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Angry Germany Slams Trump Criticism: Urges US To "Build Better Cars", Accuses Washington Of Causing Refugee Crisis
via by Tyler Durden on Mon, 16 Jan 2017 14:56:52 GMT
An angry Berlin has responded with a staunch defense of its policies after President-elect Donald Trump criticized German Chancellor Angela Merkel in two separate Sunday interviews, one with Germany's Bild and one with the Sunday Times, for her stance during the refugee crisis while threatening a 35% tariff on BMW cars imported into the US.
Germany’s deputy chancellor and minister for the economy, Sigmar Gabriel, said on Monday morning that a tax on German imports would lead to a “bad awakening” among US carmakers since they were reliant on transatlantic supply chains. “I believe BMW’s biggest factory is already in the US, in Spartanburg [South Carolina],” Gabriel, leader of the centre-left Social Democratic party, told the Bild newspaper in a video interview.
“The US car industry would have a bad awakening if all the supply parts that aren’t being built in the US were to suddenly come with a 35% tariff. I believe it would make the US car industry weaker, worse and above all more expensive." Playing Trump's threat off Congress, Gabriel added that he "would wait and see what the Congress has to say about that, which is mostly full of people who want the opposite of Trump" as quoted by The Guardian.
In his interviews with Bild and the Times, the US president-elect had indicated that he would aim to realign the “out of balance” car trade between Germany and the US. “If you go down Fifth Avenue everyone has a Mercedes Benz in front of his house, isn’t that the case?” he said. “How many Chevrolets do you see in Germany? Not very many, maybe none at all … it’s a one-way street.”
So, when asked what Trump could do to make sure German customers bought more American cars, Gabriel had a simple suggestion: “Build better cars.”
Asked what Trump could do to make sure German customers bought
more American cars, Sigmar Gabriel said: ‘Build better cars.
Trump's interview had an adverse impact shares in carmakers BMW, Daimler and Volkswagen, which fell on Monday morning following the President-elect's comments. BMW shares were down 0.85%, shares in Daimler were 1.54% lower and Volkswagen shares were trading 1.07% down in early trading in Frankfurt. The reason for Trump's latest outburst at Germany's car giants is that all three carmakers have invested heavily in factories in Mexico, where production costs are lower than the US, with an eye to exporting smaller vehicles to the American market, a move which Trump vocally disapproves.
Meanwhile, a BMW spokeswoman said a BMW Group plant in the central Mexican city of San Luis Potosi would build the BMW 3 Series starting from 2019, with the output intended for the world market. The plant in Mexico would be an addition to existing 3 Series production facilities in Germany and China.
* * *
Responding to Trump’s comments that Merkel had made an “utterly catastrophic mistake by letting all these illegals into the country”, Gabriel said the increase in the number of people fleeing the Middle East to seek asylum in Europe had partially been a result of US-led wars destabilising the region.
Slamming US foreign policy - and thus the Obama regime, not to mention Angela Merkel's close friend Hillary Clinton - as a culprit for the European refugee crisis, Gabriel said that “there is a link between America’s flawed interventionist policy, especially the Iraq war, and the refugee crisis, that’s why my advice would be that we shouldn’t tell each other what we have done right or wrong, but that we look into establishing peace in that region and do everything to make sure people can find a home there again,” Gabriel said.
“In that area Germany and Europe are already making enormous achievements – and that’s why I also thought it wasn’t right to talk about defence spending, where Mr Trump says we are spending too little to finance Nato. We are making gigantic financial contributions to refugee shelters in the region, and these are also the results of US interventionist policy.”
Gabriel, who will likely run as the centre-left candidate against Merkel in Germany’s federal elections in September, said Trump’s election should encourage Europeans to stand up for themselves.
“On the one hand, Trump is an elected president. When he is in office, we will have to work with him and his government – respect for a democratic election alone demands that,” Gabriel said. “On the other hand, you need to have enough self-confidence. This isn’t about making ourselves submissive. What he says about trade issues, how he might treat German carmakers, the question about Nato, his view on the European Union – all these require a self-confident position, not just on behalf of us Germans but all Europeans. We are not inferior to him, we have something to bring to the table too.
“Especially in this phase in which Europe is rather weak, we will have to pull ourselves together and act with self-confidence and stand up for our own interests.”
While Merkel has yet to provide a direct response to Trump's statements and refused to comment on the interview during a news conference with New Zealand Prime Minister Bill English, saying she would wait until after Trump's inauguration and then planned to work with him at all levels of government, her spokesman, Steffen Seibert, said the chancellor had read the Trump interview “with interest”, but declined to comment in more detail until the president-elect had been sworn in.
“We are now waiting for President Trump to start his term and will then work closely with the new government,” he said, adding that "It’s a clear statement of the positions of the new American president, but the positions of the chancellor on many of these issues are equally clear."
Martin Schäfer, a spokesman for the German foreign ministry, rejected Trump’s labelling of the EU as a “vehicle for Germany”. He said: “For the German government, Europe has never been a means to an end, but a community of fate which, in times of collapsing old orders, is more important than ever.”
The foreign ministry also rejected Trump’s criticism that creating “security zones” in Syria would have been considerably cheaper than accepting refugees fleeing the war-torn country. “What exactly such a security zone is meant to be is beyond my comprehension and would have to be explained,” said Schäfer, adding that there had not been enough willingness among the international community to lend military support to create a no-fly zone in Syria.
* * *
Germany was not the only nation unhappy with Trump's statement: Pierre Moscovici, European economic affairs commissioner, also found fault with Trump’s assertion that other European countries would follow in Britain’s footsteps and leave the EU.
“I’m not worried, I think this idea that Brexit is going to be contagious is a fantasy, a bad fantasy,” Moscovici told reporters in Paris. “Brexit is not a great thing,” he said, warning Trump that comments advocating a break-up of the EU would not get the trans-Atlantic relationship off to the best start.
* * *
Yet while Germany and Brussels were unhappy with Trump's criticism, Moscow was delighted, and sure enough Trump’s remarks on Nato were met more favourably in Moscow, where Dmitry Peskov, spokesman for the Russian president, Vladimir Putin, agreed with the US president-elect that the alliance was “obsolete”.
“Since Nato is tailored toward confrontation, all its structures are dedicated to the ideals of confrontation, you can’t really call it a modern organisation meeting the ideas of stability, steady growth and security,” he said.
But Trump’s suggestion that the US could lift its sanctions on Russia in exchange for an agreement to reduce the countries’ nuclear arsenals elicited a cooler response. Peskov said Russia had not been conducting talks with the US about nuclear arsenal reduction and said cancelling sanctions was not a political goal in Russia. "Russia wasn’t the initiator in introducing these restrictions, and Russia, as the president of Russia has underlined, doesn’t intend to raise the issue of these sanctions in its foreign contacts,” he said.
Last month, echoing similar comments by Trump, Putin said Russia needed to strengthen its strategic nuclear forces. Leonid Slutsky, a Russian MP, said he “wouldn’t connect these two issues and make the cancellation of sanctions a negotiating point in such a delicate area as nuclear security”. Konstantin Kosachyov, head of the foreign affairs committee in the Russian senate, said the cancellation of sanctions was “definitely not an end in and of itself for Russia”.
“It’s not even a strategic goal for which something needs to be sacrificed, especially in the security sphere,” he told state news agency RIA Novosti. “We think [sanctions] are a bad legacy of the departing White House team that need to be sent after it into history.”
* * *
And yet, perhaps Trump's bluster was merely the latest ruse to get everyone on the negotiating table. It may be working already: as Reuters reports, Chancellor Merkel is working to set a date this spring for a meeting with Donald Trump, who will be sworn in as U.S. president on Friday, German government sources said on Monday. Merkel had offered to meet Trump in the United States in her capacity as chairman of the Group of 20 leading economies, the sources said.
The chancellor has spoken with Trump only once, shortly after his election to succeed U.S. President Barack Obama. Following Trump's latest "stunning" public statements, she now appears to be in a hurry to not only speak with him again, but also meet face to face.
Is Tolerance A One-Way Street?
via by Tyler Durden on Mon, 16 Jan 2017 14:40:19 GMT
Submitted by Douglass Murray via The Gatestone Institute,
- When just about every other magazine in the free world fails to uphold the values of free speech and the right to caricature and offend, who could expect a group of cartoonists and writers who have already paid such a high price to keep holding the line of such freedoms single-handed?
- Most of the people who said they cared about the right to say what they wanted when they wanted, were willing to walk the walk -- to walk through Paris with a pencil in the air. Or they were willing to talk the talk, proclaiming "Je Suis Charlie." But almost no one really meant it.
- If President Hollande and Chancellor Merkel had really believed in standing up for freedom of expression, then instead of walking arm-in-arm through Paris together with such an inappropriate figure as Palestinian leader Mahmoud Abbas, they would have held up covers of Charlie Hebdo and said: "This is what a free society looks like and this is what we back: everyone, political leaders, gods, prophets, the lot can be satirised, and if you do not like it then you should hop off to whatever unenlightened hell-hole you dream of."
- The entire world press has internalised what happened at Charlie Hebdo and instead of standing united, has decided never to risk something like that ever happening to them again.
- For the last two years, we have learned for certain that any such tolerance is a one-way street. This new submission to Islamist terrorism is possibly why, in 2016, when an athlete with no involvement in politics, religion or satire was caught doing something that might have been seen as less than fully respectful of Islam, there was no one around to defend him.
The 7th of this month marked two years to the day since two gunmen walked into the offices of the satirical magazine Charlie Hebdo in Paris and murdered twelve people. This period also therefore marks the second anniversary of the period of about an hour during which much of the free world proclaimed itself to be "Charlie" and attempted, by walking through the street, standing for moments of silence or re-tweeting the hashtag "Je Suis Charlie" to show the whole world that freedom cannot be suppressed and that the pen is mightier than the Kalashnikov.
So two years on is a good time to take stock of the situation. How did that go? Did all those "Je Suis" statements amount to anything more than a blip on the Twitter-sphere? Anyone trying to answer such a question might start by looking at the condition of the journal everyone was so concerned about. How has it fared in the two years since most of its senior editorial staff were gunned down by the blasphemy police?
 A Paris rally on January 11, 2015, after the Charlie Hebdo attack, featuring "Je Suis Charlie" signs. (Image source: Olivier Ortelpa/Wikimedia Commons) |
Not well, if a test of the magazine's wellbeing is whether it would be willing to repeat the "crime" for which it was attacked. Six months after the slaughter, in July 2015, the new editor of the publication, Laurent Sourisseau, announced that Charlie Hebdo would no longer publish depictions of the Prophet of Islam. Charlie Hebdo had, he said, "done its job" and "defended the right to caricature." It had published more Muhammad cartoons in the issue immediately after the mass murder at their offices and since. But, he said, they did not need to keep on doing so. Few people could have berated him and his colleagues for such a decision. When just about every other magazine in the free world fails to uphold the values of free speech and the right to caricature and offend, who could expect a group of cartoonists and writers who have already paid such a high price to keep holding the line of such freedoms single-handed?
Now, at the second anniversary of the atrocity, one of the magazine's most prominent figures, Zineb El Rhazoui, has announced that she is leaving the magazine. El Rhazoui, who has been described as "the most protected woman in France" because of the security detail she receives from the French state, has announced that Charlie Hebdo has gone "soft" on Islamic radicalism. She told Agence France-Presse that "Charlie Hebdo died on [7 January 2015]." The magazine had previously had a "capacity to carry the torch of irreverence and absolute liberty" she said. "Freedom at any cost is what I loved about Charlie Hebdo, where I worked through great adversity.'
Of course, El Rhazoui is an unusual person. And a scarce one in twenty-first century Europe. Which is why she needs the security detail. Most of the people who said they cared about the right to say what they wanted when they wanted, about everything and anything -- including one particularly stern and unamused religion -- were willing to walk the walk: that is, they were willing to walk through Paris with a pencil in the air. Or they were willing to talk the talk, proclaiming "Je Suis Charlie." But almost no one really meant it. If they had, then -- as Mark Steyn pointed out -- those crowds in Paris would not have been parading through the streets holding pencils, but holding cartoons of Mohammed. "You're going to have to get us all" would have been the message.
And ditto the leaders. If President François Hollande and Chancellor Angela Merkel had really believed in standing up for freedom of expression, then instead of walking arm-in-arm through Paris together with such an inappropriate figure as Palestinian Authority leader Mahmoud Abbas, they would have held up covers of Charlie Hebdo and said: "This is what a free society looks like and this is what we back: everyone, political leaders, gods, prophets, the lot can be satirised, and if you do not like it then you should hop off to whatever unenlightened hell-hole you dream of. But Europe is not the continent for you."
Instead, in the two years since those gestures, European society went quiet. Of course, there have been regular opportunities to display the modern idea of virtue, often using Charlie Hebdo as the punching bag. Since being alerted to the existence of the magazine by the gunmen, the censorious types who now fill our societies (and who probably do not even buy or read magazines) nevertheless regularly send out social media messages objecting to things to which they have been alerted within the magazine.
So it is that a rude and satirical magazine has found itself repeatedly judged by the humourless morality police of our day and often deemed to be insufficiently reverential about various world events. A Charlie Hebdo cartoon about the Cologne New Year's Eve sexual assaults was deemed in poor taste. Elsewhere, the publication's response to an earthquake in Italy failed to hit the single acceptable note in the eyes of some non-readers. Likewise the crash of a Russian jet and other stories that were considered to lack appropriate piety.
Meantime, we are in a situation, as the British author Kenan Malik said of the period after the Satanic Verses affair, of having "internalised" the atrocity. The entire world press -- perhaps especially, in free countries -- has internalised what happened at Charlie Hebdo, and instead of standing united has decided, quietly and in the privacy of their own offices, never to risk something like that ever happening to them again. This new submission to Islamist terrorist demands is possibly why, in 2016, when an athlete with no involvement in politics, religion or satire was caught doing something that might have been seen as less than fully respectful of Islam, there was no one around to defend him. Even the British Prime Minister, Theresa May, asked in the House of Commons to stand up for the right of an athlete not to have his career destroyed because of one fleeting, drunken joke, equivocated:
"This is a balance that we need to find. We value freedom of expression and freedom of speech in this country -- that is absolutely essential in underpinning our democracy.
"But we also value tolerance to others. We also value tolerance in relation to religions. This is one of the issues that we have looked at in the counter-extremism strategy that the Government has produced.
"I think we need to ensure that yes it is right that people can have that freedom of expression, but in doing so that right has a responsibility too -- and that is a responsibility to recognise the importance of tolerance to others."
For the last two years, we have learned for certain that any such tolerance is a one-way street. Our societies had been walking up it. But from the other direction came the Kalashnikov brigade who only had to fire once; in the face of it, the whole civilised world chose to U-turn and run back the other way. Allah's blasphemy police would be foolish not to push the advantage that such capitulation gives their cause over the months and years ahead.
Better Buy: Novavax, Inc. vs. Roche
via Motley Fool Headlines by on Mon, 16 Jan 2017 14:42:00 GMT
Will Home Depot Raise Its Dividend in 2017?
via Motley Fool Headlines by on Mon, 16 Jan 2017 14:24:00 GMT
IMF Downplays Trump Stimulus Effect; Slashes Saudi, Mexico Growth In Latest World Economic Outlook
via by Tyler Durden on Mon, 16 Jan 2017 14:21:22 GMT
As the world's elite gather in Davos to decide for the minions what the world should look like, The IMF has taken a far dimmer view of global (and by that we mean Trumpian) economic growth than markets appear to be. In addition to slashing Brazilian, Mexican, and Saudi Arabian economic growth forecasts, Lagarde's lackeys are taking a cautious stance toward the policies of U.S. President-elect Donald Trump, who takes office this week, assuming only a modest boost to the U.S. economy from his promise of fiscal stimulus.
As Bloomberg reports, The IMF maintained its forecast for global growth in 2017 of 3.4 percent, the Washington-based organization said Monday in a quarterly update to its World Economic Outlook. Expansion for 2018 is forecast at 3.6 percent, also unchanged from the fund’s previous forecast in October.
After a lackluster outturn in 2016, economic activity is projected to pick up pace in 2017 and 2018, especially in emerging market and developing economies. However, there is a wide dispersion of possible outcomes around the projections, given uncertainty surrounding the policy stance of the incoming U.S. administration and its global ramifications. The assumptions underpinning the forecast should be more specific by the time of the April 2017 World Economic Outlook, as more clarity emerges on U.S. policies and their implications for the global economy.
With these caveats, aggregate growth estimates and projections for 2016–18 remain unchanged relative to the October 2016 World Economic Outlook. The outlook for advanced economies has improved for 2017–18, reflecting somewhat stronger activity in the second half of 2016 as well as a projected fiscal stimulus in the United States. Growth prospects have marginally worsened for emerging market and developing economies, where financial conditions have generally tightened. Near-term growth prospects were revised up for China, due to expected policy stimulus, but were revised down for a number of other large economies—most notably India, Brazil, and Mexico.
While the balance of risks is viewed as being to the downside, there are also upside risks to near-term growth. Specifically, global activity could accelerate more strongly if policy stimulus turns out to be larger than currently projected in the United States or China. Notable negative risks to activity include a possible shift toward inward-looking policy platforms and protectionism, a sharper than expected tightening in global financial conditions that could interact with balance sheet weaknesses in parts of the euro area and in some emerging market economies, increased geopolitical tensions, and a more severe slowdown in China.
Full breakdown...
But The IMF notes that the impact of a Trump administration is one of the biggest unknowns facing the global economy.
While Trump has promised to cut taxes and boost infrastructure spending, he’s also threatened to impose tariffs on trade partners such as China and Mexico. Such punitive measures may sap growth if they provoke retaliation. Trump’s policy priorities will become clearer after his inauguration on Jan. 20 in Washington.
The high degree of uncertainty about what’s in store for U.S. economic policy presents a “wider than usual range of upside and down risk factors,” IMF Chief Economist Maurice Obstfeld said in remarks prepared for delivery Monday.
“In light of the U.S. economy’s momentum coming into 2017 and the likely shift in policy mix, we have moderately raised our two-year projections for U.S. growth,” he said. “However, the specifics of future fiscal legislation remain unclear, as do the degree of net increase in government spending and the resulting impacts on aggregate demand, potential output, the Federal deficit, and the dollar.”
The IMF bumped up its forecast for U.S. growth by only 0.1 percentage point this year and 0.4 points for 2018. The U.S. economy will expand by 2.3 percent in 2017 before firming to a 2.5 percent rate in 2018, according to the update.
The Federal Reserve is now expected to raise rates at a less gradual pace than IMF staff projected in October, the fund said, without specifying the number of rate hikes it anticipates this year.
However, Brazil, Saudi Arabia, and Mexico
- *IMF CUTS BRAZIL 2017 GROWTH OUTLOOK TO 0.2% FROM 0.5%
The International Monetary Fund more than halved its 2017 growth outlook for Brazil, citing weaker-than-expected activity in Latin America’s largest economy.
Brazil will grow 0.2 percent this year, compared with a prior forecast of 0.5 percent, the IMF said in an update of its World Economic Outlook. The fund is now more pessimistic than all but three of the 39 analysts Bloomberg surveyed, whose median forecast is 0.8 percent.
Like most economists, the IMF is tempering its optimism about the government of President Michel Temer. The fund had forecast stagnation for Brazil early last year, but boosted that outlook to a half-point expansion soon after Temer assumed Brazil’s presidency in May.
- *IMF CUTS SAUDI ARABIA 2017 GDP GROWTH FORECAST TO 0.4% FROM 2%
The International Monetary Fund cut its growth outlook for Saudi Arabia on lower oil production, underscoring the challenges facing the kingdom as it seeks to overhaul its economy.
Gross domestic product will expand 0.4 percent in 2017, the lender said in its World Economic Outlook report update on Monday, citing the impact of the recent deal by the Organization of the Petroleum Exporting Countries to reduce output. It compares with the fund’s October prediction of 2 percent, and a median estimate of 0.9 percent in a Bloomberg survey.
The sharply lower forecast comes as Saudi Arabia seeks to build investor confidence in its long-term strategy to reduce dependence on crude and boost non-oil sectors of its economy, while trying to plug one of the Middle East’s biggest budget deficits. The kingdom is planning to borrow as much as $15 billion this year on international debt markets to help fund its spending plans, following last year’s $17.5 billion sovereign bond sale.
- *IMF CUTS MEXICO 2017 GROWTH OUTLOOK TO 1.7% FROM 2.3%
Citing “U.S.-related uncertainty,” the IMF slashed its projection for Mexico’s growth to 1.7 percent this year, down 0.6 percentage point from the October forecast.
Trump has promised to end or renegotiate the North American Free Trade Agreement between the U.S., Canada and Mexico that’s been key to Mexico becoming a manufacturing powerhouse over the past two decades.
Ironically, given the establishment's devastating forecast pre-Brexit, The IMF has increased its growth outlook for UK... (via The FT)
The International Monetary Fund has upgraded its UK growth forecast for the second time after the Brexit vote as it predicted global economic growth will pick up from its slowest pace since the aftermath of the financial crisis.
In its latest set of economic forecasts, the Washington-based IMF said it now expects the British economy to expand by 1.5 per cent this year from an earlier projection of 1.1 per cent – the biggest single upgrade of any major economy in its January update for 2017.
Growth in 2016 was also nudged up to 2 per cent from an October projection of 1.8 per cent but expansion in 2018 would come in lower at 1.4 per cent from an earlier forecast of 1.8 per cent, said the fund.
It is the latest immediate growth upgrade for the UK since the IMF warned a decision to leave the EU would wreak “severe” damage to Britain’s growth prospects before the June referendum.
The pre-referendum warnings came in for severe criticism from pro-Brexit campaigners, with the fund defending itself by saying it would have been “malpractice” not to have considered worst-case scenarios from a “leave” vote.
The UK economy has broadly defied warnings to continue growing at a healthy clip since the June vote, accelerating to a 0.6 per cent pace in the third quarter. The latest raft of business surveys also point to robust growth at the end of the year, helped along by buoyant consumer spending.
“Domestic demand [has] held up better than expected in the aftermath of the Brexit vote”, said the IMF.
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Full IMF Report below:
3 Top Growth Stocks Priced at a Bargain This Winter
via Motley Fool Headlines by on Mon, 16 Jan 2017 14:02:00 GMT
Key Events In The Coming Week: Trump Inauguration, Davos, Theresa May, ECB, China GDP
via by Tyler Durden on Mon, 16 Jan 2017 13:43:15 GMT
The week ahead promises to be a full one, with a plethora of events coming up. The Word Economic Forum in Davos could generate some headlines, with particular focus on Chinese President Xi Jinping, who will be the first Chinese president to attend. Tuesday brings Theresa May's long-awaited Brexit speech, while of course Friday marks the inauguration of Donald Trump as the 45th US president. We will also be keeping a weather eye out for the Supreme Court ruling on Article 50, although there is no set date for its announcement.
Central Banks: ECB and BOC
No policy change is expected from either the ECB or the BoC, but both press conferences will draw attention, particularly that of President Draghi. The market is convinced that Draghi will do his best to be boring.
China Economic Update
There is a barrage of Chinese data out on Friday, where the most closely followed number will be China's Real GDP for 4Q will be released in China, as well as IP, retail sales, FAI and December property prices. On Monday, Xi Jinping said China's 2016 GDP is expected to be 6.7%.
US: CPI, Industrial Production, Housing, Trump Inauguration
There is a busy US calendar ahead, with CPI, Empire Manufacturing, industrial production, housing data and Philly Fed reports. There are several scheduled speaking engagements from Fed officials this week, including two by Chair Yellen on Wednesday and Thursday. The Beige Book for the January FOMC period will be released on Wednesday. The week culminates in the inauguration of Donald Trump as the 45th US president. Cabinet confirmation hearings will also be continuing during the week.
Eurozone and UK
In the Eurozone, the ECB will be the main event, with the German ZEW and final inflation prints the only data releases of note. In the UK, there is an important week ahead with Theresa May’s speech on Brexit the main focus, but also releases of inflation data, retail sales and the labor market report. Keep an eye out out for the UK Supreme Court ruling on Article 50, although there is no set date for the release.
Others
In Japan, we get machine orders, PPI, tertiary industry index, the final print of November IP and a speech from the BoJ’s Nakaso. In Australia, labor force data is the key release in the week ahead, while housing finance approvals and consumer confidence in both Australia and New Zealand will also be of interest. In Canada, focus will be on the BoC monetary policy meeting, but we also get CPI and retail sales data. It should be a very quiet week ahead in Switzerland and the Scandies, although we do hear from Norges Bank Governor Olsen, and of course Switzerland hosts the WEF in Davos. There will be monetary policy meetings in Chile, Malaysia and Indonesia.
Earnings
Earnings will also be in the spotlight with Morgan Stanley tomorrow, Goldman Sachs, Citigroup and Netflix on Wednesday, IBM on Thursday and Schlumberger and General Electric on Friday due.
Davos And Trump
Away from that world leaders will also congregate in Davos this week for the World Economic Forum while UK PM Theresa May is due to outline Brexit plans on Tuesday. Clearly the other big focus this week is the inauguration of Donald Trump as US President on Friday.
* * *
A look at key events by day courtesy of DB:
- With markets closed in the US today for Martin Luther King Day it’s an unsurprisingly quiet start to the week with just the Euro area trade balance reading in November due.
- Tuesday kicks off in Japan where industrial production data is due. In Europe there will be plenty of focus on the ECB’s bank lending survey due early on, while the December inflation report in the UK will also be under the spotlight. The January ZEW survey for Germany is also due out. Over in the US tomorrow the only data due out is the January Empire manufacturing print.
- Turning to Wednesday, Germany and the Euro area will release the final revisions to December CPI reports while the UK will release the latest labour market data. Over in the US inflation data will also be the focus with the December report due out. Industrial and manufacturing production, as well as the NAHB housing market index will also be due.
- With little else of note on Thursday morning the main focus will be on the ECB policy meeting. In the US we’ll get housing starts and building permits data as well initial jobless claims and the Philly Fed business outlook print.
- It’s a blockbuster end to the week in China on Friday with the Q4 GDP print due along with December activity indicators including industrial production, retail sales and fixed asset investment. During the European session we’ll get PPI in Germany and retail sales in the UK. There’s nothing of note in the US on Friday except for Trump's inauguration of course.
There’s also plenty of Fedspeak this week. Both Dudley and Williams are scheduled to speak tomorrow, before Kashkari and Yellen speak on Wednesday. The latter is taking part in a discussion at the Commonwealth Club in San Francisco however is also expected to give an economic assessment. The Fed Chair then speaks again on Friday, along with Harker and Williams. The ECB’s Villeroy and Praet also speak today along with the BoE’s Carney while we’ll also get the usual ECB press conference on Thursday.
* * *
Finally, here is a full breakdown of just US events, together with consensus estimates, courtesy of Goldman Sachs
The key economic release this week is CPI on Wednesday. There are several scheduled speaking engagements from Fed officials this week, including two by Chair Yellen on Wednesday and Thursday. The Beige Book for the January FOMC period will be released on Wednesday.
Monday, January 16
- US markets are closed in observance of Martin Luther King, Jr. Day. There will be no economic data releases.
Tuesday, January 17
08:45 AM New York Fed President Dudley (FOMC voter) speaks: Federal Reserve Bank of New York President William Dudley will give a speech on “Evolving Consumer Behavior: A View from the Federal Reserve Bank of New York” at an event sponsored by the National Retail Federation.
08:30 AM Empire manufacturing survey, January (consensus +8.5, last +9.0)
10:00 AM Fed Governor Brainard (FOMC voter) speaks: Federal Reserve Governor Lael Brainard will give a speech on “The Impact of Fiscal Policy on Monetary Policy” at the Brookings Institution in Washington D.C. Audience Q&A is expected.
06:00 PM San Francisco Fed President Williams (FOMC non-voter) speaks: Federal Reserve Bank of San Francisco President John Williams will give the keynote speech at the Sacramento Business Review Economic Forecast at Sacramento State University in California. Audience and media Q&A is expected.
Wednesday, January 18
- 08:30 AM CPI (mom), December (GS +0.29%, consensus +0.30%, last +0.20%); Core CPI (mom), December (GS +0.20%, consensus +0.20%, last +0.15%); CPI (yoy), December (GS +2.1%, consensus +2.1%, last +1.7%); Core CPI (yoy), December (GS +2.2%, consensus +2.2%, last +2.1%): We expect that core CPI rose by 0.20% in December or 2.2% on a year-over-year basis. In the November report, core inflation was softer than expected, mainly due to lower inflation in the categories of apparel, medical care, airfares, and lodging away from home. We expect some payback in the apparel category, in part related to colder-than-average December temperatures. Headline consumer prices likely increased by 0.29% in December. On a year-over-year basis, the headline index likely increased by 2.1%.
- 09:00 AM Dallas Fed President Kaplan (FOMC voter) speaks: Federal Reserve Bank of Dallas President Robert Kaplan will participate in a panel discussion on “Confidence in Uncertain Times”. Media and audience Q&A is expected. President Kaplan is a voting member of the FOMC this year.
- 09:15 AM Industrial production, December (GS +1.1%, consensus +0.6%, last -0.4%): Manufacturing production, December (GS +0.4%, consensus +0.5%, last -0.1%); Capacity utilization, December (GS 75.8%, consensus 75.4%, last 75.0%): We expect industrial production to rebound by 1.1% in the December report following two months of weakness, based on our expectation of a rebound in the weather-sensitive utilities category.
- 10:00 AM NAHB housing market index, January (consensus 69, last 70): Consensus expects the NAHB homebuilders’ index—which we have found to be a decent leading indicator of housing starts—to tick down to 69, though still near post-crisis highs.
- 11:00 AM Minneapolis Fed President Kashkari (FOMC voter) speaks: Federal Reserve Bank of Minneapolis President Neel Kashkari will give a speech on economic opportunity and inclusive growth at an event hosted by the Minneapolis Urban League. Audience and media Q&A is expected. President Kashkari will be a voting member on the FOMC this year.
- 02:00 PM Beige Book, January-February FOMC meeting period: The Fed’s Beige Book is a summary of regional economic anecdotes from the 12 Federal Reserve districts. The December Beige Book reported modestly slower activity in a few districts, stronger consumer spending and residential investment, and mixed manufacturing activity. In the January-February Beige Book, we will look for additional anecdotes related to the state of manufacturing activity, price inflation, and wage growth.
- 03:00 PM Fed Chair Yellen (FOMC voter) speaks: Federal Reserve Chair Janet Yellen will give a speech on “The Goals of Monetary Policy and How We Pursue Them” in front of the Commonwealth Club of California in San Francisco. Audience Q&A is expected.
- 04:00 PM Total Net TIC Flows (last +$18.8bn)
Thursday, January 19
- 08:30 AM Housing starts, December (GS +12.0%, consensus +8.6%, last -18.7%); Building permits, December (consensus +1.1%, last -3.8%): We expect housing starts to rebound 12% in December, following a 19% drop in November led by the volatile multifamily category. Despite colder-than-usual December temperatures, favorable single-family fundamentals and a rising backlog of approved permits suggest scope for a meaningful rebound. Consensus expects a more modest rise of 8.6% for housing starts and looks for a 1.1% increase in building permits.
- 08:30 AM Initial jobless claims, week ended January 14 (GS 265k, consensus 251k, last 247k); Continuing jobless claims, week ended January 7 (last 2,087k): We expect initial jobless claims to rebound 18k to 265k, following two consecutive readings not far from the cycle low. We remain in a period where seasonal adjustment is difficult, and we are hesitant to infer a drop in the trend pace of layoffs based on the most recent two reports. Seasonality-related uncertainty will affect the data for at least two more weeks, and accordingly, confidence around our 265k forecast is low. The drop in initial claims has not yet been mirrored in continuing claims, which have actually risen relative to the levels in early December (as of the week ending December 31).
- 08:30 AM Philadelphia Fed manufacturing index, January (GS +16.0, consensus +16.0, last +19.7): We expect the Philadelphia Fed manufacturing survey to pull back to +16.0 following last month’s increase to +19.7, remaining at levels signaling expansion in manufacturing activity. Last week, the Federal Reserve Bank of Philadelphia conducted its annual historical revision and calculation of new seasonal adjustment factors. For December, the index was revised down modestly to +19.7 from +21.5.
- 10:00 AM San Francisco Fed President Williams (FOMC non-voter) speaks: Federal Reserve Bank of San Francisco President John Williams will give the keynote address at the Solano Economic Development Corporation’s Annual Luncheon Meeting in Fairfield, California. Audience Q&A is expected.
- 08:00 PM Fed Chair Yellen (FOMC voter) speaks: Federal Reserve Chair Janet Yellen will give a speech on the economic outlook and US monetary policy at an event hosted by the Stanford Institute for Economic Policy Research. Audience Q&A is expected.
Friday, January 20
- 09:00 AM Philadelphia Fed President Harker (FOMC voter) speaks: Federal Reserve Bank of Philadelphia President Patrick Harker will participate in a discussion on the economic outlook at the New Jersey Bankers Association’s 6th Annual NJ Economic Leadership Forum. Media Q&A is expected. Last week, President Harker reiterated his support for three rate hikes this year.
- 01:00 PM San Francisco Fed President Williams (FOMC non-voter) speaks: San Francisco Fed President John Williams will give closing remarks at the Bay Area Council Economic Institute’s 10th Annual Economic Forecast event in San Francisco. Audience Q&A is expected. Remarks will likely be similar to those from his speaking engagement on Tuesday.
Source: BofA, DB, Goldman
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Oil Slides After Saudis Suggest Early End To OPEC Deal
via by Tyler Durden on Mon, 16 Jan 2017 13:21:30 GMT
Following a brief spike overnight (as China intervened in its equity market), crude prices slipped lower, testing towards a $51 handle after Saudi Arabia says OPEC is on track to wrap up its production curbs by the middle of the year, potentially leaving its aim of clearing a global oil glut unfinished.
As Bloomberg reports, OPEC and Russia won’t need to prolong output cuts beyond June because the agreed reductions will have already ended the oversupply in world crude markets, Saudi Minister of Energy and Industry Khalid Al-Falih said in Abu Dhabi on Monday. However, ending the deal by mid-year and restoring production would mean the surplus just starts building again, thwarting OPEC’s ambition of whittling down bloated oil inventories.
The Organization of Petroleum Exporting Countries said that draining off a stockpile “overhang” of more than 300 million barrels -- enough to supply China for almost a month -- was the main aim of supply curbs agreed with Russia and other producers. Twenty-four nations signed up to a joint cutback of 1.8 million barrels a day on Dec. 10.
If they extend the deal for six months beyond its scheduled expiry in June, that surplus will be entirely eliminated by the end of the year, according to Bloomberg calculations based on data from the International Energy Agency. If they don’t extend the deal, and restore output to previous levels, about two-thirds of that glut will remain in place.
“If the reduction is of such short duration, this will hardly be sufficient to balance the oil market,” said analysts at Commerzbank AG led by Eugen Weinberg in Frankfurt. “In this case the market participants who bet on rising prices will probably withdraw from the market, putting corresponding pressure on prices.”
And that is what we are seeing begin to occur on this illiquid US holiday trading day...
When OPEC announced its original deal in Vienna, the group said it could be extended for another six months to “take into account prevailing market conditions and prospects.” Al-Falih said OPEC will reassess the situation when it meets again and the group’s members have said they’re will to extend the pact if necessary.
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China Warns Trump "It Will Take Off The Gloves" If He Continues To Provoke Beijing
via by Tyler Durden on Mon, 16 Jan 2017 13:02:31 GMT
In the latest indication that China is becoming increasingly unsettled by Trump's relentless attacks on legacy diplomacy with China, and especially the "One China" policy, two leading state-run newspapers warned on Monday that Beijing will "take off the gloves" and take strong action if Trump continues to provoke Beijing over Taiwan once he assumes office.
The reaction was provoke by Trump's latest US interview, in which he told the WSJ that the "One China" policy was up for negotiation. China's foreign ministry, in response, said "One China" was the foundation of China-U.S. ties and was non-negotiable.
"If Trump is determined to use this gambit in taking office, a period of fierce, damaging interactions will be unavoidable, as Beijing will have no choice but to take off the gloves," the otherwise calm English-language China Daily said. It added that Beijing's relatively measured response to Trump's comments in the Wall Street Journal "can only come from a genuine, sincere wish that the less-than-desirable, yet by-and-large manageable, big picture of China-U.S. relations will not be derailed before Trump even enters office".
But China should not count on the assumption that Trump's Taiwan moves are "a pre-inauguration bluff, and instead be prepared for him to continue backing his bet". "It may be costly. But it will prove a worthy price to pay to make the next U.S. president aware of the special sensitivity, and serious consequences of his Taiwan game," said the national daily.
The far more fiery state-run nationalist tabloid, The Global Times, echoed the China Daily, saying Beijing would take "strong countermeasures" against Trump's attempt to "impair" the "One China" principle.
"The Chinese mainland will be prompted to speed up Taiwan reunification and mercilessly combat those who advocate Taiwan's independence," the paper said in an editorial.
The official statement, while less provocative, was just as terse: Chinese Foreign Ministry spokeswoman Hua Chunying said the United States was clearly aware of China's position on "One China". "Any person should understand that in this world there are certain things that cannot be traded or bought and sold," she told a daily news briefing. "The One China principle is the precondition and political basis for any country having relations with China."
Hua added, "If anyone attempts to damage the One China principle or if they are under the illusion they can use this as a bargaining chip, they will be opposed by the Chinese government and people. "In the end it will be like lifting a rock to drop it on one's own feet," she concluded, without elaborating.
Meanwhile, The Global Times ratcheted up its war rhetoric, saying Trump's endorsement of Taiwan was merely a ploy to further his administration's short term interests, adding: "Taiwan may be sacrificed as a result of this despicable strategy."
Other joined in. "If you do not beat them until they are bloody and bruised, then they will not retreat," Yang Yizhou, deputy head of China's government-run All-China Federation of Taiwan Compatriots, told an academic meeting on cross-straits relations in Beijing on Saturday. Taiwan independence must "pay a cost" for every step forward taken, "we must use bloodstained facts to show them that the road is blocked," Yang said, according to a Monday report on the meeting by the official People's Daily Overseas Edition.
Trump has yet to tweet a response, if any, this morning.
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South Korea Seeks Arrest Of Samsung Chief For Bribery, Embezzlement And Perjury
via by Tyler Durden on Mon, 16 Jan 2017 12:46:43 GMT
South Korea political crisis spilled over into the corporate sector overnight, when the country's special prosecutor on Monday sought a warrant to arrest the head of Samsung Group, the country's largest conglomerate, accusing him of paying multi-million dollar bribes to a friend of impeached President Park Geun-hye.
Samsung Electronics vice chairman Jay Y. Lee
According to Reuters, investigators had grilled the head of Samsung, the world's biggest maker of smartphones, flat-screen TVs and memory chips, Jay Y. Lee for 22 straight hours last week as a suspect in a corruption scandal, which last month led to parliament impeaching president Park.
The special prosecutor's office accused Lee of paying bribes total 43 billion won ($36.42 million) to organizations linked to Choi Soon-sil, a friend of the president who is at the center of the scandal, in order to secure the 2015 merger of two affiliates and cement his control of the family business.
The 48-year-old Lee, who became the de facto head of the Samsung Group after his father, Lee Kun-hee, was incapacitated by a heart attack in 2014, was also accused of embezzlement and perjury, according to the prosecution's application for an arrest warrant.
In a startling admission that in Korea the concept of "Too Big To Prosecute" does not hold sway, the special prosecutors' office told a media briefing that "in making this decision to seek an arrest warrant, determined that while the country's economic conditions are important, upholding justice takes precedence." South Korea, an exporting powerhouse, is Asia's fourth-largest economy.
Special prosecution spokesman Lee Kyu-chul added that prosecutors have evidence showing that Park and Choi shared profits made through bribery payments. Lee is due to appear on Wednesday morning at the Seoul central district court, which will decide whether to grant the arrest warrant.
Meanwhile Samsung, whose companies generate $230 billion in revenue, equivalent to about 17 percent of South Korea's economy, rejected the accusation that Lee paid bribes. "It is difficult to understand the special prosecutors' decision," it said in an emailed statement.
Prosecutors have long been looking into whether Samsung's support for foundations and a company backed by Choi was linked to the National Pension Service's 2015 decision to support a controversial $8 billion merger of Samsung C&T Corp and Cheil Industries Inc. Samsung, which has acknowledged providing funds to the institutions, has repeatedly denied accusations of lobbying to push through the merger.
"It is especially hard to accept the special prosecutor's assertion that there was improper request for a favor related to the merger or succession of control," it said on Monday.
The special prosecutor's office said in its indictment of Moon that Park, through her aides, ordered Moon to ensure the merger of the two Samsung companies succeeded.
Park, 64, remains in office but has been stripped of her powers while the Constitutional Court decides whether to make her the country's first democratically elected leader to be forced from office.
Park has denied wrongdoing but admitted to carelessness in her relationship with Choi, a friend for four decades. Choi, in jail as she undergoes criminal trial and also denies wrongdoing.
On the news, shares of Samsung Electronics closed 2.14% lower, underperforming the 0.61% drop in the broader market. Investors say that while key Samsung businesses are run by professional CEOs and would not be hurt on an operational basis if Lee is arrested, his absence would slow bigger-picture decision-making. The Korea Employers Federation, a business lobby, said arresting Lee would undermine confidence both in Samsung and the country's economy, Asia's fourth-largest, and called the special prosecutor's probe "very regrettable."
The proposed arrest is merely the latest in a long strink of corporate scandals to rock South Korea, and Samsung in particular. Jay Y. Lee's father Lee Kun-hee was himself handed a three-year suspended jail sentence in 2009 for tax evasion. He was later pardoned. Public opinion has in recent years grown less tolerant of leniency extended to the heads of conglomerates, or chaebols, for the sake of the economy.
The Samsung crackdown is the latest fallout from a political crisis that has impacted South Korea, stemming from the impeachment of president Park in December. If the impeachment is upheld by the Constitutional Court, an election would be held in two months, with former U.N. Secretary General Ban Ki-moon expected to be a candidate. Choi, in detention and on trial on charges of abuse of power and attempted fraud, again denied wrongdoing on Monday in an appearance at the Constitutional Court's impeachment trial.
