Tuesday, March 07, 2017

Today's Headlines

  • Kim Jong Un Lights Fires Across Asia, Raising Dilemma for Trump. (video) Murder in Malaysia. Protests in China. And missiles flying toward Japan. All can be traced back to North Korea and show how Kim Jong Un is managing to stir up tensions in the region while trying to provoke a reaction from U.S. President Donald Trump. The question for Trump, Xi Jinping and other leaders is how to respond, given sanctions, cajoling and military pressure have all failed to rein Kim in.
  • China's Capital Controls Trigger a Backlash After Scrapped Deals. Chinese corporate chiefs are turning vocal critics of the nation’s capital controls as the pile of scrapped deals grows. While the restrictions have helped alleviate pressure on the yuan, they’ve also curbed overseas acquisitions. Executives in Beijing during the National People’s Congress bemoaned the measures, saying they’re derailing expansion abroad -- a key tenet of China’s long-term economic ambitions.
  • China's Running Out of Time to Cut Excess Capacity. The tailwind from surging factory prices is strengthening corporate profits and supporting growth, opening a window for China to deepen cuts in excess industrial capacity without inflicting too much damage on the broader economy. The catch: that window may not stay open for long. That’s because factory prices -- forecast to have increased 7.7 percent in February from a year earlier -- may soon moderate as the effect of low comparisons a year earlier begins to fade. Economists forecast producer price inflation will dial back to a 2.8 percent pace by the fourth quarter.
  • Brazil Economic Rout Deepens as Investment Shows No Rebound. Brazil’s economic rout deepened in the fourth quarter as investors and consumers remained on the sidelines amid government austerity measures that marked a disastrous year of corruption and recession. Gross domestic product contracted 0.9 percent in the final three months of 2016, its biggest decline in a year, after a revised 0.7 percent drop the previous quarter, the national statistics institute said Tuesday. That was worse than the median estimate for a 0.5 percent decline from 46 economists Bloomberg surveyed, and lower than all but four of their forecasts. For the full year Brazil contracted 3.6 percent.
  • European Stocks Decline as Trump Tweet Drags Drugmakers Lower. Declines in health-care shares sent European stocks lower for a fourth day after U.S. President Donald Trump vowed to lower the cost of medicines. The Stoxx Europe 600 Index fell 0.3 percent at the close. Shire Plc, Novartis AG and Hikma Pharmaceuticals Plc led losses among drugmakers, down at least 1.6 percent each, after Trump said in a Twitter post he’s working on a “new system where there will be competition in the drug industry.”
  • Trump Appointees Can Roll Back Bank Rules, Pence Economist Says. The Trump administration’s initial efforts to attack financial regulations will include directing federal agencies to reverse changes that have been made through guidance rather than formal rule-making, a key aide to Vice President Mike Pence said Tuesday. The White House is trying to fill vacancies at the banking-industry watchdogs “in short order,” Mark Calabria, Pence’s chief economist, said at a National Association for Business Economics conference in Washington. Once President Donald Trump’s people are in place, he said, they can quickly roll back supervisory efforts they think aren’t appropriate.
  • Hedge Funds Are Bracing for a Market Selloff. U.S. stocks have piled up $1.5 trillion in market value this year, but hedge funds are bracing for tough times ahead. Based on buying and selling in 2017, managers have stopped loading up on bullish positioning. They’ve also become less reliant on U.S. stocks by selling economically sensitive bank shares and materials like copper, data compiled by Credit Suisse Group AG show. What are they buying? Gold.
Wall Street Journal:
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