Thursday, August 14, 2014

Today's Headlines

  • Ukraine Organizes Aid as Russian Convoy Nears Border. Ukraine sent its own aid to the country’s war-torn east as a Russian convoy with emergency supplies neared the border in defiance of conditions set by the government in Kiev. President Vladimir Putin, visiting the Crimea peninsula he annexed from Ukraine in March, said Russia shouldn’t isolate itself and pledged to work to halt the conflict that’s flared for months between pro-Russian separatists and government forces, killing more than 1,500 people, according to United Nations estimates. The U.S and the European Union have slapped sanctions on Russian businesses and individuals, and Ukraine’s parliament passed a bill today allowing similar measures.
  • Finland Sees World on Brink of Cold War Before Putin Meeting. Finnish President Sauli Niinistoe said the world risks sinking into a political deadlock as dangerous as the cold war that dominated relations between the U.S. and the Soviet Union decades ago. As the Finnish head of state prepares to meet President Vladimir Putin in the southern Russian town of Sochi tomorrow, he said talks between the two will focus on finding a way to defuse tensions surrounding the conflict in Ukraine. Russia today confirmed the meeting will take place.
  • Euro-Area Pickup Stalls as Big Economies Fail to Grow. The euro area’s recovery unexpectedly stalled in the second quarter as its three biggest economies failed to grow, underlining the vulnerability of the region to weak inflation and the deepening crisis in Ukraine. Gross domestic product in the three months through June was unchanged from the first quarter, when it increased 0.2 percent, Eurostat, the European Union’s statistics office in Luxembourg, said today. The median of 37 forecasts in a Bloomberg News survey was for growth of 0.1 percent. In a separate report, the agency confirmed inflation at 0.4 percent in July.
  • Germany 10-Year Bond Yield Drops Below 1% as GDP Shrinks. German bonds rose, pushing 10-year yields below 1 percent, boosting speculation that the European Central Bank will have to act to avert the kind of slump that stymied economic growth in Japan for more than a decade. Euro-area bonds from Ireland to Greece advanced as data showed Europe’s largest economy shrank more in the second quarter than analysts predicted and France’s stagnated.
  • France Risks EU Deficit Clash After Scrapping Targets. The French government abandoned its 2014 deficit targets after the economy unexpectedly failed to grow for a second straight quarter, risking a clash with European partners striving to meet their own fiscal goals. Finance Minister Michel Sapin said that European policy is partly to blame for the lack of expansion in the region’s second-biggest economy. French gross domestic product stagnated in the three months through June, national statistics office Insee said today in Paris. Economists forecast a 0.1 percent gain, a Bloomberg survey showed. 
  • Commodities Fall to 6-Month Low as Gain for Year Paring. Commodities erased gains for the year as oil and grains declined on signs of ample supplies as economic growth halted in Europe and factory output slowed in China, the biggest consumer of industrial metals and energy. The Bloomberg Commodity Index of 22 raw materials dropped 0.5 percent to 125.593 by 5:11 p.m. in London, for a 0.1 percent decline this year. Lean hogs, Brent crude and gasoline fell at least 2 percent today. Lean hogs, Brent crude and aluminum fell at least 1.6 percent today. Cotton, grains and oilseeds are the worst-performing commodities this year in the Bloomberg index. Soybeans dropped 20 percent and corn lost 12 percent on record U.S. harvests. Brent is heading for a second monthly decline, the longest streak since May 2013, as shale fracking allowed the U.S. to pump the most oil in 27 years even as fighting in the Middle East threatened to disrupt supplies.
  • Europe Stocks Climb as GDP Data Fuel Stimulus Speculation. European stocks advanced, reversing earlier losses, as data showing the euro area’s recovery stalled in the second quarter fueled speculation of more central bank stimulus. ThyssenKrupp AG climbed after posting quarterly earnings that beat projections. Royal Boskalis Westminster NV surged 8.2 percent after saying it will start a share buyback program. RWE AG declined 2.1 percent after saying first-half profit fell 62 percent. Novozymes A/S slid 6.5 percent after the supplier of enzymes reported second-quarter net income that trailed analyst estimates. The Stoxx Europe 600 Index rose 0.3 percent to 331.04 at the close of trading, after earlier dropping as much as 0.4 percent.
Wall Street Journal:
Business Insider: 
  • China's Credit Slowdown Raises Concerns About Overall Economic Health. The dramatic and widely unexpected drop in Chinese credit supply in July has raised concerns that the economic "recovery" China seemed poised to make starting in June -- when aggregate financing in China hit a whopping $320 billion, which was more than seven times greater than July's figure -- has been nipped in the bud. There are also concerns that the coming months will bring even worse news from the world's second-largest economy. These concerns are aggravated by anecdotal reports repeated in mainstream news media saying July's decline is the result of the policy-driven credit tightening by the government and also reflects a drop in Chinese enterprises' demand for new loans. If the latter is the case, it raises important questions about the underlying health and trajectory of China's economy.
  • Rights group says Chinese police open fire on Tibetan protesters. Chinese police have opened fire on Tibetan demonstrators in southwestern China, wounding 10 people, after the Tibetans protested against the detention of a respected village leader, a Tibetan rights group said. The crackdown in the Ganzi prefecture of Sichuan province, a flashpoint for Tibetan protests against Chinese rule, underscores simmering tensions between Tibetans and the Chinese authorities. The UK-based International Campaign for Tibet (ICT) group, citing several Tibetan sources in exile, said late on Wednesday the area "is now under tight control, with local Tibetans including the elderly and children subject to interrogation". Photographs that circulated on social media showed Tibetans with "serious wounds on the head and torso" after the incident, the ICT said.

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