Economy

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FILE PHOTO: People pass by the NYSE in the financial district of New York
FILE PHOTO: People pass by the New York Stock Exchange (NYSE) in the financial district in the lower Manhattan borough of New York City, U.S. June 2, 2016. REUTERS/Brendan McDermid/File Photo

May 24, 2019

NEW YORK (Reuters) – J.P. Morgan on Friday more halved its previous estimate on U.S. economic growth in second quarter to 1.00% following data that showed a fall in durable goods orders in April.

The bank now sees it as basically a coin toss for the Federal Reserve to raise or cut interest rates, compared with its previous call for just a rate increase.

“We had previously expected the next move from the Fed would be a hike, albeit at the very end of our forecast horizon in late 2020,” J.P. Morgan economist Michael Feroli wrote in a research note. “We now see the risks of the next move as about evenly distributed between a hike and a cut.”

(Reporting by Richard Leong; Editing by Bill Trott)

Source: OANN

It’s only 9 am in New York but Friday’s session has already featured a frantic flurry of trade-war-related headlines that have – at least in the market’s view – overshadowed Theresa May’s tearful announcement that she will be stepping down as PM.

Beijing repudiated President Trump’s Thursday claim about a ‘speedy’ trade deal, saying there were no plans for a Trump-Xi meeting. US stock futures pared gains on that headline. Also, US firms ratcheted up the pressure on Huawei, with Microsoft joining the contingent of chip and tech companies that is planning to cut ties with Huawei over Washington’s blacklisting.

And now, the South China Morning Post is reporting that China’s largest chipmaker is withdrawing its ADRs from the New York Stock Exchange, and will subsequently trade only in Hong Kong. The company said ‘low trading volumes’ and the ‘cost of maintaining the listing’ motivated its decision.

China’s biggest maker of semiconductors is to withdraw from the New York Stock Exchange as the increasingly ferocious trade war with the US spills over into the technology sector.

Semiconductor Manufacturing International Corp (SMIC) said on Friday evening it has notified NYSE of its intention to apply on June 3 to delist its so-called American depositary receipts from the bourse. In a filing to the Hong Kong stock exchange, where its shares are listed, SMIC cited low trading volumes of its ADRs and the costs of maintaining the listing and complying with reporting requirements and related laws.

The delisting is expected to happen after June 13, and trading of the chip maker’s US securities will shift to the over-the-counter market, the statement said.

The sudden move comes as Washington steps up efforts to cut off its technology from China, with trade negotiations between the world’s two largest economies still deadlocked.

Just a few days ago, Steve Bannon told the SCMP that he would like to see Chinese companies shut out from American capital markets. It appears Beijing is doing him one better.

Meanwhile, a growing number of sell-side strategists now see a protracted trade war as the ‘base-case’ scenario. The latest assessment from Rabobank concluded that it’s extremely unlikely that either side will offer an olive branch in the near future: “That ship has sailed.”

China is battening down the hatches for a “Long March” and doesn’t even want to talk to the US. In fact, Xi and Trump might not even meet at the end of June in Osaka, in which case there is no obvious off-ramp.

Hovering in the background is Steve Bannon’s ‘superhawkishness’. President Trump has already accomplished something incredible: He’s united a disparate group of business leaders and politicians from both parties behind his hard-line approach. This might give him the cover he needs to ignore the market, at least until things start getting really bad.

In the meantime, expect more Chinese companies will demonstrate their ‘independence’ from American markets.

A Canadian court has tried to stop Alex Jones from focusing on a trans child case which has quickly turned into a free speech battle.

Source: InfoWars

Finance Minister Olaf Scholz addresses a news conference to present the budget plans for 2019 and the upcoming years in Berlin
Finance Minister Olaf Scholz addresses a news conference to present the budget plans for 2019 and the upcoming years in Berlin, Germany March 20, 2019. REUTERS/Fabrizio Bensch

May 24, 2019

BERLIN (Reuters) – German Finance Minister Olaf Scholz is ready to press ahead with a financial transaction tax at national level if other countries are not willing to introduce the levy, Der Spiegel reported in its online edition on Friday.

Germany and other European Union states have been trying to agree a financial transaction tax and Scholz said last week he expected progress by the third quarter of 2019 on introducing such a levy in at least nine EU countries.

Should that prove impossible, Spiegel said Scholz was ready to introduce the tax in Germany anyway as he wants to finance a basic pension for low-income workers that his left-leaning Social Democrats (SPD) is pushing.

The SPD is the junior coalition partner in the German government, led by Chancellor Angela Merkel’s conservatives.

“If there is no agreement to be reached on this at international level, then Germany should move forward,” Spiegel quoted an official source close to Scholz as saying. The source did not want to be named.

A Finance Ministry spokeswoman, when asked about the financial transaction tax, earlier told Friday’s regular government news conference in Berlin: “Work is continuing at the European level. Let’s wait and see.”

(Writing by Paul Carrel; Editing by Gareth Jones)

Source: OANN

FILE PHOTO: U.S. President Donald Trump and China's President Xi Jinping meet business leaders at the Great Hall of the People in Beijing
FILE PHOTO: U.S. President Donald Trump and China’s President Xi Jinping meet business leaders at the Great Hall of the People in Beijing, China, November 9, 2017. REUTERS/Damir Sagolj/File Photo

May 24, 2019

By William Schomberg

LONDON (Reuters) – It was a stark warning about the risks ahead for the global economy, even by the forthright standards of the boss of the Organisation for Economic Co-operation and Development.

“The world economy is in a dangerous place,” Angel Gurria said as the OECD announced its latest, lower forecasts for growth on May 21.

The source of his worry: the mounting trade tensions between the United States and China, which could hit the rest of the world much harder than they have to date.

“Let’s avoid complacency at all costs,” Gurria said. “Clearly the biggest threat is through the escalation of trade restriction measures, and this is happening as we speak. This clear and present danger could easily have knock-on effects.”

With much of the world economy still recovering from the after-effects of the global financial crisis a decade ago, U.S. President Donald Trump caused alarm when he raised tariffs on $200 billion worth of goods from China on May 10, prompting Beijing to say it would hit back with its own higher duties.

Trade tensions are the main reason that growth in the global economy will weaken to 3.2 percent this year, the slowest pace in three years and down from rates of about 5 percent before the financial crisis a decade ago, the OECD said.

MORE TARIFFS?

The world economy is expected to pick up slowly next year, but only if Washington and China drop their latest tariff moves.

The impact could be a lot more severe if Trump follows through on his latest threat to hit a further $300 billion of Chinese imports with tariffs and China retaliates again.

That kind of tariff escalation, plus the associated rise in uncertainty about a broadening of the trade war, could lop about 0.7 percent off the world economy by 2021-2022, the OECD said.

That would be equivalent to about $600 billion, or the loss of the economy of Argentina.

But the knock-on effects might not stop there.

A full-blown trade war, combined with an ensuing debt crisis in China and a shift away from exports to drive its economy, could cause a 2 percent hit to China’s economy, in turn knocking global growth further, the OECD said.

To be sure, that kind of worst-case scenario may well be averted, given the stakes for the United States and China.

Trump and Chinese President Xi Jinping are due to meet at a Group of 20 leaders summit in Japan on June 28-29.

Other G20 nations will be urging them to step back from the fight, chief among them Germany and Japan, two export power-houses which have much to lose from a long trade war.

For now, the effect of the trade tensions is being felt mostly among manufacturers.

By contrast, consumers, buoyed by low unemployment and weak inflation in many of the world’s rich economies, have shown little sign of alarm at the row between Washington and Beijing.

But over the longer term, a protracted trade war is likely to drag down the consumer economy too.

Global trade should normally grow at double the pace of the world economy but is expected to lag it in 2019, boding ill for investment by companies, the OECD said.

That investment would normally drive productivity growth, which is key for long-term prosperity and is urgently needed. Living standards for many workers in rich countries remain lower than before the financial crisis of 2008-09.

The frustration with lower living standards is widely seen as one of the main factors behind the rise of populist politics, including Trump’s presidential election victory in 2016.

“To put it bluntly, this cannot be the new normal,” said Laurence Boone, the OECD’s chief economist. “We cannot accept an economy that doesn’t raise people’s living standards.”

(Writing by William Schomberg; Editing by Gareth Jones)

Source: OANN

FILE PHOTO: U.S. President Donald Trump and China's President Xi Jinping meet business leaders at the Great Hall of the People in Beijing
FILE PHOTO: U.S. President Donald Trump and China’s President Xi Jinping meet business leaders at the Great Hall of the People in Beijing, China, November 9, 2017. REUTERS/Damir Sagolj/File Photo

May 24, 2019

By William Schomberg

LONDON (Reuters) – It was a stark warning about the risks ahead for the global economy, even by the forthright standards of the boss of the Organisation for Economic Co-operation and Development.

“The world economy is in a dangerous place,” Angel Gurria said as the OECD announced its latest, lower forecasts for growth on May 21.

The source of his worry: the mounting trade tensions between the United States and China, which could hit the rest of the world much harder than they have to date.

“Let’s avoid complacency at all costs,” Gurria said. “Clearly the biggest threat is through the escalation of trade restriction measures, and this is happening as we speak. This clear and present danger could easily have knock-on effects.”

With much of the world economy still recovering from the after-effects of the global financial crisis a decade ago, U.S. President Donald Trump caused alarm when he raised tariffs on $200 billion worth of goods from China on May 10, prompting Beijing to say it would hit back with its own higher duties.

Trade tensions are the main reason that growth in the global economy will weaken to 3.2 percent this year, the slowest pace in three years and down from rates of about 5 percent before the financial crisis a decade ago, the OECD said.

MORE TARIFFS?

The world economy is expected to pick up slowly next year, but only if Washington and China drop their latest tariff moves.

The impact could be a lot more severe if Trump follows through on his latest threat to hit a further $300 billion of Chinese imports with tariffs and China retaliates again.

That kind of tariff escalation, plus the associated rise in uncertainty about a broadening of the trade war, could lop about 0.7 percent off the world economy by 2021-2022, the OECD said.

That would be equivalent to about $600 billion, or the loss of the economy of Argentina.

But the knock-on effects might not stop there.

A full-blown trade war, combined with an ensuing debt crisis in China and a shift away from exports to drive its economy, could cause a 2 percent hit to China’s economy, in turn knocking global growth further, the OECD said.

To be sure, that kind of worst-case scenario may well be averted, given the stakes for the United States and China.

Trump and Chinese President Xi Jinping are due to meet at a Group of 20 leaders summit in Japan on June 28-29.

Other G20 nations will be urging them to step back from the fight, chief among them Germany and Japan, two export power-houses which have much to lose from a long trade war.

For now, the effect of the trade tensions is being felt mostly among manufacturers.

By contrast, consumers, buoyed by low unemployment and weak inflation in many of the world’s rich economies, have shown little sign of alarm at the row between Washington and Beijing.

But over the longer term, a protracted trade war is likely to drag down the consumer economy too.

Global trade should normally grow at double the pace of the world economy but is expected to lag it in 2019, boding ill for investment by companies, the OECD said.

That investment would normally drive productivity growth, which is key for long-term prosperity and is urgently needed. Living standards for many workers in rich countries remain lower than before the financial crisis of 2008-09.

The frustration with lower living standards is widely seen as one of the main factors behind the rise of populist politics, including Trump’s presidential election victory in 2016.

“To put it bluntly, this cannot be the new normal,” said Laurence Boone, the OECD’s chief economist. “We cannot accept an economy that doesn’t raise people’s living standards.”

(Writing by William Schomberg; Editing by Gareth Jones)

Source: OANN

British Prime Minister Theresa May makes a statement
British Prime Minister Theresa May leaves the back of Downing Street with her husband Philip, in London, Britain, May 24, 2019. REUTERS/Toby Melville

May 24, 2019

LONDON (Reuters) – Britain’s next prime minister is likely to adopt a tougher stance on Brexit than Theresa May, and may revive the prospect of a disorderly, no-deal exit as a negotiating tool, ratings agency Standard & Poor’s said on Friday.

“In our opinion, Mrs. May’s successor will likely take a harder stance on Brexit and would potentially resurrect the specter of a no-deal exit as a negotiating tool, although it remains to be seen if they would carry through with the threat,” S&P said in a statement.

“We do not anticipate an easy end to the deadlock before the end of October, when the UK is due to leave the EU,” the ratings agency added.

May said earlier on Friday that she planned to step down on June 7, paving the way for a contest to be leader of the Conservative Party and Britain’s next prime minister.

(Reporting by David Milliken; editing by Stephen Addison)

Source: OANN

FILE PHOTO: The Carige bank logo is seen in Rome
FILE PHOTO: The Carige bank logo is seen in Rome, Italy, April 16, 2016. REUTERS/Stefano Rellandini/File Photo

May 24, 2019

MILAN (Reuters) – A junior minister from Italy’s ruling 5-Star Movement said on Friday he favored a market solution for troubled bank Carige, adding the government had to put in place the right conditions to ease it.

“The government should work to create right conditions for a market solution for Carige,” Cabinet Undersecretary for Regional Affairs Stefano Buffagni said on the sidelines of an event.

Deputy Prime Minister and League leader Matteo Salvini has said that his party was ready to back a state rescue of Carige in the absence of private investors willing to plug in a capital shortfall at the ailing bank.

(Adds dropped word in lead)

(Reporting by Elvira Pollina, writing by Giulio Piovaccari)

Source: OANN

Mexico's President Andres Manuel Lopez Obrador attends a news conference, in Mexico City
Mexico’s President Andres Manuel Lopez Obrador attends a news conference, at the National Palace in Mexico City, Mexico, May 21, 2019. REUTERS/Henry Romero

May 24, 2019

MEXICO CITY (Reuters) – Mexico’s economy contracted in the first quarter of 2019 from the previous three-month period, data showed on Friday, dealing a blow to the new government’s drive to convince investors it can boost growth in Latin America’s second largest economy.

President Andres Manuel Lopez Obrador took office in December pledging to ramp up lackluster economic growth and to improve job creation.

The economy shrunk 0.2% compared with the October-December period, according to data from national statistics agency INEGI.

In annual terms, however, the economy expanded 1.2% compared with a year earlier, slightly lower than the 1.3% growth preliminary data published last month showed.

Lopez Obrador is targeting average annual economic growth of 4% during his six-year term.

But some of his economic decisions have rattled investors, and private sector analysts have cut their Mexican growth forecasts for this year.

The International Monetary Fund on April 9 lowered Mexico’s 2019 growth outlook to 1.6% from 2.1% and to 1.9% from 2.2%, citing shifts in perception about policy under the new administration.

(Reporting by Anthony Esposito; Editing by Chizu Nomiyama and Susan Thomas)

Source: OANN

Men work on a production line manufacturing robotic arms at a factory in Huzhou, Zhejiang
FILE PHOTO: Men work on a production line manufacturing robotic arms at a factory in Huzhou, Zhejiang province, China January 8, 2019. REUTERS/Stringer .

May 24, 2019

BEIJING (Reuters) – Premier Li Keqiang said on Friday China aimed to keep value-added taxes for the manufacturing industry at low levels and encourage companies to innovate, in comments coming at a time of a bitter trade dispute with the United States.

Despite a good start in the first quarter, rising external challenges may still destabilize the Chinese economy, the second largest in the world, Li said in a statement on a government website.

While addressing a tax symposium, Li said although cuts in taxes and fees would reduce fiscal revenue, they would boost companies’ investment and confidence, which would in turn create employment and maintain sustainable economic growth.

“Local governments have adequate conditions to overcome difficulties and strike a balance between tax breaks and fiscal balances,” Li said.

Earlier this year, Li said China would cut taxes and fees for companies by nearly 2 trillion yuan ($290 billion) this year to boost slowing economic growth.

On Friday he said China’s economy had been resilient so far and that ample policy tools were available for macroeconomic adjustments.

(Reporting by Min Zhang in Beijing and Lee Chyen Yee in Singapore; Editing by Kevin Liffey)

Source: OANN

Men work on a production line manufacturing robotic arms at a factory in Huzhou, Zhejiang
FILE PHOTO: Men work on a production line manufacturing robotic arms at a factory in Huzhou, Zhejiang province, China January 8, 2019. REUTERS/Stringer .

May 24, 2019

BEIJING (Reuters) – Premier Li Keqiang said on Friday China aimed to keep value-added taxes for the manufacturing industry at low levels and encourage companies to innovate, in comments coming at a time of a bitter trade dispute with the United States.

Despite a good start in the first quarter, rising external challenges may still destabilize the Chinese economy, the second largest in the world, Li said in a statement on a government website.

While addressing a tax symposium, Li said although cuts in taxes and fees would reduce fiscal revenue, they would boost companies’ investment and confidence, which would in turn create employment and maintain sustainable economic growth.

“Local governments have adequate conditions to overcome difficulties and strike a balance between tax breaks and fiscal balances,” Li said.

Earlier this year, Li said China would cut taxes and fees for companies by nearly 2 trillion yuan ($290 billion) this year to boost slowing economic growth.

On Friday he said China’s economy had been resilient so far and that ample policy tools were available for macroeconomic adjustments.

(Reporting by Min Zhang in Beijing and Lee Chyen Yee in Singapore; Editing by Kevin Liffey)

Source: OANN


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