Global News February 13, 2017

  1. CNN News
  2. Global News February 13, 2017

The Washington Post.
“188,000 evacuated, emergency declared as California’s massive Oroville Dam threatens floods”

If interest rates rise in an economic forest and no one hears a central-bank statement, do they still make a tightening sound? This is the metaphysical question of Chinese monetary policy these days. Last week the People’s Bank of China nudged up rates on a series of short-term liquidity tools that lenders can tap if short on cash. But it left benchmark rates untouched and also offered no explanation for its moves. Still, its intentions seem plain enough: worried about a property bubble and excessive credit growth, the central bank wants to tighten monetary conditions. At the same time, it hopes to avoid panicking financial markets or weighing too heavily on growth. So far, investors remain content, pricing in mild downward pressure on stocks and bonds, and not overreacting. But the Chinese central bank is walking a tightrope. It has only taken the first step; keeping balance will get harder.


Zero Hedge
“China «Seriously Concerned and Opposed» After Trump Backs Japan Over Disputed East China Sea Islands»

On Friday, when President Trump confirmed that the US alliance with Japan covers the contested «Senkaku» islands located in the East China Sea, and which prompted a diplomatic scandal between China and Japan in 2013, we predicted that China would not be happy. Additionally, in a joint Japanese-U.S. statement after the weekend meeting in the United States said the two leaders affirmed that Article 5 of the U.S.-Japan security treaty covered the islands, known as the Senkaku in Japan and the Diaoyu in China. Sure enough, on Monday our prediction was confirmed after China’s Foreign Ministry expressed displeasure after Japan got continued U.S. backing for its dispute with Beijing over islands in the East China Sea during a meeting between U.S. President Donald Trump and Japanese Prime Minister Shinzo Abe, Reuters reported. Chinese Foreign Ministry spokesman Geng Shuang said China was «seriously concerned and resolutely opposed», adding that the islands had been China’s inherent territory since ancient times. «No matter what anyone says or does, it cannot change the fact that the Diaoyu Islands belong to China, and cannot shake China’s resolve and determination to protect national sovereignty and territory,» Geng told a daily news briefing in Beijing.


“Flynn on thin ice but still in at the White House after turbulent few days“

Michael Flynn has no plans to resign and no expectations that he will be fired, a senior administration official told CNN Sunday. That’s despite a turbulent 72 hours caused by the national security adviser’s inability to deny that he spoke about sanctions against Russia with the Russian ambassador before President Donald Trump took office. While Flynn may have no plans to leave the White House, many inside the Trump administration are concerned with the fact that the national security adviser could have misled senior members of the White House, including Vice President Mike Pence, who went on national television and denied that Flynn spoke about sanctions with Sergey Kislyak, Russian ambassador to Washington. Flynn was also a contender to join Trump on the Republican ticket as his running mate. But even after he wasn’t tapped for the vice presidency,
Flynn continued to travel with Trump to most of his political rallies as one of his most trusted advisers in his small circle of aides.


The Economist
“Cut and thrust: OPEC and shale“

The cartel of oil producers will try to boost prices today by boasting that members have honoured their promise in November to slash output. OPEC’s oil-market report will be its first assessment of the cuts that began in January. The International Energy Agency (which represents consumers) says that OPEC has cut production by 1m barrels a day, a record 90% compliance rate that is thanks mostly to Saudi Arabia. The report may also reveal whether Russia, which promised a cut of 300,000 barrels a day over the first six months, is fulfilling its side of the bargain. Oil traders, though, are focused on the response of American shale producers, which have ramped up output in recent months. That may offset efforts by Saudi Arabia and Russia to rig the market, and explains why oil prices remain stuck below $55 a barrel—a level that still chokes many petrostates’ economies.


Project Syndicate
“The Promise of Middle East Sovereign Wealth Funds”

A decade ago, sovereign wealth funds (SWFs) from the Middle East and North Africa (MENA) were the behemoths arriving on the global financial scene. Funds like the Qatar Investment Authority (QIA) grabbed headlines as they gobbled up assets – including listed securities, private companies, and real estate – primarily in Europe and North America. But the world in which SWFs invest has changed, and they must change with it. Over the last 20 years, as strong hydrocarbon revenues have enabled Middle Eastern SWFs to proliferate and grow, a variety of labels have been created to categorize them, including stabilization funds, future generation funds, and investment funds. But most sovereign investors – which also include sizeable social security and pension funds, such as Saudi Arabia’s General Organization for Social Insurance and Public Pensions Agency – belie clear-cut labels. It is with regard to domestic firms that Middle Eastern SWFs have the most urgent responsibility, especially considering that most other institutional investors in these markets are also inactive when it comes to corporate governance. As some of largest public equity investors in the region, SWFs should be encouraged to take more responsibility for their investments. Indeed, the only way SWFs can safeguard wealth for future generations – fulfilling the purpose for which they were established – is to participate meaningfully in corporate governance.