European stock market close 7 March 2017
- FTSE -0.2%
- Cac -0.5%
- Dax flat
- Ibex +0.1%
- FTSE Mib flat
- Italy 2.19% -3bp
- Spain 1.73% flat
- Portugal 3.97% +1bp
- Germany 0.320% b-2p
- Greece 7.21% +12bp
Chinese Finance Minister Xiao Jie is promising 350 billion yuan ($50.7 billion) in corporate tax breaks this year, aiming to stimulate the economy and keep companies frustrated with heavy taxation from seeking greener pastures overseas.
The measures, targeting mainly manufacturers and small businesses, come on top of a tax overhaul that saved companies 570 billion yuan last year. “The goal is to further lighten the burden on companies,” Xiao said in his first news conference since his appointment as minister last fall.
The leading proposal would eliminate the top bracket, though switching to a three-bracket framework with a lower top rate has also been floated. Whatever Beijing ends up doing is likely to reduce the tax obligations of manufacturers and other businesses now subject to the 17% rate.
The government aims to “create a fairer tax environment” and “expand the benefits of tax breaks,” Xiao said.
Apart from saying its military budget will grow “roughly 7%” this year, China dropped no more hints on how much it was planning to spend on defense and foreign affairs amid rising tensions on both sides of the Pacific.
In the budget, the item “national defense” is substantiated by a guiding principle devoid of specific figures, while “foreign affairs” as an accounting item is not mentioned in the report.
The two figures are usually disclosed in the country’s most important political event known as the “Two Sessions” every March, where its rubber-stamp legislature National’s People Congress and advisory Chinese People’s Political Consultative Conference converge.
Despite that, state mouthpiece Xinhua said on Monday that China’s total military budget for 2017 is 1.044 trillion yuan ($151.4 billion), citing an official at the Ministry of Finance. This compares with last year’s 954.35 billion yuan.
Premier Li Keqiang’s state-of-the-nation address and budget announcement on Sunday was the first time in decades that specific spending figures were not mentioned.
He’s speaking at the CERAWeek conference.
In a report released this morning by the Organisation for Economic Cooperation and Development titled “Will risks derail the modest recovery? Financial vulnerabilities and policy risks” the OECD warns the global economy may not be strong enough to withstand risks from increased trade barriers, overblown stock markets or potential currency volatility, and adds that the “disconnect between financial markets and fundamentals, potential market volatility, financial vulnerabilities and policy uncertainties could derail the modest recovery.“
The OECD projects global GDP growth to pick up modestly to 3½ per cent in 2018, from just under 3% in 2016, boosted by fiscal initiatives in the major economies, a forecast which is broadly unchanged since November 2016 and notes that while confidence has improved, “consumption, investment, trade and productivity are far from strong, with growth slow by past norms and higher inequality.“
Yesterday’s snap deployment of the US THAAD anti-missile system in South Korea has led to significant reverberations among the region, with not only North Korea, but also Russia and China slamming the move.
As reported last night, various equipment including 2 launch pads for U.S. missile defense system known as THAAD arrived in South Korea on Monday and will continue to be brought in, Yonhap News said.”Continued provocative actions by North Korea, to include yesterday’s launch of multiple missiles, only confirm the prudence of our alliance decision last year to deploy THAAD to South Korea,” Adm. Harry Harris, commander, US Pacific Command, said in a news release.
US Secretary of Defense James Mattis and South Korean Defense Secretary Han Min-koo spoke over the phone last week and agreed that THAAD should be deployed “ASAP.”
White House Press Secretary Sean Spicer signaled the deployment Monday when he told reporters that the United States is “taking steps to enhance our ability to defend against North Korea’s ballistic missiles, such as through the deployment of a THAAD battery to South Korea.” U.S. defense officials confirmed to NBC News on Monday night that that meant delivery was already under way — not that the United States was simply restating its previous promises to send the system to South Korea sometime in the future.
First mm rise since June and now back above the $3trln benchmark. Seemingly less need to intervene hence reduced cross-boarder yuan outflow.
According to the Economic Policy Institute,
“CEO pay grew an astounding 943% over the past 37 years, greatly outpacing the growth in the cost of living, the productivity of the economy, and the stock market, disproving the claim that the growth in CEO pay reflects the ‘performance’ of the company, the value of its stock, or the ability of the CEO to do anything but disproportionately raise the amount of his pay.”
For the past two years, we have highlighted the 100 most overpaid CEOs of S&P 500 companies, and the votes of large shareholders, including mutual funds and pension funds on their pay packages.
What has changed since the first report? Not much. Executive pay has continued to increase. Although mutual funds and pension funds are doing better at exercising their fiduciary responsibility by more frequently voting their proxies against some of the most outrageous CEO pay packages. Of the mutual funds with the largest changes in voting habits from last year, all of them opposed more of the pay packages than they had the prior year.
As we noted in our prior reports, the system in place to govern corporations has failed in the area of executive compensation. Like all the best governance systems, corporate governance relies on a balance of power. That system envisions directors representing shareholders and guarding the company’s assets from waste. It also envisions shareholders holding companies and executives accountable.
Expect demand/bids into 113.80. Offers/res around 114.20