The latest in a series of polls conducted by Reuters now out 31 Aug
Brent crude seen averaging $45.44 per barrel vs $45.51 in July poll
US crude seen averaging $43.96 pb vs $44.12 prev
The 34 oil analysts and economists cite fading chances of output freeze and US production showing signs of picking up
The lower outlook comes after 5 consecutive months of upward revisions . Reuters say that of the 28 respondents who took part in both July and Aug surveys 8 have lowered their forecasts while 16 remain unchanged.
Commenting on a political and economic environment inside Europe which is becoming more and more hostile to globalization, Ernst Wolff, a political economist and specialist on the subject, told Sputnik that the phenomenon is creating more and more ‘losers’, with the winners hardly anywhere to be found. Amid growing political instability in low-wage countries, Adidas has begun to move its production out of the Third World and back to Germany, with its German operations expected to be highly automated and minimally reliant on human labor. Meanwhile, just this past weekend, German Economic Minister Sigmar Gabriel won praise inside Germany for announcing that the US-European trade negotiations known as the TTIP have “de facto failed.” Asked to comment on these seemingly disparate events, political economist Ernst Wolff, author of the recently published book ‘Pillaging the World: The History and Politics of the IMF’, spoke to Sputnik Germany about what they say about the state of the phenomenon of globalization.
To begin with, Wolff suggested that Adidas’ move is “just the next logical step” in the company’s efforts to improve its bottom line and grow the profits of its investors. “The big losers,” he noted, “are the workers from Southeast Asia that are losing their jobs and probably won’t receive any social protection.” As far as Germany and German workers are concerned, here too the gains will be minimal, the expert noted, since the shoes’ new production facilities will be heavily automated. “Here in Germany not a single job will be created. In general, all parties will lose from this measure; only a handful of people will benefit, making their wallets fuller.” Asked whether this recent move by a major global corporation may be some kind of indication that globalization is coming to an end, or that it’ at some sort of crossroads, Wolff said that that doesn’t believe this to be true. “I do not think we have reached a turning point, but I think globalization has very seriously changed its face. This has to do more than anything with the technical factor. Around the world, robotics and 3D printer technologies are being developed, meaning that many low-wage jobs, especially in Southeast Asia, can now be replaced by automation. For companies, of course it’s much cheaper to produce their goods using machines, since they in turn save on wages. Besides, machines can produce 24 hours a day, 7 days a week.”
Ireland granted “undue tax benefits” of up to €13bn to Apple, the European Commission has said in a highly-anticipated ruling on Tuesday.
“This is illegal under EU state aid rules, because it allowed Apple to pay substantially less tax than other businesses. Ireland must now recover the illegal aid,” the commission said in a statement.
European competition commissioner Margrethe Vestager said:
Member States cannot give tax benefits to selected companies – this is illegal under EU state aid rules. The Commission’s investigation concluded that Ireland granted illegal tax benefits to Apple, which enabled it to pay substantially less tax than other businesses over many years. In fact, this selective treatment allowed Apple to pay an effective corporate tax rate of 1 per cent on its European profits in 2003 down to 0.005 per cent in 2014.
Moody’s Investors Service has today affirmed the Government of Japan’s issuer rating at A1. The rating outlook is maintained at stable.
The affirmation reflects:
• The slow but continuing progress in developing a policy and reform framework which could ultimately reflate the Japanese economy and reverse the rise in government debt.
• Our expectation that funding costs for the government will remain low and stable.
Moody’s notes that the recent waning of economic momentum has prompted a pause in fiscal policy tightening, which we expect to lead to a rise in the Japanese government’s debt burden. However, we expect that Japan’s credit profile will continue to be consistent with an A1 rating, and the rating outlook remains stable.
Moody’s has also affirmed Japan’s local currency senior unsecured rating at A1.
Japan’s long-term local- and foreign-currency bond and deposit ceilings remain at Aaa. The short-term foreign-currency bond and deposit ceilings remain at Prime-1 (P-1).
Research from the Hong Kong Monetary Authority on regional deflation has concluded that China lies “at the heart of the region’s deflation challenge” – with ramifications that could ripple across Asia.
A new white paper published by the HKMA’s monetary research institute has taken a look at declining producer prices across Asian economies. It argues that a trifecta of issues in China – declining corporate profits, overcapacity and heavy debts – could undo recent rises in factory gate prices across Asia’s biggest economy. These factors increase the risk of producer price deflation, which the paper notes could ultimately lead to consumer deflation, kicking off a vicious cycle of deterioration for all of the above indicators.
Policy wonks can find the full paper here, but in short its authors suggest their model’s findings confirm that spillover effects from China are one of the key determinants of Asian producer price deflation.
Since the three issues outlined are more severe at China’s state-owned enterprises, the authors’ proposed fix centres on said government-run outfits:
Republican presidential nominee Donald Trump linked illegal immigration and employment Saturday, pledging to start deporting offenders as soon as he is sworn in should he become the White House’s next occupant.
“On Day One, I am going to begin swiftly removing criminal illegal immigrants from this country –- including removing the hundreds of thousands of criminal illegal immigrants that have been released into US communities under the Obama-Clinton administration,” Trump said in Des Moines, Iowa.
Trump’s Democratic rival Hillary Clinton served as secretary of state during President Barack Obama’s first term in office. The next president will be sworn in on January 20.
“I am going to build a great border wall, institute nationwide e-verify, stop illegal immigrants from accessing welfare and entitlements and develop an exit-entry tracking system to ensure those who overstay their visas are quickly removed,” Trump warned.
Facing accusations that it acted aggressively toward a US warship in the Persian Gulf this week, Iran has defended its actions. This comes amid reports of a series of close encounters between US and Iranian vessels that took place in the region this week. On Tuesday, four Iranian Revolutionary Guard Corps vessels intercepted the guided-missile destroyer USS Nitze near the Strait of Hormuz. US officials described the interception as “unsafe and unprofessional.”
On Thursday, Iranian defense minister Gen. Hosein Dehghan defended Tehran’s actions, adding that the Revolutionary Guard would perform similar intercepts in the future if necessary. “If any foreign vessel enters our waters, we warn them, and if it’s an invasion, we confront,” he told Tasnim news agency. Dehghan’s comments came hours before reports surfaced that four similar incidents occurred in the Persian Gulf this week. According to US officials, one instance involved the USS Squall. Operating in the Northern Persian Gulf, an Iranian ship came within 200 yards of the American vessel. Crewmembers aboard the Squall fired three warning shots into the water.
China’s banking regulator has forbidden peer-to-peer lenders from pooling funds or selling popular high-yield investment products, the latest volley in Beijing’s battle against unruly online financing.
A new set of provisional rules jointly issued by the China Banking Regulatory Commission, Ministry of Industry and Information Technology, Ministry of Public Security and the Cyberspace Administration of China forbids P2P lending platforms from pooling funds, acting as guarantors of any kind or selling wealth management products, according to state media.
The rules also forbid P2P companies from engaging in asset securitisation and require banks to act as third parties that hold and manage funds on behalf of peer lending platforms.
North Korea fired a submarine-launched missile on Wednesday that flew about 500 km (311 miles) toward Japan, a show of improving technological capability for the isolated country that has conducted a series of launches in defiance of UN sanctions.
The missile was fired at around 5:30 a.m. (4:30 p.m. ET) from near the coastal city of Sinpo, where satellite imagery shows a submarine base is located, officials at South Korea’s Joint Chiefs of Staff and the Defence Ministry told Reuters.
The projectile reached Japan’s air defense identification zone (ADIZ), an area of control designated by countries to help maintain air security, South Korea’s Yonhap News Agency reported.
The distance of the flight indicated the North’s push to develop a submarine-launched missile system was paying off, officials and rocketry experts said.
North Korea’s “SLBM (submarine-launched ballistic missile) technology appears to have progressed,” a South Korean military official told Reuters.
The launch comes two days after rival South Korea and the United States began annual military exercises in the South that North Korea condemns as a preparation for invasion, and has threatened retaliation.
EM ended last week on a soft note. Fed tightening expectations were buffeted first by hawkish Dudley comments and then by the more balanced FOMC minutes.
On net, the markets adjusted the odds for tightening by year-end a little higher from the previous week, and stand at the highest odds since the Brexit vote. Yet despite the strong jobs data in June and July, odds of a move on September 21 or November 2 are still low, with the December 14 meeting seen as the most likely for the next hike.
Fed chair Yellen speaks at the annual Jackson Hole Symposium on Friday, and will be the highlight of the week. Given that Dudley mirrors Yellen quite closely, we think she could deliver a hawkish message this week. If so, that would give the dollar more traction. EM and risk are most vulnerable under this scenario.
Taiwan reports July export orders Monday, which are expected at -1.3% y/y vs. -2.4% in June. It then reports July IP Tuesday, which is expected to rise 1.8% y/y vs. 0.9% in June. The economy recovered in Q2, so it will be important to see if this continues in Q3. Given the headwinds on the economy, we think the central bank will cut rates 121.5 bp again to 1.25% at its quarterly meeting in September.
Singapore reports July CPI Tuesday, which is expected at -0.5% y/y vs. -0.7% in June. It reports July IP Friday, which is expected to grow 0.8% y/y vs. -0.3% in June. The July trade data was much weaker than expected, and warns of downside risk to the IP reading. Recent data have been soft, and we think the MAS will easy policy at its October meeting with another adjustment to its S$NEER trading band.