posted on 25 April 2017

Written by Econintersect

Early Bird Headlines 25 April 2017

Econintersect: Here are some of the headlines we found to help you start your day. For more headlines see our afternoon feature for GEI members, What We Read Today, which has many more headlines and a number of article discussions to keep you abreast of what we have found interesting.

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Global

World's Biggest Stock Markets Haven't Been This Split Since 2008 (Bloomberg) The Chinese and U.S. stock markets are going in opposite directions. An intensifying crackdown against leverage in Asia’s biggest economy has rocked the hither-to unflappable Shanghai Composite Index over the past week, sending it to a three-month low last session. In the U.S., the largest equity market is embracing a risk rally spurred by the French election, with the S&P 500 Index continuing to build on reflation-trade gains ignited by Donald Trump’s November victory. The divergence means the two markets are the least in tune since August 2008 -- just before the collapse of Lehman Brothers Holdings Inc. unleashed chaos on the global financial system.

U.S.

State Department website posts article on Trump's Florida resort (Reuters) A U.S. State Department website on Monday took down an article it published this month about President Donald Trump's Mar-a-Lago resort which had prompted criticism from prominent ethics experts that the piece represented use of public office for private gain. The original article was posted on April 4 on the "Share America" website, overseen by the State Department's Bureau of International Information Programs. It was also shared on the websites and social media pages of several U.S. embassies, including those in the United Kingdom, Portugal and Albania, as well as the State Department's Bureau of Economic and Business Affairs. Although it was posted weeks ago, the article surfaced on Monday when it was shared widely on social media. The State Department removed the article's content around 7 p.m. on Monday, replacing it with a short statement saying its intention ...

"... was to inform the public about where the President has been hosting world leaders. We regret any misperception and have removed the post."

Retailers Are Going Bankrupt at a Record Pace (Bloomberg) Retailers are filing for bankruptcy at a record rate as they try to cope with the rapid acceleration of online shopping. In a little over three months, 14 chains have announced they will seek court protection, according to an analysis by S&P Global Market Intelligence, almost surpassing all of 2016. Few retail segments have proven immune as discount shoe-sellers, outdoor goods shops, and consumer electronics retailers have all found themselves headed for reorganization.

Wolf Richter: Private Equity in the Thick of Bricks and Mortar Retail Implosion (Yves Smith, Naked Capitalism) YS has contributed to GEI. One of the reason so many real world retailers are hitting the wall so hard is that private equity leverage and asset stripping made them particularly vulnerable. While the losses to online retailers would have forced some downsizing regardless, the fact that so many are making desperate moves in parallel is in large measure due to the fact that the tender ministrations of their private equity overlords have made them fragile when challenged by the rise of internet competition - see graph below.

Eileen Appelbaum and Rosemary Batt, in their landmark book Private Equity at Work, described a real estate looting strategy that as of 2014 had already ruined some formerly viable retail and restaurant chains.

Entire U.S. Senate to go to White House for North Korea briefing (Reuters) Top Trump administration officials will hold a rare briefing on Wednesday at the White House for the entire U.S. Senate on the situation in North Korea. All 100 senators have been asked to the White House for the briefing by Secretary of State Rex Tillerson, Secretary of Defense Jim Mattis, Director of National Intelligence Dan Coats and General Joseph Dunford, chairman of the Joint Chiefs of Staff, said White House spokesman Sean Spicer on Monday.

While administration officials routinely travel to Capitol Hill to address members of Congress on foreign policy matters, it is unusual for the entire Senate to go to the White House, and for all four of those officials to be involved.

UK

Scots don't want another independence vote: Kantar poll (Reuters) Most Scottish voters do not want another referendum on independence from the United Kingdom and support for secession itself appears to have weakened, according to a Kantar survey. Scots voted by a wide margin to stick with the European Union in last June's referendum, clashing with the UK as a whole which voted to leave. Scotland's devolved government, run by the Scottish National Party (SNP), says this means the country should be given a new chance to decide whether it wants to split from the UK. The central government in London opposes this. The Brexit issue does not appear to have given wings to the independence movement, according to Kantar's survey of 1,060 adults carried out after Scotland's First Minister Nicola Sturgeon called for a referendum to be held in autumn 2018 or spring 2019. Of those interviewed, only 26% thought an independence vote should be held on either of those dates, while 18% thought it should take place later. But 46% thought there should be no referendum at all.

France

Hollande urges French to reject Le Pen in presidential run-off vote (Reuters) France's outgoing president, Francois Hollande, on Monday urged people to back centrist Emmanuel Macron in a vote to choose his successor next month and reject far-right leader Marine Le Pen, whose place in the run-off represented a "risk" for France. Macron and Le Pen, leader of the National Front (FN), go head-to-head on May 7 after taking the top two places in Sunday's first round.

Opinion polls indicate that the business-friendly Macron, who has never held elected office, will take at least 61 percent of the vote against Le Pen after two defeated rivals pledged to back him to thwart her eurosceptic, anti-immigrant platform.

Syria

U.S. sanctions hundreds of employees of Syrian research center (Reuters) The United States on Monday blacklisted 271 employees of a Syrian government agency it said was responsible for developing chemical weapons, weeks after a poison gas attack killed scores of people in a rebel-held province in Syria. The U.S. Treasury Department sanctioned 271 employees of Syria's Scientific Studies and Research Center (SSRC), an agency that Washington says develops chemical weapons for the government of Bashar al-Assad, the Treasury said in a statement. Some of the people blacklisted had worked on Syria's chemical weapons program for more than five years, the Treasury Department said. The sanction orders U.S. banks to freeze the assets of any employees named, and bans American companies from conducting business with them.

China

China Markets Reel as $1.7 Trillion in Shadow Funds Unwinds (Bloomberg) A $1.7 trillion source of inflows into Chinese markets has suddenly switched into reverse, roiling the nation’s money management industry and sending local bonds and stocks to their biggest losses of the year. The turbulence has centered on so-called entrusted investments -- funds that Chinese banks farm out to external asset managers. After years of funneling money into such investments, banks are now pulling back in response to a series of regulatory guidelines over the past three weeks that put a spotlight on the risks. Critics have blamed entrusted managers for adding leverage to China’s financial system and reducing transparency.

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Click for larger image.

Canada

U.S. commerce secretary Ross announces trade measure on Canadian lumber

Affects $5 billion in lumber imports from Canada

U.S. dollar gains solidly against loonie after report

Canada says will contest any tariff move

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