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How Investors’ Gloomy Take on Japan May Be Upended by Inflation

The Abenomics trade is so 2013. Foreign investors haven’t been much interested in Japan lately, despite the strongest economy in two decades. What could turn that around, some market observers say, is a surprise revival of inflation. While the official consumer price index rose at just half of policy makers’ 2 percent target in the latest reading, less-watched gauges suggest cost pressures are building. Prices paid by services companies are climbing the most since the early 1990s, as is worker compensation. Rents are accelerating in major cities, led by Tokyo. ...

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Chicago Fed National Activity Index Fell in September

The Chicago Fed National Activity Index fell in September, as the pace of growth from production-related indicators slowed down. The index, which provides a snapshot of national economic activity and inflation pressures, was 0.17 in September, compared with 0.27 in August. A value of zero for the monthly index is associated with the national economy expanding at its historical average. Positive values reflect above-average growth while negative values reflect below-average growth. The index is comprised of a weighted basket of 85 indicators across four broad categories of the economy: production ...

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EU revises up Italy 2017 deficit to 2.4 percent , debt slightly down

Italy’s budget deficit in 2017 was 2.4 percent of the country’s gross domestic product, the European Union statistics agency said on Monday, revising up previous estimates of a deficit of 2.3 percent, in line with data provided by Rome. The country’s debt in 2017 reached 131.2 percent of GDP, falling slightly from 131.4 percent in 2016, Eurostat said. The 2017 debt is lower than previous estimates of 131.8 percent of GDP. The deficit for the 19-country eurozone was at 1.0 percent in 2017, down from 1.6 percent in 2016. The ...

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EU’s Moscovici doesn’t want crisis with Italy, expects answers on budget

The European Commission does not want any crisis with Italy over its budget plans, but it expects answers to its concerns, European Economic Affairs Commissioner Pierre Moscovici said on Monday. An Italian government source said that Rome was expecting the EU executive to take the unprecedented step to ask it to revise its 2019 draft budget, which includes lifting the deficit to 2.4 percent of GDP from 1.8 percent in 2018. “The European Commission does not want a crisis between Brussels and Rome,” Moscovici told France Inter radio. “My state ...

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Bank of Japan Signals Financial System Able to Withstand Easing for Now

The Bank of Japan said the financial system remains stable and growth in bank lending continues to support the economy, signaling it’s comfortable that lenders are coping with its record monetary easing program for now. Banks “have maintained their active lending attitudes,” the central bank said in its semiannual financial system report on Monday. “The financial cycle has shown no signs of overheating as observed during the bubble period in the late 1980s.” The publication has attracted closer-than-usual scrutiny among BOJ watchers for any signs that it may further adjust ...

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UK Firms Say Brexit Had Negative Impact On Investment Decisions: CBI

A majority of British firms said Brexit had a negative effect on investment decision, according to a new research on business preparations by the Confederation of British Industry. Eight out of ten firms said Brexit hit investment as speed of talks outpaced by reality firms face on ground. The majority of firms said they will implement damaging contingency plans in the absence of greater certainty on Brexit by December. “The situation is now urgent,” Carolyn Fairbairn, CBI Director-General, said. “Unless a Withdrawal Agreement is locked down by December, firms will ...

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Inflation Creep Is Real, Morgan Stanley Says

Inflation that’s been elusive for almost a decade is starting to materially crop up in the U.S., Euro area and Japan — signaling that the long-delayed healing from the financial crisis is boosting price growth, at last. Core inflation in the so-called G-3 economies has risen to a 1.4 percent annual pace from a post-crisis low of 1.1 percent, and is bound to float higher, according to a research note by Chetan Ahya, Morgan Stanley’s chief economist and global head of economics. The Euro area and Japan should see a ...

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Italy expects EU budget rejection on Tuesday – source

The Italian government expects the European Commission to decide for the first time ever on Tuesday to ask a member state to revise its draft budget, a government source said on Sunday. The Commission has slammed as an unprecedented breach of EU fiscal rules Italy’s 2019 budget plan, which aims to lift the deficit to 2.4 percent of domestic output next year from 1.8 percent in 2018. Since receiving beefed-up powers in 2013 over member states’ budgetary plans, the Commission has never asked a country to submit a revised budget. ...

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Oaktree Capital’s Marks Doesn’t See U.S. Recession Coming Soon

Now is the time to adopt a cautious investment strategy as the market cycle ages, though there aren’t signs of an impending U.S. recession, according to Oaktree Capital Group LLC’s Howard Marks. Oaktree Capital’s Marks Doesn’t See U.S. Recession Coming Soon The world’s largest economy is still doing “very well,” Marks, chairman and co-founder of one of the world’s largest alternative and distressed investment firms, told Bloomberg TV in Sydney on Monday. Despite a lack of bargains in many markets, strategies should focus on remaining invested and position defensively, without ...

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U.S. tariff hikes against China have negative effect on world economy: experts

The impact of tariff hikes is expected to decelerate world economic growth in 2019-2020, meanwhile a deal on liquefied natural gas (LNG) may help ease trade tensions between China and the United States, according to experts who attended a petroleum technical symposium. Steve Lewandowski, vice president of global olefins at IHS Markit, the London-based global information provider, told the 2018 CAPA Petroleum Technical Symposium, organized by the Chinese American Petroleum Association (CAPA), that the spillover effects of tariffs on market confidence and asset prices are at least as important as ...

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China’s $195 Billion Debt Splurge Has Less Bang Than You Might Think

China’s burst of local bond issuance is supposed to fund roads, affordable homes and other infrastructure developments that will help support its flagging economy. But there don’t seem to be enough projects around to spend the money on. Provincial authorities had by the end of September already raised 92 percent of the 1.35 trillion yuan ($195 billion) worth of special infrastructure bonds that the central government has targeted for the entire year. The bonds, which are separate to provincial authorities’ budgets, are part of an attempt to counter the economic ...

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Chinese exporters: weaker yuan won’t make up for trade war impact

The sharp weakening of China’s currency so far this year is far from enough to offset the impact on its exporters from the trade tariffs imposed by the US government, Chinese firms said during the country’s biggest trade fair this week. The tariffs have piled extra pressure on Chinese firms already being squeezed by higher costs for rent, labour, energy and taxes, the firms explained at the event in the southern city of Guangzhou, the centre of China’s export industry. Many will be forced to close or move to lower-cost ...

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Why the Developing World Started Gaining on the West

During the past three decades, there has been a momentous change in the global economy. One of the most troubling and puzzling features — the failure of poor countries to catch up to developed countries — has seemingly been overturned. Basic growth theory says that developing countries should grow faster than rich ones. One reason is that capital has diminishing returns — as you build more offices, more houses, more cars and machine tools and computers — the economic benefit of building yet more of those things goes down, even ...

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Brexit Uncertainty Slashes Investment in 8 in 10 U.K. Businesses

Four-fifths of U.K. companies have cut or withheld investment because of the uncertainty caused by Brexit, Britain’s biggest business lobby said. Some 58 percent of businesses have made plans to cut jobs, adjust supply chains, relocate production and services or stockpile products if no clarity emerges soon on Britain’s future relationship with the European Union after Brexit, according to the Confederation of British Industry. In a survey of 236 companies, it found that 41 percent have already implemented some contingency plans. As time ticks down to Britain’s March departure from ...

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China says must balance stable growth and risk prevention

China must balance the need for stable growth while managing risks and maintain a prudent and neutral monetary policy, the State Council, the country’s cabinet, said following a meeting of top economic and financial policymakers. Data released on Friday showed the world’s second largest economy growing at its weakest pace since the global financial crisis, underscoring challenges for Beijing amid an escalating trade war with the United States and sluggish domestic demand. The State Council Financial Stability and Development Commission held a special meeting on Saturday led by Vice Premier ...

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