them work out an agreement with moderate Senate Democrats. Senate Republicans were once hopeful about padding their narrow majority on a map they saw as ripe for gains in November.
- (JPNL) - Traders Are Flocking To This Leveraged International ETF
Last year, the MSCI Japan Index rose 24.3 percent, outpacing the S&P 500 by 260 basis points. Japanese stocks are off to another fine start in 2018 with the MSCI Japan Index trading higher by 7.6 percent. Bullishness for Japanese equities is prompting some traders to consider juicing their returns with leveraged exchange traded funds, such as the Direxion Daily MSCI Japan Bull 3X Shares (NYSE: JPNL). The Direxion Daily MSCI Japan Bull 3X Shares attempts to deliver triple the daily returns of the MSCI Japan Index. With Japanese economic data increasingly strong, JPNL is an international leveraged ETF for aggressive traders to consider as 2018 moves forward.
- White House seeking to slash renewable energy research: report
[WASHINGTON] The Trump administration will ask US Congress to cut funding for clean energy and energy efficiency programs by 72 per cent in this year's budget, according to a report in the Washington Post, underscoring its preference for fossil fuels. The Post said it had obtained draft documents that outlined the administration's starting point for negotiations for the 2018 budget, set to be unveiled in February. Congress, which is ultimately tasked with deciding appropriations, could push back - but the documents signal the White House's policy priorities, the newspaper said. Spending for the Energy Department's Office of Energy Efficiency and Renewable Energy is currently set at US$2.04 billion. But the US energy watchdog terminated the proposal, finding it neither justified nor reasonable.
- How and why the State’s purchasing power should be used to to renegotiate PFI deals
If used appropriately, the state’s purchasing power could result in new terms and a better deal for taxpayers when it comes to the government’s PFI contracts. In the NHS alone PFI companies are likely to make pre-tax profits just short of £1 billion over the next 5 years. And this relates only to 107 PFI contracts out of the existing 700 or so PFI deals which are currently in operation across the public sector. In theory, Parliament could seek to requisition or expropriate the assets of the PFI companies without providing any compensation and cease all payments to them. For many people the idea of re-negotiation is unpalatable, given the extent to which PFI companies have “fleeced” the taxpayer for many years.
- The Fed: More Confident on Outlook and Inflation Target
The Federal Reserve reinforced the case for a hike in March and two more later this year. Going into Federal Reserve Chair Janet Yellen’s 32nd and final meeting, neither we nor the markets expected the Fed to make much news. Of note, however, in its statement after the meeting on 31 January, the Fed acknowledged recent firmer economic data and expressed confidence in inflation moving toward the 2% target later this year. So the Fed today reinforced the case for a hike in March and two more later this year, which likely suits Chair Yellen ‒ and soon-to-be Chairman Powell ‒ just fine. For more on interest rates and the financial markets in 2018, please see “Putting Markets in Perspective".
- ADB Releases First Bond Market Guides for Cambodia, Myanmar
MANILA, PHILIPPINES (1 February 2018) — The Asian Development Bank (ADB) today released the first officially recognized bond market guides for Cambodia and Myanmar. The publications, titled the ASEAN+3 Bond Market Guide for each country, provide practical and detailed information on the investment climate, rules, laws, opportunities, and characteristics of the bond markets of the two Southeast Asian countries. In Myanmar, meanwhile, a corporate bond market is planned for development after the recent issuance of government securities. The guides are published by the ASEAN+3 Bond Market Forum (ABMF) in collaboration with ADB as its secretariat. The Bond Market Guides are available for download from adb.org.
- U.S. Tax Overhaul Boosts Oil Sector By Billions
The U.S. tax overhaul signed into law by President Donald Trump last month will boost the oil industry by $190.4 billion, according to estimates by Wood Mackenzie released on Tuesday. Several factors contribute to the multibillion dollar tax cut for fossil fuel players: the lower corporate tax rate, the reduced pass-through rates for partnerships on big projects, and the adoption of accelerated expensing of capital costs. Explorers with profitable assets will see their cash pile grow by almost $200 billion as a result. "Long term, it will help solve the 'trapped cash' problem where, under the old system, U.S. companies would face steep tax payments for repatriating funds from abroad." Another major item on the tax bill is the opening of the Arctic National Wildlife Refuge (ANWR) for drilling, which would be a huge bill on its own had the tax bill not been so controversial.
- Following Abbas’ Urging, Slovenia Likely to Recognize State of Palestine
The Foreign Affairs Committee of Slovenia’s National Assembly will soon vote on a draft resolution to recognize Palestine as a self-determining state. If Slovenia does recognize Palestine, they will become the second EU country ever to do so while a member of the EU, following Sweden in 2014. While socialist Yugoslavia recognized Palestine, Slovenia, which was once a republic of Yugoslavia, does not. The European Union itself is also amenable to Palestinian statehood, voting to recognize Palestine as a self-determining state in a late 2014 non-binding resolution. Outside of the EU, 138 countries recognize Palestinian statehood, totalling over 80 percent of the world's population.
- South Korea Detects Cryptocurrency Crimes Amounting to about $600 Million
South Korea Detects Cryptocurrency Crimes Amounting to about $600 MillionSEOUL The South Korean authorities have unearthed cryptocurrency crimes, including money laundering and illegal foreign exchange trading, amounting to 637.5 billion won ($597.7 million) so far. One of the largest illegal trades involved 4 billion won sent to offshore deposits without being declared, the report said. The customs authority added that it would continue to monitor the use of cryptocurrencies in cases such as illegal currency trading or money laundering. South Korea is one of the main world markets for digital currencies with nearly 30 percent of the countrys workers having investments in them, according to several surveys. The South Korean government has hinted at the possibility of collecting taxes from investors, and banning the trading of cryptocurrencies, a market that is barely regulated in the Asian country.
- Australia Manufacturing Sector Picks Up Steam
(RTTNews) - The manufacturing sector in Australia continued to expand in January, and at a faster rate, the latest survey from the Australian Industry Group showed on Thursday with a Performance of Manufacturing Index score of 58.7. That's up from 56.2 in December, and it moves further above the boom-or-bust line of 50 that separates expansion from contraction. It also marks the 16th straight month of expansion, which is the longest winning streak in 13 years. All seven sub-indexes expanded, including production, deliveries, new orders, stocks, sales, employment and exports.
- Rachel Notley says B.C. will face consequences over plan to ban increased oil shipments
EDMONTON — Alberta Premier Rachel Notley says there will be consequences for British Columbia over the province’s latest attempt to hinder expansion of the Kinder Morgan Trans Mountain oil pipeline. “The decision we took on the Trans Mountain expansion remains in the national interest,” he said. “This has not changed.”Saskatchewan’s incoming premier Scott Moe also expressed support for the project and criticized the move by B.C. In Alberta, United Conservative Party Leader Jason Kenney said he has been telling Notley to fight back since the B.C. government is “playing games” that will hurt Western Canada’s resource sector and that her party stands with Alberta.
- Oh poor Britain – overrun by chlorinated chickens, hapless without the EU
Enter the – European Single Market – which is a logical extension of the dominance of neoliberals in the European Commission. “Community GDP in 1994 was 1.1% to 1.5% higher than it would have been without the Single Market …”3. In March 2015, a Bruegel Working Paper (2015/01) – The Long Road Towards the European Single Market – presented an interesting graph (see Figure 2). There is very little proof that the ‘single market’ has improved the relative performance of the EU15 economies against the US, the exemplar of a ‘single market’. They cannot say that Britain is better off in the ‘single market’ because the ‘single market’ doesn’t exist.
- Xi stresses developing modernized economy
"The whole Party must have a deep understanding of the importance and difficulty of developing a modernized economy and a good grasp of the goals and priorities of this task," Xi said. Developing a modernized economy has become a catchphrase for China after Xi spoke of the goal at the 19th CPC National Congress in October last year. Xi said the modernized economy should integrate all social and economic activities that are interrelated. Xi singled out several fields that need to be worked on, including the development of the real economy, which he said provided a "solid foundation" for the modernized economy. Xi also demanded measures to accelerate innovation-driven development, which he described as a "strategic support" for the modernized economy.
- FOMC leaves the stance of policy unchanged as expected - Westpac
Analysts at Westpac explained that at its January 2018 meeting (Chair Yellen’s last), the FOMC left the stance of policy unchanged as expected. Additional evidence of this progress towards the 2.0%yr target was found in the discussion of market inflation expectations. With the market increasingly on the look-out for a stronger inflation pulse, the next test for firming inflation expectations will be the household sector. As yet, “survey-based measures of longer-term inflation expectations are little changed”. Wages growth arguably remains the greatest impediment to household inflation expectations as well as consumer spending.
- UK Companies Seek Cooperation With Russia in Space Technologies - Lawmaker
LONDON (Sputnik) - Daniel Kawczynski, UK Conservative lawmaker, told Sputnik on Wednesday that he intended to inform the country's Foreign Secretary Boris Johnson about the interest of UK companies in enhancing cooperation with Russia in the space domain. Because I had a British company, who came to see me yesterday, who were working with Russian space program… at Baikonur," Kawczynski said when answering a question about the changes in UK-Russia relations. The lawmaker added that work was ongoing to publicly recognize and promote aspects of cooperation between the United Kingdom and Russia, adding that, nevertheless, relations between the two countries remained tough. Meanwhile, Daniel Kawczynski hopes to visit Moscow in June to take part in the international forum on parliamentarian system development. Kawczynski noted that that the dates of the conference fall on Monday and Tuesday, when the UK lawmakers usually have voting procedures.
- Gold edges lower after Fed says it sees signs of inflation
[NEW YORK] Gold prices were flat on Wednesday, but dipped slightly after the US Federal Reserve said it would keep interest rates the same, but expected inflation to rise this year. On Fed Chair Janet Yellen's last policy meeting as head of the central bank, the Fed left interest rates unchanged. But expectations that the Fed will raise interest rates to fight inflation make gold less attractive because it does not pay interest. In other precious metals, silver climbed 0.4 per cent at US$17.20 an ounce after hitting a one-week low of US$17.03. It hit a one-week low in the previous session.
- The cost of lower EU migration will be greater than the benefits of a US trade deal, leaked Brexit analysis says
The cost of reduced EU migration to the UK will cancel out any economic benefit of a UK-US trade deal, according to a leaked Whitehall analysis. BuzzFeed News has obtained a secret government report examining the economic impact of Brexit. The cost to the British economy of lower EU migration after Brexit will be greater than any gains made by a US-UK trade deal, according to a leaked Whitehall report. On Monday, BuzzFeed News published details from a secretive Whitehall analysis examining the economic impact of Britain leaving the European Union. Meanwhile, a more "flexible" policy would still "cancel out" any economic benefits from the trade deal.
- Oil rebounds, ends up on petrol demand, Opec compliance
Crude oil futures ended higher for the fifth straight month, with US futures gaining 7.7 per cent in January, the best month for the contract since September. Oil prices slipped immediately after the news, but rebounded on the back of the surprising 2 million-barrel drawdown in petrol stocks, suggesting demand for products may be enough to limit seasonal inventory buildup. "Lower petrol inventories, combined with gasoline demand which is strong to start the year, bodes well for crude oil prices going forward," said Rob Thummel, portfolio manager at Tortoise in Leawood, Kansas. "The dollar is weakening and that is also a positive for oil prices." Encouraged by higher crude prices, energy companies added 12 oil rigs last week, the biggest weekly increase since March.
- Federal Reserve leaves rates unchanged, sees inflation rising this year
The US Federal Reserve kept interest rates unchanged on Wednesday but said inflation likely would rise this year, bolstering expectations borrowing costs will continue to climb under incoming central bank chief Jerome Powell. [WASHINGTON] The US Federal Reserve kept interest rates unchanged on Wednesday but said inflation likely would rise this year, bolstering expectations borrowing costs will continue to climb under incoming central bank chief Jerome Powell. US stocks rose slightly after the Fed statement before paring gains. Short-term interest rate futures showed traders adding slightly to bets the Fed would raise rates three times in 2018, starting at its next meeting in March. INFLATION VIEW UPGRADEDThe Fed's gradual path of rate increases will hinge on a continued pickup in inflation, which has lingered below target despite a strong job market.
- 4 Chemical Stocks Most Affected By Potential U.S. NAFTA Exit
And one of the big losers in such an exit would be the chemicals. Products with the highest NAFTA export share include polypropylene (72%), VCM (65%), MTBE (63%), epoxy (46%) and polyethylene (40%), they said. Few (if any) exports of EDC, VAM and caustic soda head to Canada and Mexico. “If the U.S. exits NAFTA, it’s likely that tariffs will rise, forcing U.S. producers to look for more-distant markets to place their products,” the analysts said. TPH says four chemical companies have the most exposure if the U.S. backs out of the agreement.
- The Oil Rally Is Helping Renewables
It may sound counterintuitive, but higher crude oil prices have proved to be a boon for the renewable energy industry, at least when it comes to adoption of clean energy solutions and products—notably electric cars. This year, thanks to the oil price rally, EVs, solar and wind power will continue to grow, according to the latest outlook from Bloomberg New Energy Finance. Costs will be falling for wind and solar installations, too, thanks to tech advancements and to the successful application of economies of scale. The oil price rally is making EVs more competitive against vehicles running on internal combustion engines. In fact, some experts argue that the effects of the tariff on the U.S. solar industry will, in the long run, be negligible.
- Federal debt-limit deadline moved up to mid-March, adding urgency to another congressional task
(J. Scott Applewhite/AP)The Congressional Budget Office said Wednesday that the federal borrowing limit will need to be raised by mid-March, sooner than expected, adding urgency to yet another onerous task confronting Congress. The debt limit, which is set by law, is the maximum amount of debt the Treasury Department can issue. If it does not, the United States would begin to default on its obligations, sending the nation into an unprecedented financial crisis. Previously the CBO had said the Treasury Department would exhaust its ability to borrow in late March or early April. The debt limit is currently $20.5 trillion.
- A Long Time Coming, Macron's France Is On Its Way Back
France is on its way back - from where? In case your memory is as short as mine, this time last year, France was, frankly put, dans la toilette. He has gone out of his way to court German Chancellor Angela Merkel into a common vision. “None of his predecessors were able to climb out of the depths of unpopularity,” said Frédéric Dabi, IFOP’s deputy director-general. But it's fair to say that France hasn't been in such a hopeful position for a long time.
- Microsoft reports loss due to tax charge
The technology giant said its loss for the quarter to December 31 was US$6.3 billion - as it took a charge of US$13.8 billion to pay its taxes. Once the world's largest technology company, Microsoft has been rebooting as consumers shift away from Windows-powered computers to mobile devices. Microsoft has more than US$130 billion overseas, and its repatriation will trigger a US tax bill estimated at US$13.8 billion. The new bill implements a tax rate of 15.5 per cent compared with a possible 35 per cent rate under prior law. Mr Chowdhry added that Microsoft "seems to have a much better win rates with US federal government agencies" that rivals.
- Donald Trump Just Promised to Make the Economy Even Better. Here’s How He Says He’ll Do It.
President Donald Trump’s State of the Union address promised to make the economy even better. By and large, as well as in Mr. Trump’s opinion, the economy is looking pretty good. Here’s a rundown of how President Trump plans to make the economy and America even better, and whether he’ll be able to achieve his goals. Make trade deals betterTrump’s address on soured trade deals coming to an end was unfortunately vague and nondescript. Sure, some trade deals need a revamp, but many Americans were hoping for a more clear-cut plan.
- Yellen Era End With Whimper, But Rate Hikes To Come
In the statement released Wednesday, the FOMC said, the labor market continues to strengthen and economic activity has been rising at a solid rate. Gains in employment, household spending, and business fixed investment have been solid, and the unemployment rate has stayed low. The Fed, which raised rates in December, is basically setting itself up to raise rates when Jerome Powell, the new Fed Chair, comes into office in February. His first FOMC meeting will be in March. The CME FedWatch Tool website reflects the market’s belief that there’s a 75% chance of a rate hike at the March meeting to be followed by rate hikes in June and December.
- The debt ceiling "X date" just moved up
The deadline to raise the debt ceiling just moved closer ... largely thanks to the new tax law. That's according to the Congressional Budget Office, which on Wednesday moved up its estimate of when lawmakers must raise the U.S. legal borrowing limit to avert a default on the country's debt. The debt limit is currently set at $20.456 trillion. With less money projected to come in, the CBO now estimates that the special accounting measures Treasury has been using since December will be tapped out sometime in early March. "I respectfully urge Congress to protect the full faith and credit of the United States by acting to increase the statutory debt limit as soon as possible," he said in a letter to lawmakers.
- GE Just Signaled The Next Crisis (And Nobody's Paying Attention)
And the company said it will set aside another $15 billion over seven years to bolster reserves at GE Capital. The insurance charge, along with costs tied to the US tax plan, led GE to a $9.64 billion loss in the fourth quarter. Among the strategies GE used to make its 2003 numbers was selling railroad cars to banks, with side deals and verbal promises to assure the banks they couldn’t lose money on the deal. Today GE is a $140 billion company (shares are down by nearly half over the past 12 month). BPOs have been used to value homes backing more than $20 billion of bonds sold by companies like Blackstone.
- President of European Parliament to Address Serbias Accession to EU
President of European Parliament to Address Serbias Accession to EUBELGRADE The president of the European Parliament, Antonio Tajani, is due to visit on Wednesday the Serbian capital Belgrade in order to address the Balkan countrys accession to the European Union. Tajani is set to meet with Serbian President Aleksandar Vucic, Prime Minister Ana Brnabic, President of the National Assembly Maja Gojkovic, First Deputy Prime Minister and Minister of Foreign Affairs Ivica Dacic. Additionally, Tajani and Vucic will open the 2018 EU-Serbia conference on investment growth, job creation and ways to enhance cooperation with EU entrepreneurs. Accession negotiations have started four years ago, opening 12 chapters out of 35 required to join the EU. Serbia and Montenegro are expected to join the EU by 2025.
- Now It’s the Fed That Appears to Be Moving Slowly: Gadfly
It seems as if the Federal Reserve’s interest rate is the one that is stuck. As Bloomberg News noted, the Fed added “further” twice to its previous language about future rate increases in its statement. Interest rates are supposed to move together. As the Fed has raised interest rates -- three times last year, and five since late 2015 -- the 10-year rate has remained stubbornly stuck. The 10-year interest rate, now at 2.71 percent, is at a nearly four-year high.
- Democrats’ behavior at the State of the Union was embarrassing
Democratic members of Congress and their guests watch President Trump deliver his State of the Union address Tuesday night. (Saul Loeb/AFP/Getty Images)It gives me no pleasure to say this, but the Democrats’ behavior at the State of the Union was embarrassing. I take a back seat to nobody in decrying President Trump’s cynical and divisive performance. President Trump delivered his first State of the Union speech on Jan. 30. On Wednesday morning, House Democratic leaders went before the cameras to give their thoughts on the State of the Union.
- North Korea’s list of U.S. human rights abuses includes inequality, racism and marijuana use
Since at least 2014, North Korea has released reports on alleged U.S. human rights abuses — an apparent response to criticisms of Pyongyang's own human rights abuses from Washington and the United Nations. Most have featured statistics apparently culled from the Internet, with overwrought descriptions of life in the United States that are typical of North Korean propaganda. As in previous instances, the North Korean report does not include any reference of the fact that its own human rights record is notably bad. The economic disparity between North Korean elites and the average citizen is thought to be enormous, while there is no real concept of a free press in a country where propaganda is all-encompassing. Pyongyang has refused to allow foreign human rights groups access to these camps, though their existence can be confirmed by survivors' accounts and satellite imagery.
- Forex today: dollar mixed on Fed on hold and statement
Asia - Economic Data (GMT) ahead:31 Jan 22:30 AU Jan AIG Manufacturing Index, 56.20 previous. 1 Feb 00:30 AU Dec Building Approvals, -8.0% Rtrs f'cast , 11.7% previous. 1 Feb 00:30 AU Dec Private House Approvals, -2.0% previous. 1 Feb 00:30 AU Q4 Export Prices, -3.0% previous. 1 Feb 00:30 AU Q4 Import Prices, -1.6% previous.
- Fed Statement: Highlights, Red Line
And you should enjoy this FOMC statement because it represents the outcome of the last meeting Janet Yellen will chair. Taken together, we believe the tone of the statement will be consistent with a hike at the March meeting, barring a sharp weakening in economic conditions. November headline and core PCE inflation rates were a few tenths above their respective summer lows (yoy). While core inflation remains below target and the recent firming has been gradual in nature, we think many Committee members will view the rebound as additional evidence that last year’s shortfall largely reflected temporary, idiosyncratic factors. Similarly, market-based inflation expectations have moved higher since the December meeting, and the 5Y/5Y measure monitored by the Fed reached 2.25% on Friday (see Exhibit 3).
- Commentary: Trump's Policies Will Devastate the People He Used as Props for His Speech
President Trump used his first State of the Union Address as an occasion to brag extensively about his new tax law. The Staubs claim to be expanding their business and handing out employee raises as a result of new tax law. Individual tax cuts are set to expire after 2025. Corporate tax cuts, by contrast, are intended to be permanent, and will cost $1.4 trillion in lost revenue over 10 years. One reason these big corporations are feeling so flush is that the new tax law offers massive tax breaks to firms that operate globally.
- Alan Greenspan: 'We have a stock market bubble'
Alan Greenspan is sounding the alarm about the booming stock market. "There are two bubbles: We have a stock market bubble, and we have a bond market bubble," the former Federal Reserve chairman told Bloomberg TV on Wednesday. Bond prices have cooled since then, but the stock market has kept heating up. Kelly said there is no "obvious bubble like tech stocks in 1999 and the housing bubble in 2007." The overheated housing market last decade laid the groundwork for the 2008 financial crisis, the worst since the Great Depression.
- With Focus On Unemployment, Yellen Led Fed Through Tough Balancing Act
With Focus On Unemployment, Yellen Led Fed Through Tough Balancing ActEnlarge this image toggle caption Brendan Smialowski/AFP/Getty Images Brendan Smialowski/AFP/Getty ImagesJanet Yellen chaired her final Federal Reserve policymaking meeting Wednesday. She and her Fed colleagues held interest rates steady and officially elected Jerome Powell to succeed her as chair. When Yellen became chair early in 2014, the first woman ever to do so, the unemployment rate was 6.7 percent. "It's been over for years; at least six or seven years, and yet we still maintain crisis-level interest rates." President Trump also gave Yellen high marks, but he declined to give her a second term.
- The GOP tax law unintentionally created the potential for a huge disaster if Congress doesn't act
The deadline is pushed up because of changes to tax receipts from the GOP tax law. According to a new report from the nonpartisan Congressional Budget Office, decreased tax receipts stemming from new law required a change to the projected debt ceiling deadline. The revised timeline could cause lawmakers to speed up often-contentious debt ceiling negotiations. Already, conservatives in the House and Senate have signaled they will oppose a DACA solution and a debt ceiling increase. On immigration, letting the DACA program expire could endanger protections for approximately 700,000 unauthorized immigrants who were brought to the US as minors.
- UK and EU set for clash over citizens' rights during transition
WUHAN, China (Reuters) - Prime Minister Theresa May has warned that European citizens arriving in Britain after Brexit next year may lose some rights, setting up a clash with the European Union over their treatment during any transition period. Curbing immigration was a key reason why Britons voted to leave the EU in 2016, following a large influx of EU citizens, especially from poorer countries in eastern Europe. The European Union has warned Britain that it must accept all decisions of the trading bloc and that its citizens should be able to secure full residence rights during the two-year transition period after it leaves the bloc. But May has suggested EU citizens coming to Britain after March next year will be treated differently. “They did not vote for nothing to change when we come out of the EU,” she said.
- Rex Tillerson visits Mexico as bilateral ties hit their lowest point in years
3 trading partner of the United States, while the United States is Mexico’s largest partner, the destination for about 80 percent of its exports. But the United States is also balancing a full slate of delicate issues with Mexico, particularly the renegotiation of NAFTA, the North American Free Trade Agreement. Mexico and the United States share information on travelers between their countries as part of their anti-terrorism cooperation and collaborate on fighting drug traffickers. Videgaray’s relationships with top U.S. officials, including White House Chief of Staff John F. Kelly, have helped open doors across government agencies for Mexican officials. The Mexican presidential election in July could swing the relationship with the United States in a starkly new direction.
- How Donald Trump Beat Joe Kennedy III in the SOTU Battle
President Donald Trump may likely have won the first round on points, giving the GOP a good start in the battle for Congress in this year’s mid-term election. 1) Trump’s Speech Was Directed at All Americans. The attempt to be bipartisan, or at least appear to be so, contributed to why Trump’s speech is receiving generally positive reviews. It’s all about being part of the Kennedy family, and the decision to tap him was about his famous family, which goes against the notion of family trumping talent. Despite outperforming Democrats, Trump made a mistake or two.
- US: Stocks end modestly higher after volatile session
[NEW YORK] Wall Street stocks finished modestly higher Wednesday as optimism about strong earnings and upbeat economic data was offset somewhat by concerns about US monetary policy. After declining for two straight days, US stocks opened solidly higher before losing steam. Leading indices briefly went negative after the Federal Reserve's policy statement suggested a possible acceleration of interest rate hikes due to rising inflation. "If there's one thing that's changed in investor psychology it's the contemplation of what higher interest rates mean in an equity market that's fully valued," said Art Hogan, chief market strategist at Wunderlich Securities. Boeing was by far the biggest winner in the Dow, surging almost five percent after it reported a 92 per cent rise in fourth-quarter profits to US$3.1 billion.
- Dow, in day with wild swings, closes up 73 points, snaps worst 2-day slide since 2016
(Photo: Spencer Platt)Despite giving up a big chunk of its early gains, the Dow closed up nearly 73 points Wednesday, coming off its worst two-day drop since 2016. Just after the open of trading, the Dow Jones industrial average rallied more than 261 points. Low rates, of course, have had a stimulative effect on the economy and stock market since the bull began in 2009. Wall Street turned cautious early in the week, with the Dow tumbling 363 points Tuesday after a 177-point drop Monday. Despite the recent market turbulence, the broad S&P 500 stock index gained 5.62% in January, its best start to a year since 1997.
- Federal Reserve Says It Won't Raise Interest Rates In 2018 Just Yet
After Janet Yellen's last meeting as Federal Reserve chair, the central bank announced it would leave interest rates untouched. The Fed raised interest rates three times last year, getting up to the still low 1.25 to 1.5 percent. Yellen's successor Jerome Powell shares her slow-and-steady mindset to economic growth. Continue ReadingIt's expected Powell's Fed will raise interest rates multiple times this year, starting in March. Additionally, other leadership changes at the Fed has analysts anticipating a more hawkish view of inflation.
- Russia casts doubt over evidence of Iran supplying missiles to Yemen’s Houthi rebels
Russia on Wednesday dismissed evidence presented by the United States and U.N. experts that Iran had supplied missiles to Yemen’s Houthi rebels as inconclusive, signaling it would oppose a bid to slap sanctions on Tehran. “Iran is vehemently denying it is supplying anything to Yemen,” Nebenzia told two reporters. The Trump administration has said it will seek action at the Security Council against Iran, although it has yet to specify what those measures may be. Ambassador Nikki Haley presented the missile fragments as “undeniable” evidence that Iran had fabricated a ballistic missile fired by Yemen’s Houthi rebels at Saudi Arabia in November. “We understand that this was produced in Iran, but (there is) no information on how it was sent to Yemen.”
- Fed holds rates as Janet Yellen leaves on a high note
"Gains in employment, household spending and business fixed investment have been solid, and the unemployment rate has stayed low," the Fed said, removing previous references to disruptions from hurricanes. Fed officials also voted to continue with their programme to reduce the central bank’s balance sheet, which began in October. Fed policy makers will update their economic projections in March, when Powell is also expected to hold his first press briefing as chairman. "She is going out on a high note," Diane Swonk, chief economist for Grant Thornton in Chicago, said before Wednesday’s decision. The Fed statement didn’t contain any reference to the tax legislation.
- Jerome Powell will take over at the Fed this weekend
Jerome Powell is about to take the helm of the world's most influential central bank. Powell, 64, will begin his four-year term as Federal Reserve chairman on Saturday, the Fed announced. Powell will bring credibility and political stature to his chairmanship, having served as a Fed governor for more than five years. He has helped to shape policy under Yellen and stimulus programs under former Fed Chair Ben Bernanke. Powell spent much of his career in investment banking and private equity before joining the Fed.
- Peter Schiff Warns "They've Got No More Tricks Up Their Sleeves"
While he was there, he did an interview with Daniela Cambone of Kitco News and Schiff said gold is going to soar. Schiff said that the standard sentiment shared by many is that once the Federal Reserve jacks up interest rates, gold will stay level and unaffected. Schiff said that the yellow metal has surprised the initial expectations that it would fall when the Fed raised rates; gold has climbed 9% since the Fed hiked last month. -Peter SchiffInvestors tend to sell the rumor of rate hikes and buy the fact when in reality, the higher interest rates are not bearish for gold. He also says the rising interest rates will suck up the benefits of those tax cuts either way.
- TREASURIES-Borrowing plan, Fed signal on rate hikes flattens U.S. yield curve
The yield curve has further room to flatten longer term with intermittent bouts of steepening, Lindbloom said. Longer-dated Treasury yields initially rose on Wednesday when the government said it will increase the monthly auction size of 10-year and 30-year debt. The spread between five-year and 30-year Treasury yields shrank to near 41 basis points, a level not seen since August 2007, before finishing at 42 basis points in late trading, according to Tradeweb. Benchmark 10-year Treasury yields were little changed on the day at 2.726 percent after reaching a near four-year peak at 2.754 percent. The five-year yield reached 2.553 percent, the highest since April 2010, while the two-year yield touched 2.165 percent, the highest since September 2008.
- Argentina companies list on U.S. exchanges ahead of expected rate hikes
Airport operator Corporación América Airports (CAAP.N) and power generator Central Puerto SA (CEPU.BA) are expected to raise $1.4 billion between them in listings this week. An increase in rates by the Fed would likely dampen investor interest in equities. Companies are also seeking to take advantage of a positive outlook for growth in Argentina and investor enthusiasm for Macri’s business-friendly policies. The Fed kept interest rates unchanged on Wednesday, but it is expected to raise borrowing costs in March under incoming central bank chief Jerome Powell. Since taking office in December 2015, Macri has sought to attract foreign investment and develop capital markets.
- Yellen Ends Term With Interest Rates Steady; Powell To Take Helm
The closely-watched wording of the Fed statement was little changed, too, except for its view on inflation. Today’s missive noted that inflation is expected to move up in the next 12 months, but not much more than that. Minneapolis Fed president Neel Kashkari voted no each time rates were hiked last year in March, June and December. Chicago Fed President Charles Evans joined the opposition side in December. The two new voters are San Francisco Fed President John Williams and Cleveland Fed President Loretta Mester—both have previously expressed hawkish views on interest rates.
- A publicly-traded staffing firm bets big on government contracting
The deal comes as companies anticipate a renewed focus on defense spending. (iStock)California-based technology staffing firm On Assignment Inc. plans to buy Fairfax-based technology services firm ECS Federal for $775 million, the two companies announced Wednesday, hoping to tap a surge in defense spending. ECS Federal will keep its name and stay in Northern Virginia. The firm has grown through a combination of organic growth and targeted acquisitions, such as the purchase of technology firm called InfoReliance in April of last year. It currently takes in annual revenue of $586.4 million servicing Defense Department agencies, the Department of Homeland Security and others.
- GOP senators urge Trump to stay in NAFTA
A large group of Republican senators including Majority Leader Mitch McConnell (R-Ky.) wrote to President Trump on Tuesday urging him not to withdraw from the North American Free Trade Agreement. The letter signed by 36 GOP senators was released just hours before Trump is to deliver his State of the Union address to Congress. The letter comes one day after the latest round of talks to renegotiate the trade pact ended in Montreal. It is carefully worded to appeal to Trump’s successes, pointing to them as a reason to stay in the trade deal. “Among Republican senators there’s very, very strong support for staying in NAFTA.
- Stocks close well off highs after rates rise on Fed statement
Stocks gave back earlier gains Wednesday after the Federal Reserve's upgraded assessment of the economy sent interest rates shooting higher. The S&P 500 ended little changed and the Nasdaq finished 0.12 percent higher after the central bank's statement was released. The Dow closed 72 points higher after giving up an earlier gain of more than 250 points. U.S. Treasury yields rose on the back of the statement. Earlier, the Dow, S&P 500 and Nasdaq were trading sharply higher, rebounding from a sharp two-day sell-off.
- Ambassador tries to placate Israelis over Seanad Bill
It was stressed at the meeting that the Bill was a private initiative and did not have the backing of the Government. Tabling the Bill, Ms Black stressed that the aim was not a boycott of Israel or a ban on Israeli products, merely goods originating from illegal settlements. “A ban on settlement goods is not a radical ask,” she said. Just ahead of the Seanad debate, Israeli prime minister Binyamin Netanyahu issued a statement condemning the Bill. “The initiative gives backing to those who seek to boycott Israel and completely contravenes the guiding principles of free trade and justice,” he said.
- Spotlight Shines on the U.S. Dollar
The biggest development last week was a comment by the U.S. Treasury Secretary suggesting the U.S. favors a weak dollar relative to other world currencies. (It later rose off those lows following a statement by the President that he wants to see a strong dollar.) Internationally, the European Central Bank left its monetary policy unchanged and indicated interest rates would remain low for an extended period of time. In the fixed-income markets, global interest rates were largely unchanged for the week. This makes the high level of currency volatility especially interesting, because currency movements are often related to changes in the level of interest rates between countries (a concept called “interest rate parity”).
- A Bad Solution to Very Real Problems, Contributing Guest
A central bank per se was not an automatic solution to the problems of the American unit-banking system. Most European countries already had central banks, and Aldrich was apparently converted to central banking by a visit to Europe on behalf of his Commission. ...One of the great anomalies of U.S. financial history is how Wall Street bankers managed to play the role they did while politicians and the public were decrying Wall Street domination and influence! Notwithstanding the appearance of decentralization and government control, control of the Fed had, in fact, been "captured" by Wall Street. On the contrary, a more free-market, free-banking, Canadian-style reform would have created a much more efficient and reliable banking system in America.
- Trump Wants Little to Do With His Own Foreign Policy
In recent months, the Trump administration has called for a dramatic shift in the direction of American foreign policy. Many of them welcome the focus suggested by Trump’s National Defense Strategy and his National Security StrategyForeign governments, meanwhile, are trying to make sense of the new approach under Trump. In his speech to launch the National Security Strategy, he immediately followed up this reference with a plea for partnership with Putin. President Trump did, however, articulate a consistent vision of U.S. national security policy in these speeches. That points to another odd tension: The United States now has two competing national security doctrines—Trump’s and that of his national security team.
- The statutory goal for monetary policy
There is a rushed process going on to review and amend the monetary policy bits of the Act, led by Treasury and assisted to some modest extent by an Independent Expert Advisory Panel – itself chaired by someone with no experience in monetary policy. There are two main bits to the first stage of the review:amending the statutory goal of monetary policy to add a focus on maximising employment (or minimising unemployment), andintroducing a statutory committee, including non-executive members, to make monetary policy decisions. The other thing worth bearing in mind is that no central bank act – not even something more specific like a Policy Targets Agreement – can specify everything about how we want a central bank to run monetary policy. The Reserve Bank of Australia was set up in 1959, and the section of its legislation relating to monetary policy goals and objectives was in the original. That discretion has not been blatantly misused in recent decades – a period when the actual conduct of monetary policy in New Zealand and Australia have mostly been quite similar – but the legislation should not provide any sort of model for New Zealand as to how best to specify the goals of monetary policy.
- US Federal Reserve Keeps Interest Rate Unchanged
WASHINGTON (Sputnik) - The US benchmark interest rate will remain in the range of 1.25 to 1.5 percent, the Federal Open Market Committee (FOMC) said in a statement on Wednesday. "In view of realized and expected labor market conditions and inflation, the Committee decided to maintain the target range for the federal funds rate at 1-1/4 to 1‑1/2 percent," the FOMC said. © Sputnik/ Mihail Kutusov Federal Reserve to Deregulate Banking Sector"In determining the timing and size of future adjustments to the target range for the federal funds rate, the Committee will assess realized and expected economic conditions relative to its objectives of maximum employment and 2 percent inflation," the statement said. The Committee said economic conditions would likely evolve in a manner that warrants more gradual increases to the federal funds rate, but it added that the rate would likely remain below target level for some time. Meanwhile, the US Senate confirmed last week Jerome Powell as the new Chairman of the Federal Reserve.
- Alan Greenspan On The “Twin Bubbles”
We suspect the duration and resolution of the twin bubbles will be a bit more complicated than the dot.com and credit/housing bubble — i.e., a swift waterfall collapse followed by a sharp rebound driven by the Federal Reserve to even higher ground . I think there are two bubbles. We have a stock market bubble, and we have a bond market bubble. I think at the end of the day the bond market bubble will be the critical issue……we are working our way to a major increase in long-term interest rates. His comments on twin bubbles begin at 6:14 minutes in.
- Venezuela's Oil Power Vanishing, Hard Default Fears Rising
Venezuela is no longer a serious oil power in Latin America nor within OPEC. Since December 2016, the country’s oil production has declined at a pace comparable to all other OPEC members...combined. Barclays thinks Venezuela's oil production reaches a low point of 1.35 million barrels a day in the second half of 2018. As a result of this, PDVSA is in selective default on 8 bond issues: including the 2020s, 2022s, and 2017s. Courts could seize assets, for instance, in a hard default situation.
- Economic Collapse and Dollar Hegemony
by Federico PieracciniStrategic Culture Foundation (January 26 2018)In the previous article, I explained why Bitcoin should be considered a reaction to US dollar hegemony and how other nations and central banks are facing the crisis of the dollar brought on by de-dollarization. This change would have enormous repercussions on the world economy over the next 300 years. The real negative change came when Nixon decided in 1971 to drop the dollar from the corresponding gold value that had been established at the Bretton Woods Agreement. Over the space of a few years, the world economy experienced a dramatic and catastrophic shift. Central banks could create money simply by transferring money to banks digitally.
- Iran, Qatar Crude Exports To Asia Are Tanking
After years of healthy trade in crude oil and petroleum products between Iran, Qatar and Asian customers, the tide seems to be turning. This week, figures emerged showing a decline in oil exports from the two OPEC members to key Asian customers. Bloomberg reported that Qatar’s crude exports to Asia have declined severely, while Reuters showed the same figures for Iran. The December decline in Iranian oil exports is considered to be a result of the threat by the Trump Administration of a potential renewal of U.S. sanctions over Tehran’s nuclear program. For Qatar, it’s a desperate situation, as its crude oil exports are a major revenue generator.
- EU offers to assist Cuba with monetary consolidation: EU official
HAVANA (Reuters) - The European Union has offered to advise Communist-run Cuba on consolidating its two currencies, drawing on its experience from introducing the euro, an EU official said on Wednesday during a visit to Havana. Manservisi said the EU had “perhaps the most significant experience worldwide in monetary transformation,” derived from the conversion of a number of European currencies to the euro. Federica Mogherini, High Representative of the European Union for Foreign Affairs and Security Policy, visited Cuba early in January to help strengthen member countries’ economic and political ties with Cuba. As U.S.-Cuba rapprochement unfolded in 2015-2016 the EU dropped all sanctions and negotiated a political dialogue and cooperation agreement, the first between Cuba and the EU. Cuba has said the peso would remain and the CUC, valued for years at 24 pesos by state-run exchange offices, would become history.
- Fed Holds Steady For Yellen’s Last Meeting As Chair
The U.S. Federal Reserve has released the minutes of the January 2018 Federal Open Markets Committee (FOMC) meeting. While there were no major adjustments to the course the FOMC has set, this is the last meeting with Janet Yellen heading up the Fed. In a unanimous vote, the Federal Reserve left its benchmark interest rate unchanged in a range of 1.25%-1.50%, as analysts were expecting, although many are expecting a rate hike during the March meeting. On a 12-month basis, both overall inflation and inflation for items other than food and energy have continued to run below 2 percent. Looking ahead, Jerome Powell will replace Yellen within the next week and is expected to maintain her cautious policy approach.
- Shrinkage & The Fed's Balance Sheet Promises
There’s all sort of hope that both the ECB and the BoJ, will also reduce their balance sheet expansion in the coming quarters. With American stocks running like they stole something, it’s tough to argue there is any relation to the Fed’s balance sheet and US stocks recently. And yeah, for a while I assumed that the ECB and BoJ’s balance sheet had overwhelmed the Fed’s scheduled shrinkage. But then Franz Lischka wrote this terrific post in his blog My Personal Forward Guidance that illuminated the nuances of the Fed’s balance sheet reduction. If you would look at the Fed balance sheet and you wouldn’t know that the Fed claims to reduce its size, you just wouldn’t see it.
- Bonds are in 'mild bear market,' says Bill Gross
Bonds have entered a bear market, but it's not one that is necessarily extreme, bond guru Bill Gross told CNBC on Wednesday. "To me, that's a mild bear market." However, he noted that the bear market will certainly not be the extreme inverse of the 30-year bull market, where interest rates declined from 15 percent to below 2 percent. Government bond yields have been moving up in anticipation of inflation pressures and a more active Federal Reserve. "The public must be induced to buy them if interest rates go higher."
- In push to cut permits, U.S. must still protect water quality: CEO
NEW YORK (Reuters) - The CEO of America’s largest water utility warned that a federal push to streamline permits for infrastructure projects could stymie stronger water quality standards. “We’ve got to make sure we maintain water quality standards and actually in some cases increase them,” American Water Works Company Inc CEO Susan Story said in an interview with Reuters on Wednesday. Some U.S. towns, facing tight budgets or hefty long-term costs to keep their systems up to environmental standards, have privatized their water utilities. Working with the EPA, American Water is now starting voluntary tests for 40 “emerging contaminants” that are not yet regulated, Story said. Whether any new federal infrastructure program spurs private investment in infrastructure, U.S. tax reform is already becoming “an infrastructure plan for regulated utilities,” Story said.
- Brexit: Still A Stupendously Bad Idea, Still Happening Anyway
“The message is don’t lose this out of sight, because we want to have it settled as well. And ever since, they’ve been regretting itMeanwhile, the City’s worst fears are beginning to have the look of cold, hard reality. Under a comprehensive free trade agreement with the EU, UK growth would be 5% lower over the next 15 years compared to current forecasts, according to the analysis. “The likelihood is that Brexit will happen, but I’m more at 40% now that it can be changed,” he said…. Views will likely shift, he said, as the fundamental dilemma arising out of Brexit soon becomes apparent to people.
- EU pledges $53m to help build Palestinian state
The European Union has announced a new funding package of 42.5 million euros (nearly $53m) to help the Palestinians build their new state. A process without one or the other would simply not work, would simply not be realistic," EU foreign policy chief Federica Mogherini said. "Nothing without the United States, nothing with the United States alone," Mogherini told reporters in Brussels. Government ministers from Israel and Egypt, as well as the Palestinian prime minister and a US senior official attended the talks. The meeting was also set to look at ways to support the UN agency working with Palestinian refugees, UNRWA.
- Concerns About Discover's Card Charge-Off Rates Look Overblown
As we detailed in our interactive model, investors are justified in being wary of the downside to Discover’s share price from higher card charge-off rates. In fact, Discover’s card charge-off figure for full-year 2017 was identical to the average figure it reported for the period 2005-07 before the economic downturn. We quantify the impact of changes in card charge-off rates on Discover’s share price using our interactive dashboard. You can modify assumptions such as earnings multiples, card balance, effective tax rate and others to see how sensitive Discover’s shares are to its card charge-off rate. Charge-Off Rates Shouldn’t Increase Too Much In The Near FutureAs we pointed out earlier, the jump in card charge-off rates over recent quarters was a due to the ongoing normalization in the figure.
- Global stocks slip after Fed flags inflation, bonds rise
NEW YORK (Reuters) - The U.S. dollar edged higher on Wednesday and world stocks lost the shine they took from Boeing’s strong earnings report after the Federal Reserve indicated more interest rate hikes were in store. The Fed said it anticipated inflation would rise this year, signaling it remained on track to raise borrowing costs again in March under incoming central bank chief Jerome Powell. The S&P 500 lost 6.34 points, or 0.22 percent, to 2,816.09 and the Nasdaq Composite dropped 12.52 points, or 0.17 percent, to 7,389.96. REUTERS/Staff/RemoteBoeing Co, the world’s biggest planemaker, provided the most upside to both the benchmark S&P 500 stock index and MSCI’s all-country world index. REUTERS/Toru Hanai - RC16074E2450The dollar initially rose against a basket of six currencies after the Fed statement, but later gave back those gains.
- 9 states are forming a coalition to put a price on carbon pollution
Some, like Oregon, are far enough along in the process that the legislature could consider a carbon tax sometime this session. Messaging aside, however, passing a carbon tax is a difficult political task even for the most environmentally-progressive states. Even if all nine states were to enact some kind of price on carbon, it would only represent a small slice of the country’s overall carbon emissions. Rhode Island and Vermont are two of the lowest carbon emitters in the country, while high-emitting states like Texas, Pennsylvania, and Illinois currently have no public plans for enacting a price on carbon. “Some of our states will be advancing policies this year, some of our states will be taking 24 months or so,” Washington State Senator Kevin Ranker (D) said.
- How to Spend Trillions on ‘Infrastructure’
I found that refreshing — we can carry a deficit if the money’s spent wisely — but that’s another story. What President Trump talked about was America’s staggering infrastructure deficit, a whopping $2 trillion fault line in the backbone of the American economy, according to the latest estimates from the American Society of Civil Engineers. He urged Congress to produce a bill that would “generate at least $1.5 trillion” to modernize our decrepit infrastructure. That’s why Larry Summers, the former Democratic Treasury secretary, urged the next president to go big on infrastructure spending. Unfortunately, the president wants to spend more money on 20th-century technology — so-called clean coal — instead of modernizing our electric grid and reorienting our economy away from coal and other fossil fuels.
- Central bank policy rates
Updated 18 January 2018The BIS is now publishing a data set on the monetary policy rates of central banks, in daily and monthly frequency. This data set contains the monetary policy rates of 38 central banks. In undertaking this work, the BIS has collaborated closely with national central banks who participated in the selection of the policy rate(s). The data set also contains historical information on policy rates, going back to 1946 for several countries. ContactFor queries regarding central bank policy rates, please write to statistics$bis.org (where "$" denotes "@").
- The Yellen rules
We consider three rules that have been the focus of extensive policy discussion. The Taylor (1993) and Yellen (2015) rules are “balanced” in the sense that the coefficients on the inflation and output gaps are equal, while the Yellen (2012) rule is an example of an “output gap tilting” rule because the coefficient on the output gap is larger than the coefficient on the inflation gap. We also consider “inflation gap tilting” rules where the coefficient on the inflation gap is larger than the coefficient on the output gap. An inflation gap tilting version of the Yellen (2015a) rule with a time-varying equilibrium real interest rate provides the most consistency with the three criteria. This paper was prepared for “Monetary Rules for a Post-Crisis World,” Mercatus-CMFA Academic Conference, September 7, 2016.
- Fiscal multipliers across the credit cycle
AbstractThis paper studies the differences between fiscal multipliers in OECD economies across the credit cycle. Impulse responses are obtained using a state-dependent model with direct projections, in which multipliers depend on the state of credit markets. Identification of the effects of fiscal stimulus and austerity measures is achieved by distinguishing between unanticipated increases and decreases in government spending. Expansionary fiscal policies are associated with large multipliers during credit bust episodes, and spending increases likewise foster economic growth in periods of rapid credit expansion, albeit to a lesser extent. In contrast, the output effect of contractionary fiscal policies is never statistically different from zero.
- Unconventional Fiscal Policy
Unconventional Fiscal Policy Francesco D’Acunto, Daniel Hoang, Michael Weber NBER Working Paper No. 24244Issued in January 2018NBER Program(s):Economic Fluctuations and Growth, Monetary EconomicsUnconventional fiscal policy uses announcements of future increases in consumption taxes to generate inflation expectations and accelerate consumption expenditure. You may purchase this paper on-line in .pdf format from SSRN.com ($5) for electronic delivery. The email address must be connected to a subscribing college, university, or other subscribing institution. Gmail and other free email addresses will not have access.
- Environmental Economics: Pronounced "Reggie"
...RGGI (pronounced “Reggie”) has, in fact, a Republican pedigree, dating back to 2003, when Gov. George Pataki of New York invited other Northeast governors to join a regional effort to reduce carbon emissions. As the cap declines, the price of the permits rises, giving utilities an incentive to find cheaper ways to reduce emissions. Even so, it’s a well-designed program that will only get stronger; last August, the nine states agreed to reduce emissions a further 30 percent by 2030. A national program along similar lines passed the House in 2009 but never came to a vote in the Senate.
- Statement Regarding Repurchase Agreements
Operating PolicyStatement Regarding Repurchase AgreementsAt its January 2015 meeting, the Federal Open Market Committee (FOMC) approved the Authorization for Domestic Open Market Operations that authorized the Selected Bank (the Federal Reserve Bank of New York) to undertake certain open market transactions for the purpose of testing operational readiness. In connection with this authorization, the Federal Reserve Bank of New York’s Open Market Trading Desk (the Desk) intends to conduct a small-value repo operation on Wednesday, December 2. This small-value repo operation is a matter of prudent advance planning by the Federal Reserve. The operation has been designed to have no material impact on the level of reserves or on market interest rates. The results of this operation will be posted on the public website of the Federal Reserve Bank of New York together with the results of other temporary open market operations.
- Britain’s Deepening Confusion
Britain’s Deepening ConfusionRobert SkidelskyProject Syndicate | Monday, June 19, 2017LONDON – “Enough is enough,” proclaimed British Prime Minister Theresa May after the terrorist attack on London Bridge. Whether it is “enough immigrants” or “enough austerity,” Britain’s voters certainly have had enough of a lot. Last year’s Brexit referendum on European Union membership suggested a Leave-Remain divide, with the Brexiteers narrowly ahead. Cutting public spending to balance the budget was based on the wrong theory and has failed in practice. Studies by Harvard University’s George J. Borjas and others suggest that net immigration lowers the wages of competing domestic labor.
- Robert Skidelsky
Germany’s HourRobert SkidelskyProject Syndicate | Monday, September 18, 2017Who runs the European Union? And manufacturing employs 19% of the German workforce, as opposed to 10% in the US and 9% in the UK. The Commission, the European Parliament, European Council, and the European Court of Justice mirror the decentralized structure of Germany itself. The EU rules through its institutions, but the German government rules those institutions. An EU clearing union would be a less visible intrusion on German national interests than a fiscal transfer union would be.
- Inconvenient Truths About Migration
Inconvenient Truths About MigrationRobert SkidelskyProject Syndicate | Wednesday, November 22, 2017Sociology, anthropology, and history have been making large inroads into the debate on immigration. Standard economic theory tells us that net inward migration, like free trade, benefits the native population only after a lag. The increase in profits leads to more investment, which will increase demand for labor, thereby reversing the initial fall in wages. For Goodhart, the taproot of liberals’ hostility to migration controls is their individualist view of society. Economic liberals view national frontiers as irrational obstacles to the global integration of markets.
- Speech on the Budget
Speech on the BudgetRobert SkidelskyHansard | Monday, December 04, 20177.47 pmLord Skidelsky (CB)My Lords, I will concentrate, as is my wont, on the macroeconomic implications of the Budget. I agree with the noble Lord, Lord Maude, that a Government should not be exempt from the efficiency expected of the private sector. In other words, total investment has more or less recovered its pre-crash level, but public investment still remains below it. Instead of using public investment to offset the fall in private investment, the Government pointed public investment in exactly the same direction. But why is the Chancellor only now “laying the foundations”, as he puts it in his Budget speech, of the dynamic economy of his dreams?
- Resurrecting Creditor Adjustment
Surplus countries would not be prevented from spending their money freely, but they would not be permitted to hoard it. The US Congress urged the IMF to invoke the scarce-currency clause against “recalcitrant” surplus countries, but its efforts were in vain. As the Princeton University historian Harold James has pointed out, the tables had turned: the US had taken up Keynes’s arguments, but creditor European countries, along with Japan, successfully resisted them. This would largely affect China, Japan, Germany, and Mexico, which contributed $347 billion, $69 billion, $65 billion, and $64 billion, respectively, to the US’s $737 billion trade deficit in 2016. And the Fund would have its own scarce-currency clause, allowing for member states to discriminate against imports from creditor countries.
- Evolving Consumer Behavior
People went from borrowing hundreds of billions of dollars per year and increasing their mortgage debt, to paying back hundreds of billions dollars and reducing their mortgage debt. The previous behavior of using housing debt to finance other kinds of consumption seems to have completely disappeared. So, why has household behavior with respect to housing debt apparently changed so much? The pace of cash-out refinancing has indeed been very low even as housing equity has risen, consistent with this hypothesis. Interestingly, these forms of housing debt have been paid down even more aggressively than first mortgages.
- Basic Incomes
The publication in the early fall of a report by the French Senate on basic incomes, which proposes experimenting with different kinds of basic incomes with local governments on a voluntary basis, has contributed to the idea’s rebirth in public debate. Since it proposed “to clarify and offer expert advice on various proposals and experiments relating to basic incomes” in January 2016, the National Digital Council (Conseil national du numérique) has set the tone for a year in which basic incomes have been a recurring theme. The Quest for a “Social Democratic” Basic IncomeThe terms used to refer to this idea are striking in their number and diversity: “basic income,” “basic income,” “living income,” and even “basic allowance.” The idea encompassed by these terms builds on thinking from the often distant past, from Thomas More to Thomas Paine and, more recently, Friedrich Hayek and Milton Friedman. In this essay, we will use the terms “basic income” and “basic income” interchangeably, as the principles of these two projects are almost identical: the idea is to pay each individual the same income, unconditionally (i.e., for nothing in return) and with no restrictions on resources. They can, alternatively, choose to exclude specific circumstances from the basic income’s parameters, which would open the door to additional rights.
- Working or Looting?
In his latest book, Political Order and Inequality, Carles Boix revisits the history of humanity, from the Neolithic agricultural revolution to the modern industrial revolution. The author measures this effect, and checks that it is indeed correlated with formal institutions: this supports the claim that economic sophistication favors the emergence of formal institutions. If they invest enough in defense, they may discourage invasion and looting, and enforce order in a new Republican regime. How to disentangle the effect of war technology on political order and on economic inequality from concomitant innovations in the technology of production? Political Order and Inequality mobilizes many narratives, several pieces of cross-sectional evidence on inequality from the Neolithic to modern times.
- The New Public Management
 Not surprisingly, the precise methods adopted to achieve this differed between countries but there were some common threads: a focus on better management and more effective financial control through the application of management techniques drawn from the private sector rather than traditional bureaucratic public administration; establishing an institutional distinction between strategic management at the centre and day-to-day management of service delivery at the front-end (“steering not rowing”); use of new technology to “join-up” government functions and improve the quality of the services it delivered; improved public accountability of government officials and their ministerial masters; and better communication by government with citizens. The Rise of New Public ManagementAccompanying this revolution in public administration came a new academic growth industry, the so-called “New Public Management” (NPM), which emerged in the 1980s. This sought to explain, critique, and often advocate a new approach to government which emphasised management rather than administration. Its subsequent output has been enormous (Hood and Dixon cite over 84,000 hits for a “new public management” search in Google Scholar – though when I tried it I got 200,000 results). Hood and Dixon’s focus is on the United Kingdom, a country that was in the vanguard of the NPM revolution.
- Economizing on Scientific Debate
A Game of OppositionThis critique of critique adopts the strategy of the counter-example: It purports to disqualify the critics of economic science by highlighting in each case a finding of economic science that is endowed with a scientific authority presented as indisputable. The accusation of science skepticism is serious and should not be formulated lightly. Those who overlook this or that economics article regarded as important by the authors are accused of economic skepticism. To ignore scientific works is certainly regrettable, but it is the most common aspect of scientific life. Yet, this mode of expression serves a function: It is that which best allows for the rational evaluation of arguments in a scientific debate.
- Waiting for Europe
A New Assembly to Democratize the Euro AreaThe T-DEM would be a treaty signed only between members of the euro area.  In an often stunningly mediocre political debate about Europe, this contribution seems far more reasonable than the demagogic proposals put forward by certain candidates for the last presidential election. Moreover, the widely shared perception of German economic success in Europe raises doubts as to the possibility that France might secure a 70% majority of the euro area states. Above all, addressing the European democratic deficit presupposes an effort in France itself, and not just in Brussels. In 2014, the European election gave rise to a confrontation between political projects embodied in flesh-and-blood candidates common to all Europe.
- Consumers’ Inflation Expectations Rebound
PRESS RELEASEConsumers’ Inflation Expectations ReboundNEW YORK—Results from the February 2016 Survey of Consumer Expectations (SCE) suggest a rebound in expectations about inflation, and growth in home prices, earnings, income and spending. Additional labor expectations are mixed as the mean perceived probability of finding a job and the mean perceived probability of losing a job both declined. Median inflation expectations at both horizons, however, remain at the low end of the range observed over the past two and a half years. Expectations for changes in the prices of medical care, college education, and rent also rose slightly, while food price expectations remained stable. About the Survey of Consumer ExpectationsThe SCE contains information about how consumers expect overall inflation and prices for food, gas, housing and education to behave.
- Consumers’ Inflation Expectations Dip
PRESS RELEASEConsumers’ Inflation Expectations DipNEW YORK—The November 2015 Survey of Consumer Expectations (SCE) recorded the lowest inflation expectations (both short and medium term) since the inception of the survey in June 2013. Additional results from November 2015 survey include:InflationMedian inflation expectations at the one and three year horizons declined by 0.3 and 0.1 percentage points to 2.6% and 2.7%, respectively. The two measures of inflation expectations reached their lowest levels since the inception of the survey in June 2013. This is also the largest one-month drop in short-term inflation expectations recorded in the SCE. The decline in inflation expectations at the one-year horizon seems driven primarily by respondents with lower education and lower numeracy.
- Janet Yellen gave the Federal Reserve a much-needed reality check
In 2014, Janet Yellen became the first woman to head up one of the world’s most powerful economic institutions, the US Federal Reserve. With quiet confidence, she made it clear that monetary policy ultimately is about people, something that often gets lost amid abstract arguments about interest rates and inflation. “My mother and father were pretty traumatized by the Depression,” Yellen said in an interview with Berkeley’s Haas business school. “We do not intend to take the punch bowl away just as the party is getting going”Yellen’s colleagues believed that after the global financial crisis, unemployment might be permanently higher. But after 13 years as a central banker, she hasn’t let the technicalities of models or the workaday language of monetary policy distract from what defines economic progress.
- Gold makes a U-turn after hitting weekly lows
XAU/USD bounces from weekly lowsDollar fails to hold onto post Fed gainsGold prices quickly recovered post-Fed losses and climbed to fresh daily highs in the last minutes. After bottoming out at a 1-week low of $1,332 an ounce as knee-jerk reaction to FOMC statement, spot made a U-turn and rose quickly to the $1,347 zone, striking fresh daily highs. Fed leaves rates unchanged, hints at more hikesAs expected the FOMC voted for keeping the target range for the federal funds rate at 1-1/4 to 1‑1/2 percent. The central bank expects inflation to move up this year and to stabilize around the 2% objective over the medium term. “The Committee expects that economic conditions will evolve in a manner that will warrant further gradual increases in the federal funds rate,” the statement reads.
- Treasuries Close Roughly Flat Following Choppy Trading Session
(RTTNews) - Treasuries showed a lack of direction over the course of the trading session on Wednesday before ending the day roughly flat. Bond prices spent the trading day bouncing back and forth across the unchanged line. The roughly flat close by treasuries came after the Federal Reserve announced its widely expected decision to leave interest rates unchanged. The Fed's accompanying statement was seen as slightly more hawkish, reinforcing expectations the central bank will raise rates at its next meeting in March. Trading on Thursday may be impacted by reaction to reports on weekly jobless claims, labor productivity, manufacturing activity and construction spending.
- Alan Greenspan says there are bubbles in both stocks and bonds
Alan Greenspan gave a stark warning about the financial markets Wednesday. We have a stock market bubble and we have a bond market bubble," Greenspan said in an interview on Bloomberg Television. "I think [at] the end of the day the bond market bubble will eventually be the critical issue." Greenspan is widely known for the "irrational exuberance" speech he gave at the American Enterprise Institute in 1996. The address warned about asset price levels, but came well before the stock market topped out in 2000.
- Exclusive - 5-Star leader says could back broad Italy government: source
The leader of Italy's 5-Star Movement told international investors on Wednesday that he would be willing to govern with mainstream rivals if a March 4 election produces no clear winner, a source told Reuters. ROME: The leader of Italy's 5-Star Movement told international investors on Wednesday that he would be willing to govern with mainstream rivals if a March 4 election produces no clear winner, a source told Reuters. A 5-Star spokesman said he had no immediate comment on the Reuters' story. 5-Star currently has around 28 percent of voting support, which would not give it nearly enough seats to govern alone. "I think he made the right noises and made the right moves, and at the end of the meetings several investors told him he should come more often," the source said.
- Yellen era ends with Fed set for March rate rise
Janet Yellen kept the Federal Reserve on course for a further interest rate rise in March in her final meeting as chairwoman of the central bank, with the inflation outlook strengthening and America’s jobs market continuing to heat up. Expectations for inflation in financial markets have risen in recent months, even if they remain low, the central bank said. Traders widely expect the next rate increase to be announced at the Fed’s next meeting following three rises in 2017. The yield on the benchmark 10-year US Treasury note was up 2.1 basis points at 2.747 per cent, continuing its recent trajectory higher. The Fed is in the middle of a series of changes at the top of the organisation that will create added uncertainty over the path of policy.
- As coal prices rise, power cos feel the heat with higher cost pressure
Global coal prices have been on a steady rise in the last few months, increasing cost pressure for thermal in the country. Adani Power, Essar Power, and JSW Energy are some of the which run power generation capacities on imported coal. For like Adani Power and Tata Power, the Mundra power units which run on imported coal may end up being a further drag on its financials. in India are also grappling with a coal shortage from Coal India, which could force to increase reliance on imported coal. However, we do not foresee a significant surge in demand for seaborne cargoes given the current high coal prices.
- State of the Union Roundup on Trade Policy
Last night’s State of the Union address by President Trump was curiously light on the topic of trade policy despite the fact that it was continually brought up during his campaign and throughout 2017. Though the address was a more reserved take on trade than the president’s past speeches, that doesn’t mean trade policy is now a safe space. These practices by the Chinese are estimated to cost the United States billions of dollars each year. The United States is seeking to enter into new trade agreements with countries that commit to fair and reciprocal trade. Overall, while the tone of both the president’s address and the content of the factsheet on trade appear subdued, we should remain vigilant about possible trade actions and continue to make the case for more trade liberalization.
- Fed stands pat on rates, clears way for March hike
Fed fund futures reckon there’s a roughly 75% chance the Fed will raise rates again in March, according to CME Group. Like its December statement, the Fed reiterated that the near-term risks to its economic outlook "appear roughly balanced." But in a recent interview, San Francisco Fed President John Williams said the economy is on a more solid footing and the risks of a downturn have diminished. Most Fed officials, in turn, favor a gradual climb in rates to head off an eventual run-up in inflation. The Fed’s policymaking committee is composed of the seven governors and 10 regional Fed bank presidents.
- Text of the Fed's statement after its meeting Wednesday
On a 12-month basis, both overall inflation and inflation for items other than food and energy have continued to run below 2 per cent. The stance of monetary policy remains accommodative, thereby supporting strong labour market conditions and a sustained return to 2 per cent inflation. This assessment will take into account a wide range of information, including measures of labour market conditions, indicators of inflation pressures and inflation expectations, and readings on financial and international developments. The Committee will carefully monitor actual and expected inflation developments relative to its symmetric inflation goal. However, the actual path of the federal funds rate will depend on the economic outlook as informed by incoming data.
- Trump is replacing Janet Yellen, the woman responsible for the economy he’s so proud of
He should really be thanking Federal Reserve Chair Janet Yellen. Trump inherited an economy and a stock market that Yellen played a major role in helping shape and revive. But Trump’s victory lap on Tuesday night was particularly glaring because he also just refused to reappoint Yellen — the woman who arguably deserves the most credit for the Trump economy so far. A quick refresher on Yellen and the FedThe Federal Reserve is the central bank of the United States. Powell, the next Fed chair, is thought to be dovish as well and is expected to continue many of Yellen’s policies.
- Illinois governor pitches bipartisanship to aid state finances
An impasse between Rauner and Democrats who control the legislature left Illinois without complete budgets for an unprecedented two straight fiscal years. There was little sign that Democrats were willing to work with Rauner, who is seeking re-election in November, on a budget or other issues. Democratic House Speaker Michael Madigan, who is a frequent target of attacks by Rauner, suggested the governor should remain on the sidelines this session. “The reason why people couldn’t keep a straight face when he said he was going to introduce a balanced budget is because (Rauner) has never been even close to a balanced budget,” Cullerton said. Illinois also has a lingering $8.5 billion unpaid bill backlog that had ballooned to more than $16 billion during the impasse.
- FOMC hints at more rate hikes - NBF
According to National Bank of Canada’s analysts, Krishen Rangasamy and Paul-André Pinsonnault, the US central bank sounded a bit more hawkish in today’s statement. The Fed kept rates unchanged as expected. Key Quotes:“The last FOMC meeting presided by Janet Yellen provided no major surprises, as the Fed opted to leave the fed funds rate unchanged at 1.25-1.50%. There were, however, subtle but significant changes in the statement which altogether sounded a bit more hawkish. The statement does nothing to change our view that the FOMC will deliver three interest rate hikes this year.”
- Auto Loans Are Still Affordable Even Though Household Debt Is Up, Economists Say
Household debt is rising but consumers can afford it, and specifically, there’s “room to run” in auto finance, analysts said. “This should also encourage some more lending on the part of our lenders,” he said in a webinar hosted by the Equifax credit bureau last week. Some Wall Street analysts have expressed concern about a potential “bubble” in auto finance, since auto loans to customers with subprime credit had been on the rise, relative to extremely low levels following the last recession. However, there’s not much evidence for a bubble in auto finance, said Amy Crews Cutts, Equifax chief economist. “I feel pretty confidently there is considerable room to run in the auto market,” she said in the webinar.
- Turkey’s Unlikely Energy Allies
In addition, it is central to the TurkStream pipeline project that will carry Russian gas through Turkey to southern European destinations. As the first foreign leader to congratulate Erdogan for crushing the coup, Russian President Vladimir Putin won the Turkish leader’s heartfelt gratitude. In mid-December Putin and Erdogan suggested the Kazakh capital of Astana as a venue for conducting peace talks for Syria. Two months later he defied Washington’s 1996 Iran-Libya Sanctions Act by signing a $23 billion gas deal during his visit to Tehran. Iran shares the gigantic Pars gas field with Qatar, and Turkey’s large construction companies help build stadiums for the 2022 FIFA World Cup tournaments.
- What is Awaiting Gibraltar Amid Brexit?
Sputnik: Can Gibraltar actually change their Brexit deal so that it differs from the UK and implement it selectively? READ MORE: Brexit Leak: 'UK Treasury Has Lost Credibility' in Making Forecasts — AcademicSputnik: What impact would a no deal or bad deal Brexit have on Gibraltar? Sputnik: Could Gibraltar join Spain or become independent following Brexit? Put simply, should Britain ever relinquish sovereignty of Gibraltar, Spain would have first refusal and there’s no way a Spanish government would not accept that. I think that Fabian Picardo is clearly creating some space for what he regards as an independent deal after Brexit with the European Union if necessary.
- Fed keeps interest rates steady, sees inflation rising this year
Powell, a Fed governor who has worked closely with Yellen in recent years, was nominated by President Donald Trump and confirmed by the U.S. Senate. U.S. stocks slightly extended gains immediately after the release of the Fed statement. Short-term interest rate futures showed traders were continuing to bet the Fed would raise rates three times in 2018, starting at its next meeting in March. UPGRADED INFLATION VIEWThe Fed raised rates three times last year and currently projects three more increases this year even as it continues to trim its balance sheet on a largely pre-set schedule. In its statement, the Fed noted that market-based measures of inflation have increased in recent months despite remaining low.
- Traders are still expecting two to three rate hikes this year after Fed statement
The Federal Reserve likely remains on track to raise interest rates at least two times this year. Fed funds futures, contracts that measure the market's bets on where the central bank's benchmark rate will be, rose slightly but did not indicate a significant change in expectations after the release of the Fed statement Wednesday. Markets were pricing in a more than 90 percent chance of an interest rate rise in March, and another 1.75 hikes by the end of the year, according to Bank of America and Jefferies. "Still somewhere between two and three [rate hikes this year] is what people are expecting," said Ian Winer, head of equities at Wedbush. The U.S. 10-year Treasury yield briefly rose to around 2.75 percent following the release of the Fed statement and remained around its highest in nearly eight years.
- With No Accomplishments To Report, Trump All But Skips Trade In SOTU
Last week, at the World Economic Forum meeting in Davos, Switzerland, President Trump suggested he was open to rejoining the Trans-Pacific Partnership. “From now on,” he said, “we expect trading relationships to be fair and to be reciprocal.”The Merriam-Webster Dictionary defines “reciprocal as “mutually corresponding.” Apparently, Trump wants every dollar of imports to be matched by a dollar of exports. Tinkering around with NAFTA and the Korea-US Free Trade Agreement, as his administration is doing, will have no appreciable effect on the U.S. trade deficits with Mexico and South Korea. Trump and Sanders were dead wrong about the TPP and about trade in general, but at least they believed what they said. “We will work to fix bad trade deals and negotiate new ones,” Trump said last night.
- Chinese RMB Strengthening To 6.10 Against U.S. Dollar By Year End, SEB Forecasts
Nordic corporate bank SEB has revised its forecast lower on the Chinese Yuan (CNY) against the U.S dollar to 6.10 by the end of this year, an appreciation of 3.174% over their previous projection of 6.30. By the end of 2019 the bank’s analysts predict the Greenback at CNY5.80 - indicating an almost 5% strengthening on an earlier forecast (6.10). And, if one looks back to when the Chinese currency moved the most - in 2016 - a decline of 6.8% was witnessed. A strong Chinese Yuan? SEB’s Yokota commenting in relation to the implications of strong Chinese currency indicated it was threefold.
- Italian Election: It's Incredibly Uncertain What the Outcome Will Be - Professor
Eurosceptic politician Matteo Salvini is among the favourites to win the upcoming Italian elections, as it seems that many within the country are frustrated with Brussel’s policies. Sputnik spoke with James Newell, Professor of Politics at the University of Salford, to hear his views on whether Italy could leave the bloc. Sputnik: Is Matteo Salvini likely to be elected? James Newell: Salvini could be elected. It's incredibly uncertain what the outcome will be, I don't think there's anybody who'd be willing to place any significant bet on the outcome.
- Trump Is Making 2018 Much Harder for Republicans
It also represents their best cause for optimism that voters’ assessments of Trump’s job performance will improve through 2018, lifting their own chances with it. Related Story The Voters Abandoning Donald Trump But growth still may not be a silver bullet for the party. One reason is that polls show that roughly as many Americans credit former President Barack Obama as Trump for the good economy. Now, Greenberg thinks Republicans are on the verge of making the same mistake, particularly with blue-collar white women who remain economically strained. This dynamic could hurt Republicans in November by limiting Trump’s capacity to reach swing voters generally content with the economy.
- Greenspan Warns: "We Have A Stock Market Bubble"
US equity markets stumbled notably as former Fed Chair Alan Greenspan told Bloomberg TV that "we have a stock market bubble." Greenspan stuck to his usual discussion topics of low productivity and fiscal doomsday inevitability..."Productivity has been dead in the water for the past 10 years... Something we have heard before (in 2016) when Greenspan warned"Entitlements are crowding out savings, and hence capital investment. Capital investment is the critical issue in productivity growth, and productivity growth in turn is the crucial issue in economic growth. We have a stock market bubble and a bond market bubble.
- Why Trump Wants Private Financing for Public Projects: QuickTake
Landmark American public works, paid for the traditional American way: the government borrows money, usually before the first shovel goes into the ground. There, consortiums of private companies raise money and design, build and operate projects for terms that generally run 30 years. In return, governments make yearly payments or dedicate a revenue stream, such as toll receipts, for the life of the contract. At their best, these public-private partnerships, or P3s, as they’re known, make infrastructure projects faster and cheaper. On a smaller scale, Pennsylvania wrapped 558 bridge repair projects into a $1.1 billion partnership.
- Federal Reserve keeps interest rate the same as Janet Yellen passes baton to Jerome H. Powell
Janet L. Yellen, chair of the Federal Reserve, is stepping down as the central bank's leader. (Andrew Harrer/Bloomberg)The Federal Reserve voted unanimously Wednesday to keep its key interest rate unchanged at 1.25 to 1.5 percent. The move was widely expected as the Fed didn’t want to rile markets this week as Fed Chair Janet L. Yellen steps down and Jerome H. Powell, President Trump’s pick, takes over the reins of the central bank. [Who is Jerome Powell, Trump's nominee for Fed chair?] She has presided over one of the largest drops in unemployment and greatest rises in stocks of any Fed chair.
- Cartel Sends Yellen Out With Some Good Old Fashioned Gold & Silver Bashin’
Gold & silver smashed lower after today’s FOMC meeting statement hit the tape. Basically, the cartel needs to see how much paper gold & silver is whizzing around the COMEX, sitting back for a moment and taking it all in, before deciding to pounce. On a 12-month basis, both overall inflation and inflation for items other than food and energy have continued to run below 2 percent. The stance of monetary policy remains accommodative, thereby supporting strong labor market conditions and a sustained return to 2 percent inflation. However, the actual path of the federal funds rate will depend on the economic outlook as informed by incoming data.
- Treasury yields tick higher as the Fed says it sees inflation picking up
source Scott Olson/Getty ImagesThe Federal Open Market Committee held its key interest rate in a range between 1.25% and 1.50%. The central bank sees inflation hitting its 2% target over the medium term. The 10-year yield briefly ticked above 2.75% for the first time since April 2014. That selling has caught the interest of many traders, who believe further upward pressure on yields could eventually weigh on the stock market. Wednesday’s selling has caused slight flattening along the yield curve, with the 2-10-year spread trading near 59 bps.
- Fed interest rate unchanged in Yellen’s swan song
The Federal Reserve has left its benchmark interest rate unchanged but signaled that it expects to resume raising rates gradually to reflect a healthy job market and economy. At Janet Yellen’s final meeting as chair Wednesday, the Fed kept its key short-term rate in a still-low range of 1.25 percent to 1.5 percent. The Fed raised its key rate three times in 2017, and most economists expect the Powell-led Fed to do so at least three additional times this year beginning in March. The Fed has modestly raised its benchmark rate five times since December 2015, when it began tightening for the first time since the height of the financial crisis in 2008. When the crisis erupted, the Fed cut its rate to a record low near zero to help rescue the financial system and the economy and then held it there for seven years.
- USD/JPY is mixed on a hawkish hold FOMC outcome, faded from fresh sesison highs
Fed leaves rates unchanged. Fed expects inflation to move up this year. Fed expects higher inflationAs expected, the FOMC left rate son hold. The Fed introduced only minor changes to the statement and mentioned that the economy warrants further gradual increases in rates. The statement leaves risk open for a March hike while the central bank expects inflation to move higher this year and to stabilize around the 2% objective over the medium term.
- Fed holds rate as Yellen exits, but signals with one word that March hike coming
Fed officials are hoping to keep a tight labor market from overheating without raising borrowing costs so fast that it would stifle the economy. The vote by U.S. central bankers to keep the benchmark overnight lending rate in a 1.25 per cent to 1.5 per cent target range was unanimous. Fed officials also voted to continue with their program to reduce the central bank’s balance sheet, which began in October. Fed policy makers will update their economic projections in March, when Powell is also expected to hold his first press briefing as chairman. The Fed statement didn’t contain any reference to the tax legislation.
- Coal Mining Jobs Grew in Trump's First Year in Office—But Here's Why That Trend May Not Continue
Coal mining jobs have risen in the past year, an anomaly after years of decline. Part of Trump’s plan to reinvigorate the coal industry also seems to include putting pressure on the growing solar industry. By his estimates, renewables make up perhaps 7% of the power grid, with natural gas and coal making up the remaining majority. Notably, while Trump has been outwardly friendly to the coal industry, he’s also taken a similar stance with the natural gas industry. “There isn’t much you can do to overshadow the natural gas prices,” said Peter Marstars, research analyst of the Rhodium Group.
- US Fed keeps rates unchanged, says inflation will 'move up' this year
While price measures have remained below the central bank's two per cent target, the Fed said, "Inflation on a 12-month basis is expected to move up this year." That change of language will fuel expectations that the Fed could raise the key lending rate more than the expected three times this year. In December, the committee said inflation was "expected to remain somewhat below two percent in the near term." The debate will be over how many more steps the central bank will take this year, especially if the tax cuts approved in December stimulate the economy. In the last meeting of Fed Chair Janet Yellen's tenure, the policy-setting Federal Open Market Committee saw the normal annual rotation as four new regional Fed bank presidents become voting members.
- The 4 foreign policy issues Trump ignored in the State of the Union
President Donald Trump’s 2018 State of the Union address focused mostly on domestic issues, leaving comparatively little time for matters of foreign policy. When he did talk about the world, Trump mostly covered familiar ground. It’s somewhat understandable that Trump didn’t want to highlight this — but it’s hard to comprehend why he spent so little time on Afghanistan. That’s more than double the number of US airstrikes in Somalia for all of 2016, and a clear increase in America’s military involvement there. Trump didn’t say what America stands for in the worldMost presidents use the State of the Union to outline what they think the US’s role in the world should be.
- Time for States to Invest in Schools
Capital spending — to, for example, build new schools, renovate and expand facilities, and equip schools with more modern technologies — also fell sharply in most states. With President Trump reportedly leaving capital funding for schools out of his infrastructure plan, it’s time for states to reverse this trend and reinvest in school buildings and equipment upgrades. Nationally, elementary and secondary schools cut capital spending by $23 billion, or 31 percent, between fiscal years 2008 and 2015 (the latest year for which we have data), after adjusting for inflation. Thirty-seven states cut capital spending in inflation-adjusted terms over this period, in many cases drastically. Six states cut capital spending by more than half.
- USD/CAD Canadian Dollar Higher After Strong GDP and Persistent USD Weakness - MarketPulse
The Canadian dollar is higher on Wednesday after the economy accelerated its growth in November. Canadian GDP is posted monthly and showed a gain of 0.4 percent in November. The Canadian economy started 2017 with a bang which led the Bank of Canada (BoC) to raise rates twice before a slowdown in the third quarter. The Canadian currency has enjoyed a strong start to 2018 and is more than 2 percent higher than the USD year to date. The fate of NAFTA has kept the Canadian dollar under pressure as the end of the original timeline fast approaches.
- Oregon Office of Economic Analysis
While this is certainly good news, the question our office is being asked more and more is about wage growth. What follows are a few of the standard charts our office uses to think about wages in Oregon. It measures wages, and other wage-related items like bonuses in aggregate, or in total across all individuals working in Oregon. Below you can see how each of the most commonly used wage measures in Oregon has evolved in the past decade. However here too you can see we have seen wage gains in Oregon, and wage gains that have been on par with last decade, but below the 1990s gains.
- Actually Senator Warren, Outsourcing Is Great
Although it is perhaps understandable when casual observers are seduced by the notion that the outsourcing of jobs to overseas locales is a sign of weakness, more should be expected of a sitting United States senator. In fact, both theory and experience teach us that foreign outsourcing helps promote economic vitality in a variety of ways. This is a particular boon to the working families Sen. Warren repeatedly invokes in her op-ed, who tend to spend a greater percentage of their income on imported non-durable items such as clothing. This, in turn, leads to increased demand for higher-end goods produced in the United States which range from Hollywood movies to financial products to Boeing aircraft. Representing Massachusetts, Sen. Warren should be well-versed in the benefits of foreign outsourcing.
- Fed Holds Rates Steady, Sees ‘Solid’ Economic Gains
Fed officials are hoping to keep rates low enough to encourage inflation to firm up a bit without surging out of control, amid a tight labor market and solid economic growth. Fed officials would like to see the jobless rate remain steady because they expect it has already fallen around a half-percentage point below the level they regard as sustainable over the long run. Also important to Fed officials, investors’ expectations of future inflation rose in January. Fed officials have raised short-term interest rates five times since late 2015, but financial conditions remain buoyant. Yields on 10-year Treasury notes have climbed in recent days to touch their highest levels in nearly four years, but remain low by historical standards.
- Fed holds interest rates steady, sees inflation rising this year
The Fed said on Wednesday its rate-setting committee had unanimously selected Powell to succeed Yellen, effective Feb. 3. Powell, a Fed governor who has worked closely with Yellen in recent years, was nominated by President Donald Trump and confirmed by the U.S. Senate. In its policy statement on Wednesday, the Fed repeated that it expected that “further gradual” rate hikes will be warranted. The Fed raised rates three times last year and sees three more hikes in 2018 even as it continues to trim its balance sheet on a largely pre-set schedule. In its statement, the Fed upgraded its description of the inflation outlook, noting that market-based measures of inflation have increased in recent months despite remaining low.
- Fed Hints At March Rate Hike
(RTTNews) - As expected, the Federal Reserve on Wednesday voted to leave its benchmark interest rate unchanged, in a range between 1.25 percent and 1.5 percent. The accompanying statement hinted that the Fed will increase the benchmark rate at its next meeting, in late March, thanks to an improving economy and signs of inflation. "Gains in employment, household spending, and business fixed investment have been solid, and the unemployment rate has stayed low." The Fed said it expects inflation to "move up" in 2018, setting the table for one of three rate hikes projected by year's end. "The new Fed chair, Jerome Powell, is well placed to build on and successfully extend this achievement."
- Fed leaves rates unchanged but gives more aggressive inflation expectations
Rather than looking for a move on rates, market participants were watching the January Fed meeting for clues on how the central bank might proceed for the rest of the year. However, the market recently has been entertaining thoughts that the Fed could add another increase, likely at the final meeting of 2018. Government bond yields have been moving up considerably in anticipation of inflation pressures and a more active Fed. The observation on inflation differed from the December statement, which noted that core and headline measurements "have declined" and were "running below 2 percent." Other parts of the Fed statement were little changed from the December meeting.
- It's All About Growth For Emerging Markets ETFs (IEMG)
The premise is simple: in order for emerging markets stocks and related exchange traded funds to build on the impressive returns delivered in 2017, economic growth is essential. With the MSCI Emerging Markets Index up about 8 percent this year and several emerging markets ETFs adding assets at feverish paces, it appears investors are comfortable betting on economic growth in the developing world. Improving economic fundamentals are essential to the bull thesis for emerging markets stocks and ETFs, as one of the previous catalysts for the asset class — valuation — is evaporating. “They are trading close to their historical norm, both on an absolute basis and relative to developed markets; the MSCI Emerging Market Index is currently trading at about a 25-percent discount to developed markets, in line with the long-term and post-crisis average.”Packing On AssetsAmong other emerging markets ETFs, the iShares Core MSCI Emerging Markets ETF (NYSE: IEMG) remains a favorite with investors. IEMG, which is barely more than 5 years old and already has almost $50 billion in assets, tracks the MSCI Emerging Markets Investable Market Index.
- Without climate change context, Trump's State of the Union rhetoric about disasters rings hollow
It was enough devastation to get attention of the global business and political elite, who in Davos, Switzerland, ranked climate change and extreme weather events as the greatest threat to global security and prosperity. It wasn't enough carnage, though, to get a climate denying president to make basic connections between the disasters befalling his nation, and human-caused climate change. Trump rightfully cited examples of courageous rescuers from Hurricane Harvey in Texas, and the deadly California wildfire season. Hurricane Harvey rainfall annual exceedance probabilities. Take Hurricane Harvey, for example, a storm so full of superlatives that meteorologists are still trying to wrap their heads around it.
- Theresa May's in China - all smiles but no deal yet on Belt and Road
Beijing: Theresa May said Britain was a “natural partner” for China’s ambitious Belt and Road global infrastructure program, but did not formally sign up, as the British prime minister arrived in Beijing on her first state visit. SHAREShare on Facebook SHAREShare on Twitter TWEETLink Theresa May, UK prime minister, left, and Li Keqiang, China's premier. Speaking at a press conference in Beijing, Mrs May said they had agreed to “intensify the golden era of UK Chinese relations. Former British prime minister David Cameron is leading fundraising for a private British and Chinese investment fund focussed on the Belt and Road Initiative. “The two-way opening up between China and the UK will go even further and China will open even wider to the UK,” he said.
- Israel vows to retain West Bank control in any peace deal
German Foreign Minister Sigmar Gabriel, left, meets with the Palestinian President Mahmoud Abbas, in the West Bank Town of Ramallah, Wednesday, Jan. 31, 2018. He said Israel’s “first condition,” would be to control security west of the Jordan River, an area that includes all of the West Bank, the heartland of the Palestinians’ hoped-for state. The Palestinians claim all of the West Bank, east Jerusalem and the Gaza Strip, areas captured by Israel in 1967, for their state. Israel withdrew from Gaza in 2005, but it has settled over 600,000 people in the West Bank and east Jerusalem, making it increasingly difficult to partition the land. Without a Palestinian state, they say that the number of Jews and Arabs under Israeli control will be roughly equal.
- Equities and bonds: a tale of two markets
The bond market has been more sensitive to these macro risks in recent weeks while the equity market is steaming ahead. Illustration: Jayachandran/MintThe equity market has seen its best month before a Union budget in more than a decade. The equity market seems to be more focused right now on the economic revival theme. The bond market has been more sensitive to these macro risks in recent weeks while the equity market is steaming ahead. Yet, it is time the euphoria in the equity market is balanced with a sense of sober reality.
- Why Democrats had 5 responses to Trump’s State of the Union
After President Donald Trump’s State of the Union address on Tuesday night, there wasn’t just one Democratic response. “That is the American promise.”Progressive icon Bernie Sanders began his own State of the Union response as Kennedy finished, which was live-streamed on YouTube, Facebook, and Twitter. This is the second year in a row that Sanders has sidestepped the official Democratic response and delivered his own State of the Union rebuttal. Until Democrats put forth candidates for 2020, they don’t need to worry so much about settling on a central party figure. At least in 2018, Trump may be the biggest unifier that they have.
- 'Would you like another go?' Andrew Neil ROASTS Labour Brexit minister on EU divorce chaos
Andrew Neil put Labour MP Jenny Chapman on the spot when she was confronted with her own statement regarding Labour’s stance on Brexit. Andrew Neil read her statement back to her, brilliantly showing how the Labour MP’s argument presented a conflicting position on Britain's EU divorce. "‘Our constituents have said very clearly in voting to leave that there are aspects of membership that they’re not content with that’s why it’s a negotiation.’ “This was you clarifying Labour’s position, would you like to have another go?”This was you clarifying Labour’s position, would you like to have another go? Andrew NeilIn a failed attempt to reply, Ms Chapman said: “I think that did the job very well. Speaking on ITV’s Peston on Sunday, Labour Party leader Jeremy Corbyn ruled out staying in the single market when Britain leaves the European Union, but called for a “special relationship”.
- Fed Expected to Leave Rates Unchanged in Last Yellen Meeting - MarketPulse
The Federal Reserve may sound a bit more hawkish as Fed Chair Janet Yellen’s tenure comes to an end. Yellen was presiding over her final meeting, and the Fed’s post-meeting statement will be released at 2 p.m. Wednesday afternoon. They do want to at least confirm the market’s expectations for a March rate hike,” said Tom Simons, chief money market economist at Jefferies. Yellen leaves the Federal Reserve after four years as chair, and in that time she began the slow process toward normalizing interest rates and shrinking the Fed’s balance sheet. Powell has been a Federal Reserve governor.
- Trump’s China policies are working a treat
Say what you like about Donald Trump’s rhetoric on trade. China response has been to let the yuan roar higher:Of course, China may also be happy to see the yuan rise to push forward its rebalancing. Especially since the last time it tried in 2015, the yuan crashed and threatened to take down the global economy. We are already seeing such in the PMI with new export orders leading the growth fade despite “global synchronised growth”:In commodities it is not all bad news. Maybe fighting back against a currency-pegging, excess saving mercantilist is not so bad for your country.
- ADP Jobs Report Beats Expectations Sets Stage for NFP on Friday - MarketPulse
The new year got off to a strong start for job creation, with businesses adding 234,000 in January, according to a report Wednesday from ADP and Moody’s Analytics. On the goods-producing side, manufacturing added 12,000 jobs while construction saw 9,000 new hires despite the traditionally slow month for the industry. “The job market juggernaut marches on,” Mark Zandi, chief economist at Moody’s Analytics, said in a statement. “Given the strong January job gain, 2018 is on track to be the eighth consecutive year in which the economy creates over 2 million jobs. Economic growth overall has been solid, with the Atlanta Fed projecting the economy to grow 4.2 percent in the first quarter.
- Letter from Trump prompts African leaders to refrain from criticizing him
ADDIS ABABA (Reuters) - African leaders say they have decided to refrain from issuing a resolution to criticize Donald Trump’s alleged reference to their nations as “shithole countries” because the U.S. president sent them a letter expressing respect for the continent. African leaders are “dismayed and shocked by the increasingly consistent trend by the Trump Administration to denigrate of African descent ... thereby promoting racism, xenophobia and bigotry,” it said. But a Jan. 25 letter sent by Trump prompted a change of tack at presidential level. “I want to underscore that the United States deeply respects the people of Africa and my commitment to strong and respectful relationships with African states as sovereign states is firm,” Trump said. “When the United States decided to give us Trump as their president we deal with that president of the United States.
- Canadian GDP Rose 0.4 in November - MarketPulse
The Canadian economy accelerated in November by the most in six months, with activity broad-based across a number of sectors including manufacturing and keeping the Bank of Canada on track to raise interest rates again before long. Gross domestic product rose by 0.4 percent from October’s flat reading, Statistics Canada said on Wednesday, in line with economists’ expectations and the biggest increase since May 2017. While that would be below the 2.5 percent that the Bank of Canada anticipates, it would still cap a strong year for the Canadian economy. The expanding economy is expected to prompt the central bank to raise interest rates again in the coming months, with markets fully pricing in another hike by May. Chandler expects the central bank to hold rates steady at its next meeting in March before raising again in April.
- Wall St. Cuts Gains After Fed Sees Rising Inflation
(Reuters) - U.S. stocks gave up earlier gains to trade flat on Wednesday after the Federal Reserve said it sees inflation rising this year, signaling it remains on track to boost interest rates again in March. The Fed kept rates unchanged but, in a statement following its two-day policy meeting, it repeated that it expected that "further gradual" rate hikes will be warranted. "They’re more confident in their expectations of rising inflation,” said Kevin Logan, Chief U.S. The central bank raised rates three times last year and sees three more hikes in 2018 even as it continues to trim its balance sheet on a largely pre-set schedule. Advertisement Continue reading the main story"The Fed’s acknowledgment of the quickening pace of inflation today put three hikes in 2018 into the 'base-case' and perhaps raises the prospects for a fourth,” said Mike Terwilliger, portfolio manager, Resource Credit Income Fund.
- Boeing ends Wall St.'s slide, Fed caution limits gains
“There is some nervousness ahead of the Fed statement,” said Michael Antonelli, managing director of institutional sales trading at Robert W. Baird. “In general, people are a lot more concerned about a hawkish tone from the Fed. FILE PHOTO - Traders work on the floor of the New York Stock Exchange (NYSE) in New York, U.S., January 26, 2018. REUTERS/Brendan McDermidThe Dow had tumbled nearly 540 points over Monday on Tuesday amid a broad market sell-off as U.S. Treasury yields surged. That came as Boeing (BA.N) surged 6.9 percent to record high after the planemaker’s full-year profit forecast easily topped estimates.
- 2018 Could Be A Great Year For Stocks, But Here's What Could Derail The Rally
January was a strong month for stocks, as the S&P 500 and Dow Jones Industrial Average both gained more than 6%. In order for markets to climb further, corporate earnings will have to grow sharply, which they are expected to do. Investors are wise to keep a close eye on the following data points, as they could prove to be the proverbial “canary in the coal mine”:Corporate earnings growth: Analysts are projecting more than 16% earnings growth for first quarter 2018, if that figure comes down significantly, there could be trouble ahead. Inflation: This could pose the greatest risk to the market rally and global growth. If earnings don’t come through or yields rise too quickly, that spread will shrink and be an ominous sign for stocks.
- Justin Trudeau Does Not Believe US will pull out of NAFTA - MarketPulse
Canadian Prime Minister Justin Trudeau said in an interview he does not think U.S. President Donald Trump will pull out of NAFTA, despite differences over how to update the trade pact, the Canadian Broadcasting Corp said on Wednesday. Trudeau’s comments were among the most positive made by any Canadian official since talks started last year to revamp a $1.2 trillion treaty that Trump calls a disaster. “It obviously would be bad if we canceled it, so I don’t think the president is going to be cancelling it,” Trudeau told the CBC in an interview recorded on Tuesday. Trudeau also told the CBC that Canada has multiple contingency plans in the event Washington does announce it plans to withdraw. The Trump administration is demanding big changes to the pact, and this has caused tensions with Canada and Mexico.
- Commentary: How Trump Is Letting Businesses Steal Money From Workers
In his State of the Union Address on Tuesday, President Donald Trump once again touted his administration’s efforts at deregulation. And, far from cutting burdensome or outdated requirements, Trump has been attacking regulations that protect workers’ pay, retirement, and safety in order to pad company profits. Doing so would reveal that deregulation is simply a code word for letting big businesses cut corners at everyone else’s expense. His administration recently proposed a new rule that would allow restaurant owners to steal their workers’ tips as long as they pay them minimum wage. Beyond the attacks on wages, the Trump administration has also been working to eliminate a rule, the fiduciary rule, that protects people’s retirement savings from unscrupulous financial advisors.