Bloomberg
“The Business Tax Problem Causing Trouble for the GOP.”
The Senate tax plan encountered its first outright Republican opposition this week, from a senator whose concerns might foreshadow the biggest business challenge ahead for the proposal. Senator Ron Johnson of Wisconsin called the plan — which was approved by the Senate Finance Committee late Thursday — “inadequate” because it would disadvantage many closely held businesses relative to major corporations, or so called C corps.
The plan would slash the corporate tax rate to 20 percent from 35 percent. But the rate for partnerships, sole proprietorships and other pass-through firms would be set by a formula — with rates higher than 30 percent for some. “I realize we have a problem here,” Johnson said in an interview. “I just don’t know yet the extent to the problem, how many dollars it’s going to take to fix it, where that’s going to come from.” Until it’s fixed, he said, he’s a “no” vote on the Senate measure.
GOP tax efforts seemed to gain momentum on Thursday as the House passed its tax bill and Republicans on the Senate Finance Committee voted later that night to amend and approve their plan. But Johnson’s misgivings may throw a wrench into President Donald Trump’s top domestic priority. Senate Republicans — who aren’t counting on Democrats to support their plan — can spare the defections of no more than two members before the bill would collapse. Party leaders say they want to address Johnson’s concerns, but admit it will be difficult.
Currently, businesses organized as pass-throughs don’t pay income tax themselves, instead passing earnings to their owners, who pay at their individual rates. The top rate is currently 39.6 percent, but the Senate plan would cut it to 38.5 percent.
Reuters
“North Korea rules out negotiations on nuclear weapons.”
North Korea on Friday ruled out negotiations with Washington as long as joint U.S-South Korea military exercises continue, and said that Pyongyang’s atomic weapons program would remain as a deterrent against a U.S. nuclear threat.
In an interview with Reuters, Han Tae Song, North Korea’s ambassador to the United Nations in Geneva, brushed off the new sanctions which the Trump administration has said it is preparing, as well as the possibility of North Korea being added to a U.S. list of states sponsoring terrorism.
South Korea and the United States agreed on Friday to keep working for a peaceful end to the North Korean nuclear crisis, but a U.S. envoy said it was difficult to gauge the reclusive North’s intentions as there has been “no signal”.
Han, asked about those bilateral talks in Seoul, replied: “As long as there is continuous hostile policy against my country by the U.S. and as long as there are continued war games at our doorstep, then there will not be negotiations.” “There are continued military exercises using nuclear assets as well as aircraft carriers, and strategic bombers and then…raising such kinds of military exercises against my country,” he said.
BBC News
“Zimbabwe latest: Defiant Mugabe makes first public appearance.”
Zimbabwe’s President Robert Mugabe has made his first public appearance since the country’s army took over on Wednesday. He attended a graduation ceremony in the capital, Harare. Mr Mugabe had been under house arrest for days. The army made its move after a power struggle over his successor. The military said on Friday it was «engaging» with Mr Mugabe and would advise the public on the outcome of talks «as soon as possible».
Meanwhile Christopher Mutsvangwa, the leader of the influential war veterans’ association, said Mr Mugabe should step down at once. He called for a huge turnout in street protests on Saturday. «We want to restore our pride and tomorrow is the day… we can finish the job which the army started, Mr Mutsvangwa said. «There’s no going back about Mugabe. He must leave.»
Mr Mugabe’s attendance at the graduation is an annual tradition but few expected to see him there, the BBC’s Andrew Harding reports from Zimbabwe. Mr Mugabe walked slowly up a red carpet and joined the crowd in singing the national anthem, then opened the graduation ceremony at Zimbabwe’s Open University, where he is chancellor.
One of the people he conferred a degree upon was Marry Chiwenga, the wife of the general who detained him on Wednesday, the state broadcaster reports. Neither the 93-year-old president’s wife, Grace Mugabe, nor Education Minister Jonathan Moyo – an ally of hers whose house was reportedly raided by the military – were present.
The army acted after Mr Mugabe sacked Vice-President Emmerson Mnangagwa last week. Mr Mnangagwa was seen as a potential successor and his sacking was supposed to pave the way for Grace Mugabe – who is four decades younger than him – to take over the presidency instead.
Bloomberg
“From Bitcoin to Global Equities, It’s Risk-On Again in Markets.”
It might be the rebound that was bound to happen.
The world is still in a synchronous economic expansion across developed and emerging markets. It still has at least half a year of liquidity pumping ahead from the key central banks, taken together. And it’s still fascinated by the prospects of digital currencies.
Sure enough, across asset classes the week is ending with a bounce-back from recent sell-offs in equities, higher-risk bonds and Bitcoin. It’s been a long time since Japan led global dynamics, but nevertheless the equity retreat that appeared most strongly in Tokyo Thursday afternoon last week was over a week later.
Just a handful of days after tumbling 29 percent from its all-time high in a rout that wiped $38 billion from its market value, Bitcoin surged back to set a fresh record. It’s on its way to $8,000 and CME Group Inc. is poised to start offering professional traders ways to hedge the price with futures on the world’s largest exchange next month.
The tumult in the junk bond market got so severe at one stage this week that Deutsche Bank’s chief international economist was inundated with questions as to whether it would lead to a U.S. recession. The U.S. gauge of high-yield debt was on course for its worst week since March before buyers came to the rescue on Thursday, though it still remains down from its high last month.
Adding to good cheer in Asia on Friday was a Moody’s Investors Service sovereign-credit rating upgrade for India, where policy makers have mounted a new campaign to deal with the country’s non-performing loans. That spurred a rally in the rupee and sent equities soaring together with bonds.