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How to Win Trade Wars: Don’t Fight Them

In the 1983 movie “War Games,” a NORAD supercomputer (spoiler alert) saves the world when it realizes that, in the game of Global Thermonuclear War, “The only winning move is not to play.” The Trump administration may be learning the same thing about the game of Global Trade War. President Donald Trump is taking flack for losing/surrendering/caving to China in trade talks. That’s to be expected from the likes of Steve Bannon. But people who don’t just want to watch the world burn should be encouraging Trump’s softer approach, not ...

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Merkel woos China as Trump poses new trade challenge

China said on Thursday it would “open its door wider” to German businesses, helping visiting Chancellor Angela Merkel defend free commerce and counterbalance trade threats from U.S. President Donald Trump that are testing transatlantic ties. Germany and China, two exporting nations that run large trade surpluses with the United States, have found themselves in Trump’s firing line and are scrambling to preserve the rules-based multilateral order on which their prosperity rests. Merkel faces a delicate balancing act on the China trip, her 11th since becoming chancellor in 2005, as she ...

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UniCredit : ECB sees ‘clouds’, potential for further slowdown

The euro zone economy continues to motor ahead but a more pronounced slowdown is possible and political uncertainty in places like Italy could undermine confidence, European Central Bank policymakers said on Thursday. ECB stimulus has fuelled a five-year recovery and central bankers have been setting up markets for the end of a 2.55 trillion euro (2.24 trillion pounds) bond purchase scheme. But an unexpected slowdown in the euro zone economy, global trade tensions and fears over the new Italian government’s spending plans could throw a spanner in the works. Playing ...

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U.K. Retail Sales Bounce Back in April as Weather Warms Up

U.K. retail sales rebounded more than expected in April as the spring weather lured shoppers into stores. Sales climbed 1.6 percent from March, compared with a median estimate of a 0.9 percent gain in a Bloomberg survey. The surge was led by fuel, household goods and clothing, according to data from the Office for National Statistics in London. After cold weather hit sales at the start of the year, the Bank of England is looking out for a recovery in consumption as it debates when to next raise interest rates. ...

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EU sets new obligations for asset managers to avoid greenwashing

The European Commission proposed on Thursday new rules to force asset managers to disclose how they take into account environmental risks in their investments and abide by new, precise criteria when they claim “green” credentials. The plan is meant to spur green investment and to curb “greenwashing”, a practice whereby companies and other organisations claim to be more environmentally friendly than they really are. “We want to establish an EU-wide classification system for sustainable activities, to provide common definitions for what is green and what is not. This is a ...

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UN official says China could help Africa in continental free trade area

A UN offcial said that China could play a role in helping Africa achieve benefits of the Continental Free Trade Area. Stephen Karingi, Director of Capacity Development Division at the UN Economic Commission for Africa (UNECA), told Xinhua in Nairobi that for Africa to achieve optimum benefit from the free trade regime it will require new investments in the area of infrastructure, human capacity and manufacturing. “China has all these resources which if deployed in Africa could help the Continent Free Trade area to be fully realized,” Karingi said on ...

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ECB Confidence Holds Strong for Now Against Trade, Italy Risks

European Central Bank policy makers flagged protectionism and mounting global risks as potential threats to the euro area, though they stuck to their conviction about the underlying momentum in the economy for now. “Uncertainty around the outlook had increased,” the Governing Council said in the account of its April 25-26 monetary-policy meeting published on Thursday. “Risks related to global factors, including the threat of increased protectionism, had become more prominent and warranted monitoring.” The account came hours after the ECB published its Financial Stability Review, where it warned high-debt countries ...

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U.S. Jobless Claims Rose to 234,000 Last Week

The number of Americans filing new applications for unemployment benefits rose again last week but remained near historically low levels. Initial jobless claims, a proxy for layoffs across the U.S., increased by 11,000 to a seasonally adjusted 234,000 in the week ended May 19, the Labor Department said Thursday. Economists surveyed by The Wall Street Journal had expected 220,000 new claims last week. It was the second straight weekly rise, taking initial claims to their highest level since late March. Claims can be volatile from week to week; the four-week ...

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The double whammy from rising crude oil prices

The blow from rising crude oil prices is twofold. One, India’s crude oil import dependency is increasing. The chart above shows the country’s import dependency of crude oil has increased to 83.7% for April 2018. The measure stood at 77.3% in fiscal year 2014 (FY14). Simply put, we are consuming more petroleum products and to compensate for our lacklustre local crude oil production growth, we will have to resort to imports. Unfortunately for us, this trend is not expected to change soon. The second part of the problem is that ...

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German Consumer Sentiment Set to Decline Slightly in June -GfK

German consumer sentiment is set to weaken in June but consumers still take a relaxed view of the escalating geopolitical situation, market research group GfK said in its monthly survey on Thursday. GfK’s forward-looking consumer confidence index is set to ease to 10.7 points in June from 10.8 points in May, it said. The data is below economists’ forecast for a 10.8 point reading in The Wall Street Journal’s survey. “The termination of the nuclear agreement with Iran by the American President did not have a particularly negative effect on ...

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JPMorgan pushes ECB rate hike forecast to June 2019 after PMI fall

JPMorgan said on Wednesday it has pushed back rate hike expectations from March 2019 to June 2019 after a business survey showed that euro zone economic growth slowed much more sharply than expected this month. IHS Markit’s Euro Zone Composite Flash Purchasing Managers’ Index (PMI), considered a gauge of economic health, slowed in May to an 18-month low of 54.1 from 55.1, below all forecasts in a Reuters poll, which predicted a reading of 55.0. JPMorgan said it has also cut its growth forecast for the second quarter of 2018 ...

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Fed and Bank of England tell markets to step up shift from Libor

The U.S. Federal Reserve and Bank of England on Thursday urged global financial markets to step up efforts to shift from the scandal-plagued Libor reference rate to alternative interest rate benchmarks. New York Fed President William Dudley, speaking at a BoE event in London, said bankers and regulators have much work to do before 2021 when the London interbank offered rate, or Libor, could cease to exist. And BoE Governor Mark Carney said he hoped the adoption of a Libor alternative in Britain would spur a new “ecosystem” of financial ...

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Profligate euro zone governments may face market’s ire, ECB warns

Indebted euro zone governments that loosen the purse strings risk falling out of favour with investors, particularly if economic growth slows, the European Central Bank said in a report on Thursday. The warning came as a new, anti-establishment government was close to taking office in Italy on pledges to cut taxes and jack up spending. “A deteriorating growth environment or a loosening of the fiscal stance in high-debt countries could impact the fiscal outlook and, by extension, market sentiment towards some euro area sovereign issuers,” the ECB said in a ...

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ECB Warns Against Fiscal Splurge as Italy Prepares Populist Rule

The European Central Bank warned high-debt countries in the euro area against loosening their purse strings as populists prepare to take power in Italy with a promise to boost government spending. “A deteriorating growth environment or a loosening of the fiscal stance in high-debt countries could impact the fiscal outlook and, by extension, market sentiment toward some euro-area sovereign issuers,” the Frankfurt-based institution said in its twice-yearly Financial Stability Review. “Despite the overall favorable developments in recent quarters, some euro-area sovereigns remain vulnerable.” The shot across the bows of Italy ...

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Most Fed policymakers say rate hike likely needed ‘soon,’ minutes show

Most Federal Reserve policymakers thought it likely another interest rate increase would be warranted “soon” if the U.S. economic outlook remains intact, minutes of the central bank’s last policy meeting showed. The readout of the meeting, released on Wednesday, also included a call by some policymakers to revise the Fed’s monetary policy statement soon to reflect that rates would be close or above long-run estimates before too long. Fed policymakers at the May 1-2 meeting decided, as expected, to keep the benchmark overnight lending rate unchanged in a target range ...

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