BBC News - US economic growth revised up again

The US economy grew even faster in the second quarter than previously thought, new figures have indicated.

The Commerce Department said it grew at a 3.1% annual rate over the three months to the end of June, up from a previous estimate of 3%, which was itself revised up from an initial 2.6%.

The further upward revision came as a surprise to analysts, who had it expected it to stay the same.

Higher consumer spending, helped boost the figure, as did state expenditure.

The US economy is now growing at the fastest rate in two years.

"Growth was solid in the second quarter, but that was after a soft first quarter," said Gus Faucher, chief economist at the PNC Financial Services Group.

"The economy has been expanding at a pace of between 2% and 2.5% throughout the current economic expansion, which started in 2009.

"This is below the pace of previous expansions, in part because of demographic changes in the US, most notably slower labour force growth with the retirement of the baby boomers."

Reuters News - Trump proposes U.S. tax overhaul, stirs concerns on deficit

by David Morgan and Richard Cowan

WASHINGTON (Reuters) - President Donald Trump proposed on Wednesday the biggest U.S. tax overhaul in three decades, calling for tax cuts for most Americans, but prompting criticism that the plan favors business and the rich and could add trillions of dollars to the deficit.

The proposal drew a swift, skeptical response from Senator Bob Corker, a leading Republican “fiscal hawk,” who vowed not to vote for any federal tax package financed with borrowed money.

“What I can tell you is that I’m not about to vote for any bill that increases our deficit, period,” Corker, who said on Tuesday he would not seek re-election in 2018, told reporters.

Trump said his tax plan was aimed at helping working people, creating jobs and making the tax code simpler and fairer. But it faces an uphill battle in the U.S. Congress with Trump’s own Republican Party divided over it and Democrats hostile.

The plan would lower corporate and small-business income tax rates, reduce the top income tax rate for high-earning American individuals and scrap some popular tax breaks, including one that benefits people in high-tax states dominated by Democrats.

Forged during months of talks among Trump’s aides and top congressional Republicans, the plan contained few details on how to pay for the tax cuts without expanding the budget deficit and adding to the nation’s $20 trillion national debt.

The plan still must be turned into legislation, which was not expected until after Congress makes progress on the fiscal 2018 budget, perhaps in October. It must then be debated by the Republican-led congressional tax-writing committees.

Analysts were skeptical that Congress could approve a tax bill this year, but that is what Republicans hope to achieve so they can enter next year’s congressional election campaigns with at least one legislative achievement to show for 2017.

Financial markets rallied on the plan’s unveiling, an event long anticipated by traders betting that stocks would benefit from both faster economic growth and inflation.

Bloomberg News - Biggest Expat Salary Increases Found in Alps, Arabian Desert

Expatriates moving to Switzerland -- home to some of the biggest private banks, commodity traders and pharmaceuticals companies -- earn an average of more than $193,000. That’s the highest in the world and 54 percent more than if they’d stayed at home, a study published Wednesday by HSBC Holdings Plc shows. That boost in remuneration is only surpassed by the 58 percent increase enjoyed by expats relocating to Saudi Arabia’s petrodollar economy.

Switzerland leads HSBC’s economics ranking -- measuring issues from personal finances and career progression to the strength of the local economy -- for a third straight year. Almost eight in 10 expats said they had more disposable income after moving to the home of Credit Suisse Group AG, drugmaker Roche Holding AG and commodities trader Mercuria Energy Group Ltd. 

“Switzerland has always been a high achiever for economics,” said Dean Blackburn, head of HSBC Expat. “The majority of expats there are in full-time employment with improved earning prospects. Expats in Switzerland are also some of the most confident in the local economy.”

Norway and Germany placed second and third for economics, followed by Singapore, which topped the overall country rankings for the third year, according to the annual HSBC Expat Explorer report.

The city-state, where foreigners make up more than 60 percent of the population, derives its top ranking by also scoring well in categories for experience and family. The former measures quality of life, integration with locals and ease of finding accommodation, while the latter captures social life, education and raising children.

Still, while a fat wallet helps, it can’t always buy bliss.

Switzerland dropped to No. 11 in HSBC’s overall expat country rankings because of low ratings in the experience and family categories. While the nation of iconic ski resorts from Zermatt to St. Moritz scored well for lifestyle, it was ranked 36th for the ease of integrating with local people and forming friendships. Similarly, the country with more than 2 million foreign residents was judged a good place to bring up children, but only placed 44th out of 46 for social life and how welcoming it was from a diversity perspective.

Achieving Goals

Those categories also dragged down Saudi Arabia to 40th in the overall ranking, just ahead of China, with Egypt propping up the list. The strong personal finances of expats living in the desert kingdom are countered by the weakness of the Saudi economy, which is facing the worst slowdown since the global financial crisis.

Goldman Sachs Group Inc. Chief Executive Officer Lloyd Blankfein said Saudi Arabia must address cultural differences with the West to attract more foreign workers as it seeks to diversify its economy away from oil. That could involve creating districts where “certain behaviors” are allowed and other places where they are not, he said last week.

The U.K. dropped 13 places to 35th in HSBC’s overall ranking from 2016, falling behind Poland, South Africa and Turkey as Brexit drained expat confidence in the country’s political and economic prospects.

The U.S. climbed three positions to 27th, topping the survey for career progression, but scoring relatively poorly for the ease of setting up, which includes organizing health care and finding accommodation.

In general, moving abroad is financially rewarding, with expats increasing their income by an average of 25 percent, according to HSBC’s survey of more than 27,500 people from 159 countries and territories.

“From home ownership to retirement preparation, expats can achieve their lifelong goals more quickly,” Blackburn said.

By 

Andy Hoffman

 and 

Zoe Schneeweiss

— With assistance by Catherine Bosley

BBC News - Brent oil price ease back from two-year highs

The price of oil has fallen back on Tuesday after earlier hitting a two-year high.

Rising demand and geopolitical worries had fuelled the increase, along with indications that production cuts by Opec members are starting to bite.

Brent rose about 4% to just short of $60, its highest since July 2015, point, before dropping back to $58.59.

US West Texas crude went above $52 a barrel before falling back to $51.87.

The oil market has been in a downturn for almost three years. But the head of BP's oil trading division in Asia, Janet Kong, told a Financial Times conference the market was now "at a juncture".

As well as increased demand, especially from China, Turkey's threat to disrupt oil flows from Iraq's Kurdistan region, helped push up prices on Monday.

Turkey has said it could cut off a pipeline that carries oil from northern Iraq to the global market, putting more pressure on the Kurdish autonomous region over its independence referendum.

"If this boycott call proves successful, a good 500,000 fewer barrels of crude oil per day would reach the market," analysts at Commerzbank said.

Meanwhile, Opec, Russia and several other producers have cut production by about 1.8 million barrels per day (bpd) since the start of 2017, helping oil prices rise by about 15% in the past three months.

At an Opec meeting on Friday, several countries said output curbs were having the desired impact on the market and price.

Kuwaiti oil minister Essam al-Marzouq said the cuts had reduced global crude stocks to their five-year average, which is Opec's target.

BBC News - Japan's yen rises after N Korea warning

 
The yen edged up 0.3% against the dollar on Friday after North Korea suggested it might test a hydrogen bomb over the Pacific Ocean.

It is not unusual for Japan's currency to climb during a crisis, as investors seek a safe haven until risks ease.

But this crisis is slightly different, because the additional risks could be to Japan itself.

Analysts, however, say things would have to be catastrophic for investors to flee the currency.

The yen is an extremely resilient currency, and it has risen during previous times of crisis in Japan.

It climbed 0.8% against the dollar when North Korea fired a missile over Japan in late August, and also gained during a second launch two weeks later.

After the 2011 tsunami and nuclear disaster at Fukushima, there was such a surge that the government and the G7 countries had to intervene.

So what would it take to send investors running from the yen?

"It'd have to be a really, really extreme event. Even if there is a war, I'd expect the yen to strengthen," said Takuji Okubo from Japan Macro Advisors.

• Kim: 'Deranged' Trump will pay for speech
• North Korea crisis in 300 words
• Trump ramps up N Korea sanctions

This latest crisis is nowhere near that level.

In fact, Mr Okubo said one reason the yen is strengthening right now is that Japanese investors actually think the risk of armed conflict is very low.

Instead, they are worried about the possible impact of a trade blockade or a drop in consumer sentiment hitting sales of homes or cars.

Image copyright

If the main risks are economic, then investors might not see much difference between this crisis and any other risk.

"If the risk is financial and economic, you would want to increase your cash reserve and generally curtail your risk exposure," he said.

Other options

Other analysts think investors simply lack other good options if their main goal is to to keep their money somewhere safe until conditions improve.

That includes the other traditional safe haven, the US dollar, in part because the Federal Reserve's current monetary policies might not be carried out if Janet Yellen is not reappointed as chair next year.

"Directionless, rudderless and leaderless America is looking unattractive" said David Kuo from the Motley Fool.

"Investors are therefore bereft of places to park their money. Switzerland is not big enough. Nor is Singapore. The eurozone is in a mess. So that just leaves Japan," he said

BBC News - Fed to start unwinding bond portfolio

Image copyrightGETTY IMAGES

Image captionFederal Reserve Chair Janet Yellen speaks to reporters after the Fed's two-day September meeting

The Federal Reserve has said that it will start to run down some of the investments it made to boost the US economy after the financial crisis.

In October the Fed will start to reduce a $4.2trn portfolio of US Treasury bonds and mortgage-backed securities, it said.

It will initially cut up to $10bn each month from the amount it reinvests.

It also said it will hold benchmark interest rates steady, and signalled a rate hike by the end of 2017.

The move to unwind the portfolio the Fed acquired during its crisis-era bond-buying programmes was widely anticipated.

What is the US Federal Reserve doing?

Analysts say the decision could lead long-term borrowing costs to rise modestly.

But Federal Reserve Chair Janet Yellen said she believes the US economy is ready for less economic stimulus.

"We feel the economy is performing well and we have confidence in the outlook," Ms Yellen said.

Fed officials are predicting economic growth of 2.4% in 2017, a stronger expansion than they anticipated in June.

Ms Yellen said the hardship caused Hurricanes Harvey, Irma and Maria may hurt growth in coming months but she does not expect it to "materially alter the course of the national economy in the medium term".

"Growth likely will bounce back," she said.

Ms Yellen said officials were watching inflation closely. This year, it has lagged below the Fed's 2% target and the forecast now suggests it will continue to do so in 2018.

Ms Yellen said she thinks the sluggish inflation rate is the result of temporary factors including lower cell phone costs that don't reflect underlying economic trends.

But she acknowledged some uncertainty: "Our understanding of the forces driving inflation isn't perfect," she said.

Despite the lagging inflation, a majority of officials see room for another rise in the key interest rate target set by the Federal Reserve before the end of the year, according to the economic forecast released after Wednesday's meeting.

But the predictions may be less useful now, because of the high number of vacancies in key Fed positions, said Mekael Teshome, an economist for Pittsburgh-based PNC Financial Services Group.

Market reaction

Policymakers have signalled their plans for the Fed balance sheet for months in an effort to avoid rattling markets.

US stocks initially fell after the announcement, but pared losses by the end of the day, with both the Dow and the wider S&P 500 closing at new highs.

"Today's meeting really was just confirmation of what we already knew," said Mr Teshome. "It's the beginning of the end for these extraordinary measures."

The Fed pursued three rounds of quantitative easing between 2008 and 2014 to stimulate the economy after the 2007-2009 financial crisis and recession.

Mr Teshome said the economy should be able to handle the shift as the Fed stops reinvesting proceeds from those holdings.

"The slight upward pressure [on rates] won't be enough to derail the expansion," he said.

Bloomberg News - World Leaders Push More Inclusive Approach to Globalization

By 

Andrew Mayeda

Canadian Prime Minister Justin Trudeau speaks next to Dutch Prime Minister Mark Rutte at the Bloomberg Global Business Forum in New York City, on Sept. 20.

 Photographer: John Moore/Getty Images

Global political and business leaders defended trade and globalization while acknowledging that countries must do more to address the concerns of people who feel left behind.

“Trade leads to growth. That’s the story of our world over the past centuries, and that’s a good thing,” Canadian Prime Minister Justin Trudeau said Wednesday at the Bloomberg Global Business Forum in New York. But “that growth hasn’t necessarily reached everyone,” and that’s led to either to political backlash “or falling back into the politics of fear, division, or envy or inward turning.”

Rather than mourning the loss of manufacturing jobs, the world should embrace the technological advances diffusing through the global economy, which will create growth in service jobs, said Alibaba Group Holding Chairman Jack Ma.

“We should not talk about made in China, made in America. It’s going to be made in the Internet,” he said.

Their comments came as world leaders gathered in New York for the annual United Nations General Assembly this week. While President Donald Trump was scarcely mentioned by name during the early part of the business forum, his administration’s nationalist approach to trade and immigration policy loomed large in the discussions. Trump has said he’ll put “America First” in his policy agenda, and during a speech Tuesday at the UN he threatened to “totally destroy” North Korea if forced to defend the U.S. or its allies.

‘Multilateralism’ Needed

French President Emmanuel Macron said the current system of international rules needs to be overhauled to address the world’s challenges. But he emphasized that cooperation must be at the core of any new system.

“We are in a very specific moment. We have a lot of global challenges: climate change, migrations, terrorism -- and for that, we do need multilateralism,” he said.

Countries need to take cooperation “to another level,” said former U.S. President Bill Clinton. “It depends upon our mind and our heart; first believing that we can and must every day expand the definition of us, shrink the definition of them.”

Trudeau said the next step for nations will be to champion “progressive” trade agendas, citing the need for provisions to strengthen labor and environmental standards and promote gender equality in trade accords.

— With assistance by Josh Wingrove, and Greg Quinn