Focus: China: first mover – what we can learn/deteriorating relationship with US

Short Url
Updated 15 May 2020
Follow

Focus: China: first mover – what we can learn/deteriorating relationship with US

What happened:

First-time jobless claims in the US for the week ending May 8 came in at 3 million, pushing the total up to 36.5 million. The trajectory of increases is falling, but 3 million is a huge number.

Unemployment filters through to consumption, which constitutes 70 percent of GDP. A further reflection of the dire situation in America is that 12 retailers and restaurant chains have filed for bankruptcy or outright liquidation this year.

Oil markets are starting to rebalance with OPEC+ on track to deliver the 9.7 million barrels per day (bpd) of production cuts this month, supported by a further cut of 1.18 million bpd from Saudi Arabia, the UAE and Kuwait.

The International Energy Agency (IEA) boosted its second-quarter global demand outlook by 3.2 million bpd, to 79.3 million. It also reduced its full-year outlook on demand contraction by 700,000 bpd to minus 8.6 million or minus 9 percent. Faster-than-expected supply adjustments and better-than-expected demand forecasts contribute to sentiment. Brent traded at $31.74 per barrel and West Texas Intermediate (WTI), the American benchmark, at $28.10 per barrel midday in Europe. These prices are still more than 50 percent lower compared to January.

Former US Federal Reserve chair, Ben Bernanke, believes that the economy will not truly recover until the coronavirus disease (COVID-19) is defeated. He also said that the current monetary and fiscal packages, which deploy more than $6 billion to households and individuals, will avoid the downturn being as severe as the Great Depression.

Germany’s GDP contracted by 2.2 percent during the first quarter. France had come in at minus 5.8 percent, Spain at minus 5.2 percent, and Italy at minus 4.7 percent.

Paul Hudson, CEO of multinational pharmaceutical company Sanofi, sparked a wider debate on who should have control over the distribution of vaccines and medicines.

He said that the US should get priority over any new COVID-19 vaccine, because research had been funded by the US. French President Emmanuel Macron objected, claiming that he would not allow Sanofi, which is a French firm, to embark on such a course.

Background:

China was the first country hit by the pandemic and also the first to emerge from lockdown.

Manufacturing output for April rose by 3.9 percent, while retail sales contracted by 7.5 percent and fixed-asset investment decreased by 10.3 percent. The urban jobless rate was reported at 6 percent.

These numbers indicate that, even if people are going back to work, they feel hesitant to spend: While the employed worry about low job security, they will tighten their purse strings. The unemployed will not spend at all.

Similar consumer behaviors can be expected in the US and Europe – particularly as furloughed workers fear descending into unemployment.

More cautious people will also want to minimize the potential risk of exposure to the virus by venturing out of the house as little as possible. These fears will only be assuaged once COVID-19 is contained. 

The fixed-asset investment number indicates a pessimistic outlook on growth and a desire by most companies to preserve cash, a trend that can be observed in Europe and the US.

This goes a long way to explaining why the stocks with China exposure have traded sideways on the MSCI for the last couple of months, despite the country being the first to reopen its economy.

New infections in northeastern China and South Korea have resulted in renewed lockdowns, highlighting how difficult it is to control the virus and that similar incidents could happen elsewhere as economies reopen. Renewed lockdowns would lead to a W-shaped recovery – one of the worst-case scenarios.

At the same time US-China relations hit a new low with US President Donald Trump publicly refusing to speak to Chinese President Xi Jinping and threatening to cut off ties with China, a move he claimed could save America $500 billion a year.

The rhetoric from Democratic presidential candidate Joe Biden also grew harsh. Some observers consider US-China relations to have reached the lowest point since the 1970s. Two-thirds of Americans have a negative view of China.

Former US diplomat and director of the Aspen Security Forum, Anja Manuel, told Bloomberg she was in favor of localizing supply chains in key sectors such as defense or healthcare, but that painting with too broad a brush was counterproductive. The focus should shift from emphasis on restrictions to research and development cooperation with allies in key sectors.

The above does not bode well for a speedy conclusion of phase one in the US-China trade agreement.

Where we go from here:

China’s National People’s Congress will meet next week and announcements on further stimulus measures are expected.

The latest round of Brexit negotiations end on Friday with no resolution of key issues in sight. The danger of a no-deal Brexit inches ever closer, as the deadline of reaching an agreement by June is enshrined in UK law.

 

— Cornelia Meyer is a Ph.D.-level economist with 30 years of experience in investment banking and industry. She is chairperson and CEO of business consultancy Meyer Resources.
Twitter: @MeyerResources


Clippers upset Warriors, Lillard saves Bucks

Updated 5 min 16 sec ago
Follow

Clippers upset Warriors, Lillard saves Bucks

  • Franz Wagner poured in 32 points to help the Orlando Magic claim a 109-99 win over the depleted Suns
  • Jimmy Butler finished with 30 points, 10 rebounds and five assists as the Miami Heat pummeled the struggling Philadelphia 76ers 106-89

LOS ANGELES: The Los Angeles Clippers held off a furious late rally to upset the pace-setting Golden State Warriors 102-99 in the NBA on Monday.

Norman Powell led the Clippers scoring with 23 points including five three-pointers as the Los Angeles club improved to 8-7 for the season after downing the Western Conference leaders.

The Clippers led by 15 points late in the second quarter only to see the Warriors chip away at the lead to narrow the margin to three points at the end of the third quarter.

The Clippers dug deep to hold off Golden State in the fourth quarter, and the Warriors missed a three-point attempt from Gary Payton II on the buzzer that would have tied it to force overtime.

Stephen Curry led the Warriors scorers with 26 points, with Andrew Wiggins adding 22.

Clippers coach Tyronn Lue said he had rallied his team at the end of the third quarter.

“I told them ‘they’re the number one team in the West for a reason’ — but we’re still up by three points, at home,” Lue said.

“But I’m proud of the team. They made a big run like they always do, and we were able to keep our composure and come away with the win.”

Elsewhere on Monday, Damian Lillard returned from a three-game concussion layoff to score a driving layup with 3.9 seconds remaining and give the Milwaukee Bucks a much-needed 101-100 victory over the in-form Houston Rockets.

Houston had gone into the game on the back of a five-game winning streak and looked ready to extend that run after racing into an early 13-point lead in the first quarter.

But Milwaukee, who are four places off the bottom of the Eastern Conference with a 5-9 record after Monday’s win, responded superbly to lead by 12 points at half-time.

Houston regained the initiative in the fourth quarter to grab the lead, but a late run by Milwaukee culminating in Lillard’s winner settled an enthralling battle.

Lillard, who finished with 18 points and 10 assists, admitted that his enforced layoff due to concussion had been a challenge.

“Normally when something is wrong with me I feel like I can will myself through it — but this was probably one of the first times in my life and definitely in my NBA career where I was like ‘something is off,’” Lillard said Monday’s win.

“It was a little frustrating. I just didn’t like not being with the team.”

Brook Lopez led the Bucks scoring with 27 points while Giannis Antetokounmpo added 20.

In Phoenix, Franz Wagner poured in 32 points to help the Orlando Magic claim a 109-99 win over the depleted Suns.

Wagner was boosted by 20 points off the bench from Anthony Black while Goga Bitadze added 17.

Phoenix, missing the injured Kevin Durant, Bradley Beal and Jusuf Nurkic, slumped to their fourth straight loss. Phoenix, who made a blistering 8-1 start to the season, fell to 9-6 after the defeat.

Phoenix coach Mike Budenholzer called on his team to rally around each other as they weathered the injury-driven dip in form.

“Just stay together,” Budenholzer said. “You’ve got to keep going, keep doing the work and keep your head up. This group will do that. They’re very resilient.”

Elsewhere on Monday, Jimmy Butler finished with 30 points, 10 rebounds and five assists as the Miami Heat pummeled the struggling Philadelphia 76ers 106-89. Tyler Herro added 18 for Miami as the Sixers once again stumbled despite leading by 19 points early in the second quarter.

Philadelphia are now bottom of the Eastern Conference with a 2-11 record. Sixers star Joel Embiid once again struggled with just 11 points.


Floods strike thousands of houses in northern Philippines

Updated 18 min 1 sec ago
Follow

Floods strike thousands of houses in northern Philippines

  • Typhoon Man-yi drenched swaths of the Philippines over the weekend
  • Man-yi was the sixth major storm in a month to strike the Philippines
Manila: Floodwaters reaching more than four meters high swamped thousands of houses in the storm-battered northern Philippines on Tuesday after rivers overflowed following heavy rain and a dam release.
Typhoon Man-yi drenched swaths of the Philippines over the weekend, swelling the Cagayan river and tributaries, and forcing the release of water from Magat Dam.
The Cagayan broke its banks, spilling water over already sodden farmland and communities, affecting tens of thousands of people.
Buildings, lamp posts and trees poked through a lake of brown water in Tuguegarao city in Cagayan province where provincial disaster official Ian Valdepenas said floodwaters reached more than four meters (14 feet) in some places.
“We experienced very heavy rains two days ago, but the flood just started to rise when Magat Dam started releasing huge volumes of water,” Valdepenas told AFP.
“Plus, our land is already saturated because of the consecutive typhoons hitting the area.”
Man-yi was the sixth major storm in a month to strike the Philippines, which have left at least 171 people dead and thousands homeless, as well as wiped out crops and livestock.
About 20 big storms and typhoons hit the Southeast Asian nation or its surrounding waters each year, killing scores of people, but it is rare for multiple such weather events to take place in a small window.
Roofs of houses
In the neighboring province of Isabela, Jun Montereal of the Ilagan city disaster preparedness committee said 30,000 people were still affected by flooding.
But the situation was slowly improving.
“The flood is subsiding now little by little, it’s slower because the land is already saturated but we are way past the worst,” Montereal told AFP.
“We are really hoping that the weather will continue to be fair so the water can go down. I think the water will completely subside in three days,” he said.
“I can now see the roofs of houses that I wasn’t able to see before because of the floods.”
Carlo Ablan, who helps oversee operations at Magat Dam, said three gates were open as of Tuesday morning to release water from the dam.
“If the weather continues to be good, we are expecting that we will only have one gate open this afternoon,” Ablan said.
Ablan said flooding in Tuguegarao city was not only caused by water from Magat Dam — other tributaries of the Cagayan river were also likely to blame.
Valdepenas said authorities in Tuguegarao were waiting for floodwaters to subside more before sending people back to their homes.
“This might start subsiding within today,” he said.
More than a million people fled their homes ahead of Man-yi, which struck the Philippines as a super typhoon before significantly weakening as it swept over the mountains of the main island of Luzon.
Man-yi dumped heavy rain, smashed flimsy buildings, knocked out power and claimed at least eight lives.
Climate change is increasing the intensity of storms, leading to heavier rains, flash floods and stronger gusts.

KSrelief provides shelter, winter clothing in Lebanon, Somalia

Updated 35 min 18 sec ago
Follow

KSrelief provides shelter, winter clothing in Lebanon, Somalia

RIYADH: Saudi aid agency KSrelief has distributed shelter and winter clothing to displaced people in Lebanon and Somalia, reported the Saudi Press Agency.

Orphans and those with special needs in Lebanon’s Akkar Governorate received vouchers to purchase winter clothes from approved stores.

The beneficiaries also included Syrian refugees and vulnerable members of the host community.

In Somalia, 920 shelter kits, 80 tents and 1,000 clothing kits benefited 6,000 displaced people in several camps in the Banaadir region as part of a project aiming to provide 7,600 shelter and clothing kits and 215 tents in the area.

Both initiatives are part of the ongoing humanitarian assistance provided by KSrelief to countries and people in need around the world.


24 hours in Ukraine: A single day shows the reality of life as war hits 1,000 days

Updated 19 November 2024
Follow

24 hours in Ukraine: A single day shows the reality of life as war hits 1,000 days

  • The Associated Press fanned out across Ukraine to chronicle 24 hours of life just as the country prepared to mark a grim milestone Tuesday: 1,000 days since Russia’s full-scale invasion on Feb. 24, 20

KYIV: The clock on her wall stopped almost as soon as the day began, its hands frozen by the Russian bomb that hit the dormitory serving as home for Ukrainians displaced by war.
It was 1:45 a.m. in an upstairs room in the eastern city of Zaporizhzhia, Natalia Panasenko’s home for just shy of a year after the town she thinks of as her real home came under Russian occupation. The explosion blasted a door on top of her, smashed her refrigerator and television and shredded the flowers she’d just received for her 63rd birthday.
“The house was full of people and flowers. People were congratulating me ... and then there was nothing. Everything was mixed in the rubble,” she said. “I come from a place where the war is going on every day. We only just left there, and it seemed to be quieter here. And the war caught up with us again.”
Nov. 11 was a typical day of violence and resilience in Ukraine. The Associated Press fanned out across Ukraine to chronicle 24 hours of life just as the country prepared to mark a grim milestone Tuesday: 1,000 days since Russia’s full-scale invasion on Feb. 24, 2022.
The day opened with two Russian bombings — one that hit Panasenko’s apartment and another that killed six in Mykolaiv, including a woman and her three children. Before the day was even halfway done, a Russian ballistic missile shattered yet another apartment building, this time in the city of Kryvyi Rih.
Swimmers braved the Black Sea waters off Odesa, steelworkers kept the economy limping along, a baby was born. Soldiers died and were buried. The lucky ones found a measure of healing for their missing limbs and broken faces.
About a fifth of Ukraine’s internationally recognized territory is now controlled by Russia. Those invisible geographical lines shift constantly, and the closer a person is to them the more dangerous life is.
In the no-man’s-land between Russian and Ukrainian forces, there’s hardly any life at all. It’s called the Gray Zone for good reason. Ashen homes, charred trees and blackened pits left by shells exploding over 1,000 days of war stretch as far as the eye can see.
Odesa, 6:50 a.m.
The waters of the Black Sea hover around 13 degrees Celsius (55 Fahrenheit) in late fall. The coastline is mined. Dmytro’s city is regularly targeted by drones and missiles.
But Dmytro — who insisted on being identified only by his first name because he was worried for the safety of his family — was undaunted as he plunged into the waves with a handful of friends for their regular swim.
Before the war, the group numbered a couple of dozen. Many fled the country. Men were mobilized to fight. Some returned with disabilities that keep them out of the water. His 33-year-old stepson is missing in action after a battle in the Donetsk region.
For Dmytro and fellow swimmers, the ritual grounds them and makes the grimness of war more bearable. He said the risks of his hobby are well worth the reward: “If you’re afraid of wolves, don’t go into the forest.”
Zaporizhzhia, noon
Managing the Zaporizhstal steel mill during wartime means days filled with calculations for Serhii Saphonov.
The staff of 420 is less than half its pre-war levels. Power cuts from Russian attacks on electricity infrastructure require an “algorithm of actions” to maintain operations. Russian forces are closing in on the coke mine in Pokrovsk that supplies the plant with coal. And the city is under increasing attack by Russia’s unstoppable glide bombs.
Right outside his office, a bulletin board displays the names of 92 former steelworkers who have joined the army. Below are photos of the dead. Staff hold fundraisers for supplies for colleagues on the front, including two bulletproof vests sitting in the corner near his desk.
“The old workers, they carry everything on their shoulders. They are hardened. They know their job,” Saphonov said. “Everyone knows that we have to endure, hold out, hoping that things will get better ahead.”
Chernihiv, 1 p.m.
Dr. Vladyslava Friz has performed more reconstructive surgeries in the past 1,000 days than she did in the previous decade of her career. And the injuries are like nothing she had ever seen before.
Her days start early and end late. In the first months of the war, she said, the hospital was admitting 60 people per hour, and eight surgeons worked nonstop. They’re still catching up, because so many of the injured need multiple surgeries.
On Nov. 11, she was rebuilding the cheek and jaw of a patient injured in a mine explosion.
“Appearance is a person’s visual identity,” she said. “There is work to be done; we are doing it. We have no other options. There are medicines, equipment and personnel, but there are no metal structures for reconstruction. There is no state funding for implants.”
She said she will not abandon her patients but worries that the world will abandon Ukraine as the war approaches its fourth year.
“The global community continues to lose interest in the events in Ukraine while we lose people every day,” she said. “The world seems to have forgotten about us.”
Odesa, 6 p.m.
Yulia Ponomarenko has brought two babies into the world in the past 1,000 days, including Mariana on Nov. 11. Her husband, Denys, is fighting at the front.
Their hometown, Oleshky, was submerged by flooding after the explosion of the Kakhovka Dam. But by then, she’d long since fled the occupying Russian forces, who target the families of Ukrainian soldiers.
Mariana, born healthy at 3.8 kilograms and 55 centimeters (8 pounds, 6 ounces and 21 inches), will grow up with an older brother and sister and a menagerie of two cats and two dogs.
“This child is very expected, very wanted. We now have another princess,” Ponomarenko said.
Kyiv, 9 p.m.
The actors can’t perform in their home theater in Kharkiv — too many bombs, too few people willing to gather in one place. So they’ve moved to the Ukrainian capital, where they played to a nearly full house on Nov. 11 as guests of the Franko Theater.
“Because of the war, the Kharkiv theater cannot play on its stage. We play underground. It is literally underground art. There are only two to three places in Kharkiv where we can play, and that’s it,” said Mykhailo Tereshchenko, one of the principal actors of the Taras Shevchenko Academic Ukrainian Drama Theatre, named for Ukraine’s most famous writer.
Yevhen Nyshchuk, director of the Franko, said the theater paused production for a few months after the war started. Now, it’s packed nearly every night there is a play, and the lengthy applause when curtains close is deafening.
The reason goes beyond the quality of a performance at this point, he believes, and expresses “this inner realization that in spite of everything, we will create, we will live, we will come, we will meet, we will applaud each other.”


UK farmers plan to protest at Parliament over a tax hike they say will ruin family farms

Updated 19 November 2024
Follow

UK farmers plan to protest at Parliament over a tax hike they say will ruin family farms

  • The Labour Party government says only a small number of farms each year will be affected
  • Some farmers have welcomed those moves, but many feel goodwill was squandered through missteps by successive governments

LONDON: With banners, bullhorns, toy tractors and an angry message, British farmers are descending on Parliament on Tuesday to protest a hike in inheritance tax that they say will deal a “hammer blow” to struggling family farms.
UK farmers are rarely as militant as their European neighbors, and Britain has not seen large-scale protests like those that have snarled cities in France and other European countries. Now, though, farmers say they will step up their action if the government doesn’t listen.
“Everyone’s mad,” said Olly Harrison, co-organizer of a protest that aims to flood the street outside Prime Minister Keir Starmer’s office with farmers. He said many famers “want to take to the streets and block roads and go full French.”
Organizers have urged protesters not to bring farm machinery into central London on Tuesday. Instead, children on toy tractors will lead a march around Parliament Square after a rally addressed by speakers including former “Top Gear” TV host and celebrity farmer Jeremy Clarkson. Another 1,800 farmers plan to hold a “mass lobby” of lawmakers nearby, organized by the National Farmers’ Union.
Volatile weather exacerbated by climate change, global instability and the upheaval caused by Britain’s 2020 departure from the European Union have all added to the burden on UK farmers. Many feel the Labour Party government’s tax change, part of an effort to raise billions of pounds to fund public services, is the last straw.
“Four out of the last five years, we’ve lost money,” said Harrison, who grows cereal crops on his family farm near Liverpool in northwest England. “The only thing that’s kept me going is doing it for my kids. And maybe a little bit of appreciation on the land allows you to keep borrowing, to keep going. But now that’s just disappeared overnight.”
The flashpoint is the government’s decision in its budget last month to scrap a tax break dating from the 1990s that exempts agricultural property from inheritance tax. From April 2026, farms worth more than 1 million pounds ($1.3 million) face a 20 percent tax when the owner dies and they are passed on to the next generation. That is half the 40 percent inheritance tax rate levied on other land and property in the UK
Starmer’s center-left government says the “vast majority” of farms – about 75 percent — will not be affected, and various loopholes mean that a farming couple can pass on an estate worth up to 3 million pounds ($3.9 million) to their children free of tax.
Supporters of the tax say it will recoup money from wealthy people who have bought up agricultural land as an investment, driving up the cost of farmland in the process.
“It’s become the most effective way for the super-rich to avoid paying their inheritance tax,” Environment Secretary Steve Reed wrote in the Daily Telegraph, adding that high land prices were “robbing young farmers of the dream of owning their own farm.”
But the famers’ union says more than 60 percent of working farms could face a tax hit. And while farms may be worth a lot on paper, profits are often small. Government figures show that income for most types of farms fell in the year to the end of February 2024, in some cases by more than 70 percent. Average farm income ranged from about 17,000 pounds ($21,000) for grazing livestock farms to 143,000 pounds ($180,000) for specialist poultry farms.
The last decade has been turbulent for British farmers. Many farmers backed Brexit as a chance to get out of the EU’s complex and much-criticized Common Agricultural Policy. Since then, the UK has brought in changes such as paying farmers to restore nature and promote biodiversity, as well as for producing food.
Some farmers have welcomed those moves, but many feel goodwill was squandered through missteps by successive governments, a failure of subsidies to keep up with inflation and new trade deals with countries including Australia and New Zealand that have opened the door to cheap imports.
National Farmers’ Union Deputy President David Exwood said the tax hike was “the final straw in a succession of tough choices and difficult situations that farmers have had to deal with.”
The government has “completely blown their trust with the industry,” he said.
The government insists it will not reconsider the inheritance tax, and its political opponents see an opportunity. The main opposition Conservative Party – which was in government for 14 years until July — and the hard-right populist party Reform UK are both championing the farmers. Some far-right groups also have backed Tuesday’s protest, though the organizers are not affiliated with them.
Harrison says the demonstration is intended as “a show of unity to the government” and an attempt to inform the public “that farmers are food producers, not tax-dodging millionaires.”
“It’s every single sector, whether you’re a landowner or a tenant, whether you’re beef, dairy, milk, cereals, veg, lettuce — you name it, everyone has had a hammer blow from this,” he said.
“Every farmer is losing.”