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Wed, 26th April 2017

Anirudh Sethi Report

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Archives of “April 20, 2017” Day

IMF’s Lagarde is finally seeing the global economy picking up momentum

Isn’t that nice

  • Downside risks still include political uncertainty
  • First priority is to sustain the growth momentum
  • Is pleased trade is picking up and is likely to keep growing
  • China has good numbers coming out
  • Growth potential still needs a lot of work
  • Policy makers need to focus on this area

The way she’s talking you’d think she’d singlehandedly raised growth.

North Korea Threatens US With “Super-Mighty Preemptive Strike”

Whether China is right about North Korea conducting a nuclear test on April 25 remains to be seen, but for now Kim Jong-Un is content with merely escalating the verbal warfare and overnight North Korean state media warned the United States of a “super-mighty preemptive strike” following the latest round of comments by Rex Tillerson who said the United States was looking at ways to bring pressure to bear on North Korea over its nuclear programme.

The Rodong Sinmun, the official newspaper of the North’s ruling Workers’ Party, did not mince its words: “In the case of our super-mighty preemptive strike being launched, it will completely and immediately wipe out not only U.S. imperialists’ invasion forces in South Korea and its surrounding areas but the U.S. mainland and reduce them to ashes” it said according to Reuters.

The threat will hardly come as a surprise: the reclusive communist nation regularly threatens to destroy Japan, South Korea and the United States “and has shown no let-up in its belligerence after a failed missile test on Sunday, a day after putting on a huge display of missiles at a parade in Pyongyang.”

The comments come in response to Tillerson statement in Washington on Wednesday when he told reporters that “we’re reviewing all the status of North Korea, both in terms of state sponsorship of terrorism as well as the other ways in which we can bring pressure on the regime in Pyongyang to re-engage with us, but re-engage with us on a different footing than past talks have been held,”

China Escalates Pressure On North Korea: Crude Oil Supply Halt On The Table

While US and North Korean officials have traded verbal missiles in the past few days, China has been noticably quiet. However, that just changed as a prominent Chinese expert told The Nikkei that China likely will halt crude oil exports to North Korea should Pyongyang conduct its sixth nuclear test, signaling a tougher attitude by Beijing toward its rogue neighbor.

North Korea relies almost entirely on China for oil. The Asian giant shipped about 500,000 tons of crude to the North each year until 2013, according to the Chinese customs agency. Bilateral ties cooled that year after Pyongyang carried out its third nuclear test, and exports officially have remained at zero since 2014. But China is believed to still provide crude to North Korea off the books. A complete freeze would impact the North Korean economy.

A nuclear test or the launch of intercontinental ballistic missiles would violate United Nations Security Council resolutions, and China is certain to respond with additional sanctions, said Zhang Liangui, a professor at the Chinese Communist Party’s Central Party School and noted authority on North Korea.

The option to cut off the North’s crude supply will be put on the table, Zhang said, while stressing that the Chinese government will ultimately decide its course of action.

Diplomatic sources have also suggested a halt to crude exports and financial exchanges. The Global Times, an affiliate of Communist Party mouthpiece People’s Daily, recently published editorials arguing that North Korea’s nuclear experiments must be stopped, and that China should make clear that it will cut off crude exports in response to further tests.

However, even if China says it has stopped all crude exports to North Korea, such a claim cannot not be verified, given that past shipments have not been reflected in official data. Some also argue that it is technologically difficult to completely shut off the pipeline between China and the North. It remains unclear just how serious Beijing has become toward handling Pyongyang’s threat.

8 Trillion Reasons To ‘Support’ President Trump

With ‘Never-Trump’-ers still convinced he is Hitler and ‘Trump’-ers questioning their reality at his recent flip-floppery, many in the country are asking why should we support this President (even as his approval ratings rise with each warmongering threat). Well there is a simple – and perhaps greedy – reason… the world’s debt and equity markets have gained over $8 trillion since his election and a loss of faith now may leave some big holes.

The value of world equity market capitalization and debt values reached a new record high today of $118 trillion.

This is a more than $8 trillion rise since Donald Trump was elected President and unleashed animal spirits around the world. For someone who has yet to actually put any reforms, stimulus, cuts, laws, into practice – not bad going!

The gains are all concentrated in the ever-hopeful global equity markets…

Japan posts first full-year trade surplus in six years

Japan posted a 4 trillion yen ($36.7 billion) trade surplus for the fiscal year ended March, according to data released Thursday by the Ministry of Finance, the country’s first in six years.

The country had posted trade deficits since fiscal 2011 as fuel imports increased; nuclear power plant operations were suspended in the aftermath of the 2011 earthquake and tsunami. Lower oil prices and a stronger currency allowed Japan to climb back into the black in fiscal 2016.

 The value of exports dropped by 3.5% on the year to 71.5 trillion yen, as exports of cars as well as iron and steel products dropped. The value of imports dropped 10.2% to 67.5 trillion, as imports of liquefied natural gas and petroleum decreased.

For the month of March, the surplus totaled 614 billion yen, preliminary data showed. That was the second straight month of surpluses, although the figure was down from the same month in 2016, which came in at 744 billion yen.

The March figure beat the QUICK consensus forecast of private-sector analysts, which predicted a surplus of 575 billion yen.

Total exports rose 12.0% in March from a year earlier to 7.22 trillion yen, as the value of exports to Asia hit a record high of 3.8 trillion yen. Exports to China contributed significantly, rising 16.4% on the year to 1.2 trillion yen, registering a year-on-year increase for five consecutive months. This was the second highest on record.

Exports to the U.S. increased 3.5% to 1.3 trillion yen.

 

Imports, on the other hand, climbed 15.8% to 6.61 trillion yen. But this was mainly due to the increase in import value of petroleum and coal from the rise in commodity prices.

The trade surplus in fiscal 2016 was “down to strong external demand and weak internal demand. It was also boosted by low oil prices,” wrote economists at SMBC Nikko Securities in a report. “The story of strong exports and weak imports will likely carry on in fiscal 2017. Exports are expected to remain on an expansionary path as foreign economies pick up. On the other hand … private consumption [in Japan] is sluggish and fixed investment from companies is likely to remain muted.”

“We cannot expect much from domestic demand, and therefore an acceleration in imports is unlikely,” read the report.

Unilever signals confidence on growth ahead of competitors

Consumer group Unilever is putting the $143bn flirtation from Kraft Heinz behind it, making no mention of the ill-fated takeover bid in its first-quarter trading statement in which it revealed a comfortable rise in revenues.

Turnover rose by 6 per cent compared to the same period in 2016, reaching €13.3bn, with a tailwind from currency movements. Sales growth stood at 6 per cent for emerging markets.

The company recently announced plans to offload its spreads business encompassing I Can’t Believe It’s Not Butter and Flora, which have been holding back broader sales growth. It is also buying back €5bn of shares in a broad revamp. So far, it’s positive on the path ahead.