Daily Archive: June 6, 2017

Jun
06

Why Qatar Is in the Naughty Corner

Emboldened by its closer ties to America, thanks to Trump, Saudi Arabia is punishing the emirate for engaging with Iran.

Jun
06

Meatonomics’ David Robinson Simon: ‘Everything I envision for meat has happened with tobacco’

Most arguments for shunning animal products focus on health, ethics and the environment, the vegan author says. ‘I just wanted to have a fourth perspective, which is economics’

David Robinson Simon’s latest colonoscopy was carried out at a major hospital in southern California by the head of its gastroenterology department. “I said something like, ‘I hope you don’t find any polyps, because I’m a vegan, so I shouldn’t be at risk,’” Simon says. “He said, ‘Ah, that’s a bunch of nonsense.’”

As Simon tells me this anecdote, 27 minutes into our interview, a new twist on the old joke crosses my mind: How do you know if someone is vegan? They’ll tell you … as you’re about to give them a colonoscopy.

Seventy years ago, if you asked somebody if smoking was bad for them, they’d say heck no

Related: Meatonomics author says government working with meat and dairy industry to boost consumption

Related: Could VAT on meat help us save the planet? | Simon Fairlie

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Jun
06

The Guardian view on the economy: invest for growth | Editorial

If re-elected, the Tories will bring more austerity and no guarantee of investment-led growth. Labour’s plans could mean escape from stagnation

On the day that former Royal Bank of Scotland boss Fred Goodwin escaped explaining in court how he crashed the business and lost billions of pounds during the 2008 financial crash, it is timely to consider Britain’s post-election economic fortunes. It is a future still defined by the banking crash that Fred “the Shred” Goodwin was so much a part of, and by the aftershocks that still weigh the government down with debt. In particular, the blow to confidence deterred businesses from making the kinds of investments needed to raise productivity and lift average wages. Britain’s not a strong and stable economy, but a fundamentally weak and enfeebled one, brought low by a banking industry that lent hundreds of billions more than it should have to people it barely knew.

It is not for the want of profits that businesses have shied away from shopping for the latest ideas or buying the latest kit. Official figures show corporate profits last year were back to the peak achieved in 2008. In the last quarter, the number of companies convinced their profit forecasts were on target or likely to exceed expectations was at a three-year high. Yet in the three months before Christmas, business investment actually fell 0.9% and was flat overall during the previous year.

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Jun
06

Make the magic money tree work for everyone, not just the rich | Letters

The money tree should be more than a fantasy used by Conservatives to bash Labour spending plans, say Guardian readers

Tory politicians now frequently accuse Labour of believing in the existence of a “magic money tree” that will enable a Labour government to “pay for it” (Front page, 3 June). They hope that none of us will remember that in its 2014 Q1 Quarterly Bulletin the Bank of England published a graphic and explicit account of the facts of money: almost all money comes into this world “out of thin air”, conjured into existence by the book-keeping act in which “whenever a bank makes a loan, it simultaneously creates a matching deposit in the borrower’s bank account, thereby creating new money”. This had for very many years been well understood by bankers, but for some reason most of them had been too shy to admit such facts outside a small circle of consenting adults.

The secret of political understanding is that most accusations hide guilty secrets. In this case the money tree is by no means a fantasy: it is the very real tree of quantitative easing, a tree that has dropped billions of pounds of new money into banks and financial institutions. The resulting inflation of asset values has allowed the few to become obscenely wealthy while the Tories have increased the national debt by nearly £800bn since 2010.

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Jun
06

South Africa falls into recession, sending rand sliding – as it happened

South African economy is suffering its second recession in eight years as trade shrinks and manufacturing contracts

South Africa’s economy shrinks againThe rand is being hammeredAnalysts blame political infighting

Earlier:

US dollar hits seven-month low…
..but eurozone investor optimism is climbingIntroduction: UK retail sales squeezed

5.37pm BST

Investors are being rather cautious ahead of Thursday’s UK election, ECB meeting and the testimony by ex-FBI boss James Comey. So most stock markets have fallen back again, while the dollar has hit a seven month low. Oil has recovered some of its early losses after the latest tensions in the Middle East, with Brent crude edging up 0.2% to $49.57 a barrel having fallen as low as $49.

The FTSE 100 has ended virtually flat, outperforming the bulk of its European peers, as the latest polls show a Conservative lead. The FTSE 250, hit by weakness in sterling, has lost 1%, its worst daily performance since the middle of April. The final scores showed:

4.56pm BST

One of the big events on Thursday is the latest meeting of the European Central Bank, with president Mario Draghi expected to make a minor shift in the tone of the bank’s message. Marchel Alexandrovich, senior European economist at Jefferies, said:

On Thursday the ECB is widely expected to change some of the language around its forward guidance, but the implications of these changes are likely to be downplayed by Mario Draghi during the Q&A session.

In the last two meetings the ECB hinted that a further cut to the depo rate was unlikely – and we expect this position to be formally confirmed in the Monetary Policy Decisions statement. However, the shift to a more neutral policy stance with regards to interest rates will not affect the ECB’s other key messages: the depo rate will remain at present level until after QE comes to an end; and QE will carry on until the end of the year “or beyond, if necessary”.

4.13pm BST

Here’s the Reuters take on the US job openings figures:

U.S. job openings surged to a record high in April while hiring slowed, suggesting a recent moderation in job growth was the result of employers having difficulties finding qualified workers.

The monthly Job Openings and Labor Turnover Survey, or JOLTS, released by the Labor Department on Tuesday showed there were 6.0 million job openings on the last day of business in April, an increase of 259,000 from March. Hiring decreased by 253,000 jobs to 5.1 million.

4.03pm BST

Investors are shying away from risk at the moment, with precious metals and defensive shares reaping the benefit.

Gold is at its highest level in seven weeks, up $14 to $1293 an ounce, while silver is up from $17.54 to $17.68 an ounce. Jasper Lawler, senior market analyst at London Capital Group, said:

There has been a clear shift into haven trades to protect against any fireworks following key events on Thursday. Brits heading to the polls, central bankers deciding interest rates in Europe and testimony from FBI Director Comey all pose a threat. With three big events clustered in one day, it only takes one to go way to set things off.

Stocks mostly retreated with a tendency for more defensive areas of the market to outperform. Utilities, a typical haven when staying invested in stocks rose over half-a-percent on the Euro Stoxx 600 while most other sectors were lower…

3.33pm BST

#JOLTS Graph time! Quits rate at 2.1%, where it’s been 10 of last 12 months pic.twitter.com/96m9qbcRoB

Wow. The US has a record high 6.04 million job openings. That’s almost 1 for every unemployed person. https://t.co/O14s9Pg4gq #jobs

As a reminder JOLTS is two months delayed: today’s job openings references the April payrolls

3.23pm BST

See our interactive graphics on today’s new job openings and labor turnover numbers https://t.co/i0dnmTlJVX #JOLTS #BLSdata #DataViz

3.14pm BST

And here are the job openings figures, and they have come in at a record high.

According to the Bureau of Labor Statistics, job openings rose from a revised 5.78m in March to 6m in April, the highest level since the survey began. But hires were weaker, falling from 5.3m to 5m while the quits rate edged marginally lower from 2.2% to 2.1%.

2.54pm BST

Last week’s US non-farm payroll numbers were much weaker than expected, but analysts agreed they were unlikely to prevent the US Federal Reserve raising interest rates next week. But some observers suggested they could slow down the pace of any further rises.

Another set of US jobs data is due shortly, and it is one that Fed chair Janet Yellen is known to pay particular attention too, even if it is not as well followed as the non-farm numbers. The Job Openings and Labor Turnovers Survey (JOLTS) gives another snapshot of the state of the employment market, with indications on job openings, hiring, layoffs and the quit rate. The latter in particular, if it is increasing, shows a more optimistic market, if employees feel confident enough to leave their jobs in search of new ones. However David Madden, market analyst at CMC Markets, said the job opening figure could see a decline on last month:

The expectation is for 5.65 million, and that compares with 5.74 million in March. This report will be of particular importance given the disappointing non-farm payroll figure last week.

2.39pm BST

Ahead of Thursday’s triple whammy of the UK election, European Central Bank meeting and ex-FBI director James Comey’s testimony, US markets are following the trend elsewhere and heading lower.

The Dow Jones Industrial Average is down 57 points or 0.28% while the S&P 500 opened 0.26% lower and the Nasdaq Composite lost 0.22%.

2.06pm BST

The weakness in the pound is a factor behind a drop in the FTSE 250.

At one point, the mid-cap index was on track for its worst day since November although it has recovered from its worst levels.

1.59pm BST

After a bright start to the morning, the British pound has taken a lurch lower.

Sterling is now down 0.2% today at $1.2875, as traders worry about Thursday’s general election.

Pound decides to go for a walk of the edge… pic.twitter.com/SQrokXTpys

Westminster voting intention:

CON: 41% (-2)
LAB: 40% (+3)

(via @Survation / 02 – 03 Jun)
Chgs. w/ 27 May.

1.11pm BST

Back in the UK, one of the bankers at the centre of the 2008 financial crisis is being spared from giving evidence about his actions in court.

A group of Royal Bank of Scotland shareholders have settled their claim that they were misled when they backed its rights issue in 2008, shortly before its collapse.

Related: Fred Goodwin escapes high court appearance as RBS settles lawsuit

12.57pm BST

The South African rand has slumped to 12.875 to the US dollar, down from 12.7 yesterday.

Sentiment towards the South African economy took a hit on Tuesday following reports of the nation falling into a technical recession for the first time since 2009. The latest GDP data released by Stats SA showed that the economy declined by 0.7% in the first quarter of 2017 with all industries excluding agriculture and mining contracting. Despite this decline, there remains some optimism over GDP growth finding some ground and rebounding to 0.7% in the second quarter of 2017 amid the stabilizing economic data seen in recent months.

The South African Rand weakened following this news with the USDZAR edging towards 12.9000. Repeated weakness from the Rand should encourage a further incline towards 13.0000 on the USDZAR.

12.37pm BST

South Africa’s slide into recession piles more pressure on president Jacob Zuma.

Zuma was already feeling the heat over his links to the wealthy and influential Gupta family.

12.16pm BST

Magda Wierzycka, CEO of financial services group Sygnia, says South Africa’s leaders need to focus on fixing its economy:

South Africa in an official recession. So avoidable. We need more focus on sound economic policies and less on plunder of state resources.

11.51am BST

The full South African GDP report is online here.

This neat graphic sums it up:

11.49am BST

Here are the key points from today’s South African growth report.

11.32am BST

Social media users in South Africa have been reacting to the news:

Stats SA: South Africa is officially in RECESSION. pic.twitter.com/H3HSZ512df

South Africa has been through alot And now there’s #recession pic.twitter.com/wocDU8BIxt

South Africa officially in recession. Yoh!! I feel like crying See unemployment increase even more.

11.31am BST

Emerging markets analyst John Ashbourne confirms that today’s growth figures are much worse then expected:

Wow. South Africa GDP fell by 0.7% q/q saar in Q1. Much worse than expected. In recession even *before* Gordhan sacked.
Really Brutal.

11.29am BST

Statistics South Africa deputy director general Joe de Beer has confirmed that the country is in recession, saying:

“We can now pronounce that the economy is in recession,”

“The major industries that contracted in the economy were the trade and manufacturing sectors.”

11.14am BST

Bloomberg is reporting that South Africa’s economy has been dragged into recession by political infighting.

That row saw the country’s respected finance minister, Pravin Gordhan, sacked three months ago, alarming international investors.

While rains are helping Africa’s most-industrialized economy recover from a 2015 drought that was the worst since records started more than a century earlier, political uncertainty has hampered implementing reforms aimed at boosting growth. President Jacob Zuma changed his cabinet and fired Pravin Gordhan as finance minister in March, a move that saw the nation lose its investment-grade status with two ratings companies for the first time in 17 years.

“There is a risk that these contractions are not over and we could see another negative coming out in the second quarter of this year,” Annabel Bishop, the chief economist at Investec Ltd., said by phone from Johannesburg.

11.10am BST

The South African rand has has slumped by 1% on the foreign exchange markets, as traders react with alarm to the disappointing GDP figures.

The rand is tanking. https://t.co/jML2qoTBha pic.twitter.com/rc0980i8ag

The rand is today’s worst performing currency. https://t.co/jML2qoTBha pic.twitter.com/ylbudR6Fai

10.53am BST

Breaking: South Africa has fallen back into recession, for the second time in eight years.

Household final consumption expenditure down by -2,3% q/q. #GDP contracted by 0,7% in Q1:2017 https://t.co/zDyVIRpqJM pic.twitter.com/UqukiZ9w6z

Nominal #GDP estimated at R1,1 trillion for Q1:2017, R17 billion less than Q4:2016 https://t.co/zDyVIRpqJM pic.twitter.com/4b6vNYLPi1

10.45am BST

European markets have weakened this morning, dragged down by worries over America’s economy and the diplomatic row between Qatar and its neighbours.

Despite the jump in eurozone investor confidence, all the main indices are in the red today.

On a day which is largely devoid of major economic releases, the focus remains firmly fixed on Thursday’s blockbuster schedule and what it could mean for the future of politics either side of the Atlantic. UK election polls have been widely conflicting of late, reflecting the significant impact different methodology has upon results.

Previously we have seen the pound fall with any mention of a hung parliament, yet with the pound rising gradually over recent weeks, it is clear that the markets continue to foresee a Tory majority.

10.10am BST

More eurozone data just landed, showing that retail sales crept higher in April.

Retail spending across the eurozone rose by 0.1%, weaker than the 0.2% which the City expects.

Euro area retail trade +0.1% in April over March, +2.5% over April 2016 #Eurostat https://t.co/DAXfXvYwV8 pic.twitter.com/q3guMWv87A

EuroZone Apr Retail Sales comes in at 0.1% m/m (f’cast 0.2%) vs 0.2% in March

9.48am BST

Breaking: Investors across the eurozone are at their most confident in a decade!

The monthly gauge of investor morale produced by Sentix has risen to 28.4 points this month, up from 27.4 in May.

EUROZONE JUNE SENTIX INVESTOR CONFIDENCE: 28.4 V 27.4 (highest since July 2007)
*Current: 36.0 v 34.5 prior
*Expectations: 21.0 v 20.5 prior pic.twitter.com/RYO7ibNELz

The assessment of the current situation has climbed to the highest level since January 2008, underlining that it is not just ephemeral expectations, but increasingly hard data, that are driving the upswing in the eurozone.

German economic sentiment at an all time high and Europe is booming – Sentix pic.twitter.com/uFrh2LSb1c

9.32am BST

The cost of renting a home in the UK has fallen for the first time since the financial crisis, as the slowdown in the sector gathers pace.

Average rents were down 0.3% in May, compared with a year earlier, at £901, according to industry body HomeLet. This is the first annual decline since 2009,

“May 2017 saw average rents nationally fall for the first time in eight years when the economy had suffered the shock of the financial crisis. HomeLet rental data suggests landlords are now facing a difficult balancing act between ensuring rents are affordable for tenants in a low real wage growth environment whilst covering their own rising costs.”

Inevitable that Brexit would mean less pressure on housing: UK rents fall for first time in more than seven years https://t.co/NedJwMgP3d

8.54am BST

The Japanese yen has hit a six-week high against the US dollar, as traders dash for safe-haven assets.

Russian intrigue and the looming UK general election are to blame, says FXTM chief market strategist Hussein Sayed:

In currency markets, the dollar fell to lowest levels in six weeks against the Yen.

This shouldn’t be surprising given the scale of event risks this Thursday, specifically UK’s general election and former FBI director James Comey testifying before the US Senate intelligence committee about potential Russian interference in 2016’s US election.

Yen hits 6-week high against dollar as investors seek a haven https://t.co/goxZcVWcpi pic.twitter.com/Zl9ScS3W1t

8.48am BST

The weakening dollar is good news for the pound, which has gained 0.3% to $1.293 this morning.

8.46am BST

The US dollar has fallen to its lowest level since Donald Trump won the US presidential election.

Investors appear to be increasingly anxious about the American economy, after learning yesterday that its services sector grew slower than expected in May. That followed Friday’s underwhelming US labour report, showing fewer jobs created than expected.

It has been reported that Comey plans to testify to conversations in which U.S. President Donald Trump pressured him to drop his investigation into former National Security Advisor Mike Flynn, who was fired for failing to disclose conversations with Russian officials.

8.26am BST

Online electrical chain AO World has added to the gloom in the retail sector this morning, with an underwhelming set of results.

“We remain relentless in pursuing our goal to be the best electrical retailer in Europe.”

8.12am BST

Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.

With two days to go until the UK general election, we have new evidence that parts of Britain’s economy are slowing.

“The impact of inflationary pressures on the nation’s purse continues to play out in this month’s figures, with shoppers evidently spending more on food and drink than on non-food purchases.

“With inflation continuing to rise and wage growth stagnating, consumers are starting to feel the pinch – although the highly competitive nature of the UK grocery market continues to play out in the consumer’s favour.

Related: UK households cut back as Brexit effect on pound hits living costs

Good morning! Asia stocks drop as caution reigns. #Dollar hits 7mth low in wake of soft econ data. #Oil extends decline on Mideast tensions. pic.twitter.com/kLxBR99bFX

Thank god it’s JOLTS day

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