Friday, November 30, 2018

BBC News - Federal Reserve hints at fewer interest rate rises

In this file photo taken on September 26, 2018 Federal Reserve Board Chairman Jerome Powell speaks during a press conference in Washington, DC. -Image copyrightAFP/GETTY
Image captionMr Powell says gradual rate increases are the best way to balance risks
Wall Street shares have risen sharply after the US central bank indicated there may not be as many future interest rate rises.
In a speech, Federal Reserve Chair Jerome Powell said interest rates are "just below" a neutral level that neither hastens nor slows growth.
Last month, he had said the bank had a "long way" to go before reaching that level.
His remarks come after repeated attacks by President Donald Trump.
Mr Trump blames the Fed's recent rate rises for recent stock market declines and has described future rate increases as the biggest risk to the US economy.
The president, who selected Mr Powell to lead the bank last year, has also said he is not happy with his pick.
Mr Powell, who was speaking at the Economic Club in New York, did not address the criticism directly.
But he appeared to soften his tone about future rate rises while continuing to defend the Fed's plans for gradual increases.
"Interest rates are still low by historical standards, and they remain just below the broad range of estimates of the level that would be neutral for the economy - that is, neither speeding up nor slowing down growth," he said.
He added: "There is no preset policy path. We will be paying very close attention to what incoming economic and financial data are telling us."
The Dow and the Nasdaq indexes both jumped more than 2% after the comments, while the S&P 500 gained 1.7%.

Balancing two risks

The US economy has enjoyed a healthy expansion this year, spurred in part by increased government spending and a major tax cut.
Job creation has been strong and gross domestic product (GDP) grew at an annualised rate of 3.5% in the most recent quarter.
However, many economists expect that pace to slow next year as the effects of the stimulus fade.
In his speech, Mr Powell said he viewed gradual increases as the best way to balance the risks of causing problems by raising rates too fast or too slowly.
"Our path of gradual increases has been designed to balance these two risks, both of which we must take seriously," he said.
Mr Powell said the overall risks to financial stability remain "moderate", but he flagged rising levels of corporate debt as one area of concern.
He also said disruption caused by events such as Brexit might trigger economic distress.

Thursday, November 29, 2018

Bloomberg News - South Africa to Introduce New Oil and Gas Law After 2019 Polls

By Paul Vecchiatto

South Africa will introduce new oil and gas laws after elections next year, Mineral Resources Minister Gwede Mantashe said.
“We will make sure that it will be one of the first laws to be processed in the new parliament after the elections,” he said in Cape Town on Thursday.
The process of approval of exploration applications will be completed in terms of the current mineral and petroleum law. The oil and gas sector must advance black economic empowerment, especially at the operational level, he said.

Wednesday, November 28, 2018

BBC News - Philip Hammond: Brexit will leave UK economy worse off

Philip HammondImage copyrightREUTERS
All forms of Brexit will make the UK worse off but Theresa May's plan is the best available, says Philip Hammond.
Analysis of the prime minister's Brexit deal shows the economy will be "slightly smaller" after 15 years, he told BBC Radio 4's Today programme.
But it was not just about the economy, the chancellor added - her plan would deliver "political benefits" as well.
It comes as the government is due to publish its economic analysis on the long-term effects of Brexit on the UK.
The Treasury will set out various scenarios - with the Daily Telegraph saying it will predict £150bn in lost output over 15 years under no deal - compared with if the UK stayed in the EU - with Theresa May's plan costing £40bn.
With two weeks until MPs vote on the deal, Mr Hammond said: "We're going to go out and we're going to sell this deal."
He said if the deal was not voted through Parliament, Mrs May's cabinet would sit down and "decide how best to proceed", looking at how MPs had voted before deciding their next move.
Under any scenario, in a "purely economic sense" the UK would be worse off than if it stayed in the EU, as exiting would created "impediments to our trade", said the chancellor.
But he argued that staying in the EU was not politically "viable" and, he added, Mrs May's planned Brexit deal combined most of the economic benefits of remaining in the EU with the political benefits of leaving the EU.
Asked if the UK would be poorer under Mrs May's deal, Mr Hammond said: "The economy will be slightly smaller in the prime minister's preferred version of the future partnership."
He said Mrs May's deal would reduce to "an absolute minimum the economic impact of leaving the EU, while delivering the political benefits" such as being able to do trade deals outside the EU and "having control of our fishing waters".
Veteran Conservative Eurosceptic Sir Bill Cash said Mr Hammond was effectively arguing for the UK to stay in the European Union in his "extraordinary" statement.
He said the chancellor had ignored potential economic benefits of leaving the EU, asking: "What about the trade deals which could give us the most enormous opportunities throughout the world, if we are able to strike them?"
Under Mrs May's deal, the UK would be able to negotiate trade deals during the transition period after 29 March's Brexit day, but would not be able to implement them until the end of the planned 21 month transition period, which could itself be extended.
Sir Bill, who is among the MPs to have submitted a letter of no-confidence in Theresa May in a bid to remove her as prime minister, said this would keep the UK tied to the EU "indefinitely" with no say over its rules.
The chancellor's comments were seized on by MPs campaigning for another EU referendum, with Labour's Chris Bryant saying on Twitter: "Philip Hammond effectively conceded that the so-called deal is going nowhere and that after 11/12 all options should be on the table. That sounds like we are inching towards #PeoplesVote."
MPs are due to vote on Mrs May's Brexit deal, which she insists is the only option, on 11 December.
According to the Daily Telegraph, the Treasury analysis will show that under Mrs May's deal, the UK's GDP will be between 1% and 2% lower over 15 years than if it stayed in the EU, compared with 7.5% lower under a no deal situation.
The Department for Exiting the EU said it does not comment on leaks.
In other developments, the Commons Public Accounts Committee issued a report warning of a "real prospect" of "major disruption" at UK ports in the case of a no-deal Brexit.
The prime minister is heading to Scotland, where she is expected to tell workers in a factory near Glasgow she believes her deal provides an "unprecedented economic relationship that no other major economy has" and certainty for employers and their staff.
She will also say that moving away from the EU's common fisheries policy (CFP) "which has so tragically failed Scotland's coastal communities" will leave the UK "free to decide for ourselves who we allow to fish in our waters".
The UK sells nearly £1bn of fish produce to the EU every year, and a number of EU countries are insisting that tariff-free trade of that kind can continue only if EU fishing boats continue to get access to UK waters.
The SNP claims the industry will be "sold out".
The party says access to UK waters for EU boats will be used as a "bargaining chip" to secure a good post-Brexit trade deal.
Media captionNicola Sturgeon said that no Scottish government could possibly accept a deal which left the country poorer
And Scottish First Minister Nicola Sturgeon has unveiled analysis the SNP claims shows Scotland would be left poorer by the deal.
Her party, which has 35 MPs, along with the leadership of Labour, the Lib Dems and Democratic Unionists have all said they will reject Mrs May's deal.
Many Tories have also said publicly they are opposed to Mrs May's deal.
Meanwhile, a row is brewing after the Labour Party demanded the government publish its full legal advice on the Brexit deal this week.
The government has only said it will publish a "full reasoned position statement" laying its out political and legal position on the withdrawal agreement.
BBC Newsnight political editor Nick Watt said a source says the full advice provides a "very stark warning" that there is no way the UK, on its own, would be able to get out of the so-called Northern Ireland backstop.
The backstop - the plan to create a temporary single customs territory to prevent the return of customs posts at the Irish border in the event no EU-UK trade deal comes into force - is controversial because Brexiteers fear it would keep the UK tied to EU rules indefinitely.
Chancellor Philip Hammond said Downing Street will not be publishing the full legal advice because it would be "impossible for the government to function" if such confidential material was made public.
"There's a very important principle here, that the Government must be able to commission impartial legal advice which absolutely tells it like it is to enable it to shape its decisions, while always complying with its legal obligation in the negotiations," he told Today.

Tuesday, November 27, 2018

Reuters News - Wall Street falls as Trump's threat sparks trade worries

by Amy Caren Daniel
(Reuters) - U.S. stocks declined on Tuesday after President Donald Trump’s threat to move ahead with additional tariffs on Chinese goods dampened hopes of resolving the trade spat at the upcoming G20 Summit.

Ahead of a meeting where the leaders of the world’s two largest economies are widely expected to enter a trade deal, Trump told the Wall Street Journal he expects to raise tariffs on $200 billion in Chinese imports to 25 percent, calling it “highly unlikely” that he would accept China’s request to hold off on the increase.
“The market remains in a fragile state and because of that anytime tariffs come into the picture you have worries,” said Peter Cardillo, chief market economist at Spartan Capital Securities in New York.
“Investors are looking for some positive news out of the G20, but until there is a concrete announcement on tariffs, investors will remain jittery."
Apple Inc (AAPL.O) fell 1.6 percent and led the declines in the technology sector .SPLRCT after Trump said tariffs could also be placed on laptops and iPhones imported from China.
Chipmakers, which have the highest revenue exposure to China among S&P 500 companies, also declined, with the Philadelphia SE Semicoductor index .SOX losing 0.79 percent.
Shares of Boeing, the single largest U.S. exporter to China, fell 1.2 percent and fellow Dow component Caterpillar fell 1.6 percent, weighing on industrial stocks .SPLRCI.
The downbeat mood comes after Wall Street started off the week on a high note, partly helped by retail stocks gaining on the hopes of a robust holiday season.
At 9:39 a.m. EDT the Dow Jones Industrial Average .DJI was down 171.84 points, or 0.70 percent, at 24,468.40, the S&P 500 .SPX was down 12.37 points, or 0.46 percent, at 2,661.08 and the Nasdaq Composite .IXIC was down 49.99 points, or 0.71 percent, at 7,031.86.
United Technologies Corp (UTX.N) tumbled nearly 6 percent, the most on the benchmark S&P 500 index. The industrial conglomerate was up in premarket trading after it announced plans to separate into three companies.
All the major S&P sectors were in the red, with the technology sector’s 0.95 percent drop leading the slide.
Federal Reserve Vice Chairman Richard Clarida said the central bank should continue to gradually raise interest rates, but it is “especially important” to closely monitor new economic data as monetary policy is getting close to a neutral stance.
Fed Chairman Jerome Powell is scheduled to speak on Wednesday and his commentary will be closely watched for further clues on the path of interest rate hikes and signs of slowing economic growth in the face of rising trade tensions.
Declining issues outnumbered advancers for a 2.04-to-1 ratio on the NYSE and for a 2.37-to-1 ratio on the Nasdaq.
The S&P index recorded one new 52-week highs and one new lows, while the Nasdaq recorded six new highs and 49 new lows.
Reporting by Amy Caren Daniel in Bengaluru; Editing by Arun Koyyur

Monday, November 26, 2018

Bloomberg News - An Oil-Rich State Seeks Hope in the Ashes of Africa's Worst War

Friday, November 23, 2018

BBC - Italy budget 'sleepwalking into instability' - Commission

File photo: Italy's Deputy Prime Minister Luigi Di Maio, Prime Minister Giuseppe Conte, and Deputy Prime Minister Matteo Salvini, all confer during a press conferenceImage copyrightAFP
Image captionItaly's PM Giuseppe Conte and his two deputies are facing pressure from Brussels

The European Commission has taken the first step towards sanctioning Italy over its national budget in an ongoing row over the country's finances.
In October, the EU executive body rejected Italy's draft budget and told it to make changes - an unprecedented event in European politics.
Italy, however, said it would stick to its high-spending goals.
On Wednesday, the Commission said formal proceedings that could bring financial sanctions were "warranted".
Its report cited a "particularly serious non-compliance with the fiscal recommendation for 2019", and Commission Vice-President Valdis Dombrovskis said: "With what the Italian government has put on the table, we see a risk of the country sleepwalking into instability."
He said that the EU's disciplinary measure known as "excessive deficit procedure" (EDP) was now appropriate.
Italy's populist-led government had already been told by the Commission to revise its budget, because of the high level of national debt, which eurozone officials worry could cause instability for the entire bloc.
But the Rome government failed to make significant changes, putting the country on a collision course with Brussels.
Under the rules of the sanction procedure, potential consequences include a fine of 0.2% of GDP - which for Italy's economy would cost billions of euros - and a halt on the payment of any development funds.
However, the process could take a long time, and Mr Dombrovskis said he was still open to talks with Italy on how to address the disagreement.
Italy's deputy prime minister, Matteo Salvini, told reporters he remained convinced about his government's budget plans. Prime Minister Giuseppe Conte said he would meet Commission President Jean-Claude Juncker on Saturday to highlight the budget's "solidity and effectiveness".

How did we get here?

Italy's current government took office in June 2018 and is a coalition of the anti-establishment Five Star Movement and right-wing League.
Widely seen as a populist coalition, the first national budget of new government was hammered out in September,
The problem for EU officials was its high cost for a country facing massive debts. The government planned to rack up a budget deficit of 2.4% of GDP to finance its plans.
The Commission had hoped for a lower budget cost as the previous government's plans were for a 0.8% deficit.
Italy is the third-largest economy in the eurozone, but has more than two trillion euros in debt - which is 131% of the country's entire economic output.
To put that in context, it is second only to Greece (178%), and far higher than the UK (88%) or Germany (64.1%). The debt is equivalent to about €37,000 for every person in Italy.
The government argues that additional investment is needed to kick-start the sluggish Italian economy, which has still not recovered from the financial crisis of a decade ago.
Italy's statistics agency Istat forecast on Wednesday that the economy would grow by 1.3% in 2019, and 1.1% in 2018.
While it said the budget would help boost demand in the Italian economy, its 2019 estimate is below the government's figure of 1.5%.
Shortly before the League-Five Star government came to power, Istat forecast a growth figure of 1.4% for 2018, and it said on Wednesday that growth was slowing in comparison with 2017.

Why is Italy's budget so expensive?

Italy's government hailed the budget as one that would "end poverty".
The draft budget included the fulfilment of election promises, such as reversing plans to raise the retirement age and a guaranteed basic income of €780 (£700; $890) for poor families. Those two plans alone were expected to total about 0.7% of Italy's GDP.
It also included tax cuts and reforms.
Recent bad weather in Italy has also added major infrastructure projects to the government's priorities - including the aftermath of the Genoa bridge collapse in August, which raised concerns over the country's ageing public works.