Are investors starting to not care about China?

Seema Mody
2-3-2016
11 Hours Ago

CNBC

The news out of China, bad or good, just doesn't seem to have as much bite anymore.

Sure, downbeat Chinese economic data on the first day of trading in 2016 ignited a global market sell-off. But as the year has worn on, the impact is diminishing.

Tuesday's disappointing manufacturing data showing activity at Chinese factories in February contracted and was at the lowest level since November 2011 didn't translate into higher stock market volatility or investor angst. In fact, U.S. markets surged as traders' focus turned elsewhere.

Similarly, news to start the week that China's central bank was cutting reserve requirements failed to generate a rally, as monetary easing otherwise might.

China's PMI Reports Show Slowdown Deepening as Services Slip

  Bloomberg News
March 1, 2016 — 3:01 AM EET Updated on March 1, 2016 — 9:11 AM EET

Bloomberg

China's factory gauge extended its stretch of deteriorating conditions to a record seven months while a measure of services fell to the weakest in seven years, underscoring the challenge for policy makers as they seek to cut overcapacity in manufacturing without derailing growth.
The manufacturing purchasing managers index dropped to 49 in February, missing the median estimate of 49.4 in a Bloomberg News survey of economists. It hasn’t been weaker since January 2009. Numbers below 50 indicate conditions worsened. In a sign China’s slowdown is spreading, the non-manufacturing PMI -- which has been outperforming the factory measure -- fell to the lowest level since December 2008.

What Russia's Failing Economy Means For Putin's Legacy And Military Ambitions

The WorldPost spoke with Sergey Aleksahenko, former deputy chairman of the Russian Central Bank.
 02/20/2016 08:01 am ET | Updated 2 hours ago

THe Huffington Post

The World Post


Alexandra Ma
Editorial Fellow, The Huffington Post


Russia is in the middle of its worst economic crisis since 2008.

The country's economic output declined by 3.7 percent in 2015 and is projected to decrease by a further 1 percent in 2016, according to International Monetary Fund estimates published in January. Inflation soared to 15.4 percent in 2015, compared with 7.8 percent in 2014.

The decline is partly the result of the international sanctions imposed following Russia's annexation of Crimea in March 2014. Large trade and investment partners, including the European Union and the United States, cut off Russia's access to foreign loans and capital markets and froze assets belonging to high-level Russians.

Cheap Cigarettes Are Burning Greece's Finances

By Nikos Chrysoloras

February 8, 2016 — 2:01 AM EET

On an unremarkable morning on Stournari street in downtown Athens, just a few blocks away from the epicenter of every riot the city has seen during its recent crisis years, two men of Asian origin politely and openly hawk cigarettes to passersby.

The illegal packs of R.G.D.-branded smokes cost 1.50 euros ($1.70) each, less than half the price of 20 Marlboros or Prince at one of Greece’s ubiquitous street kiosks.

As Prime Minister Alexis Tsipras walks another tightrope between creditor demands for additional belt tightening and a social backlash, the scene exposes an unhealthy truth: Greeks could smoke, drink and gamble their way out of their next financial hole, if only they were taxed on all of it.

BofA: The Oil Crash Is Kicking Off One of the Largest Wealth Transfers In Human History

A $3 trillion shift year from oil producers to global consumers.

 Joe Weisenthal

 TheStalwart

February 1, 2016 — 4:49 AM EET

Bloomberg

Economists are still hotly debating whether the oil crash has been a net positive for advanced economies.

Optimists argue that cheap oil is a good thing for consumers and commodity-sensitive businesses, while pessimists point to the hit to energy-related investment and possible spillover into the financial system.

A new note from Francisco Blanch at Bank of America Merrill Lynch, however, puts the oil move into a much bigger perspective, arguing that a sustained price plunge "will push back $3 trillion a year from oil producers to global consumers, setting the stage for one of the largest transfers of wealth in human history."

Blanch and his team already see evidence that the fall in the price of crude is having a positive impact on demand, and say that it could accelerate even further if prices don't pick up.

As Taiwan’s Workers Flock to China, Concerns About Economy Grow

By AUSTIN RAMZYJAN. 13, 2016

The New York Times

TAIPEI, Taiwan — Jason Lee spent most of the last decade building a business in a field for which Taiwan is famous. With three friends, he founded an animation studio here, churning out TV shows and special effects for games and films.

But costs rose and orders dried up, and they closed up shop in 2011. A few years later, Mr. Lee left Taiwan for mainland China, where he was hired to run an animation studio in the city of Qingdao. Five months ago, he started his own studio there. He has 20 employees, a number he hopes to double after the Chinese New Year next month — growth he could not have imagined in Taiwan.

A New Economic Era for China Goes Off the Rails

By KEITH BRADSHERJAN. 7, 2016

The New York Times

HONG KONG — When President Xi Jinping of China convened a group of top officials to discuss the economy last month, the highly publicized meeting was seen as a moment of triumph.

A stock market plunge last summer, and a messy currency devaluation that followed, had faded from global view. In the relative calm, he seemed to usher in a new era of economic management, promising policy coordination at the highest levels to prevent another bout of turmoil.

Less than three weeks later, his plans have been derailed as China’s stock market and currency once again rattle investors around the world. The latest rout sets up a challenge for Mr. Xi, who has positioned himself as the master of the country’s economy.

Stocks Fall Sharply on China Slowdown Worries

Stoxx Europe 600 falls 2.2%, led by 3.3% drop in Frankfurt’s exporter-heavy DAX index

The Wall Street Journal

By RIVA GOLD

Jan. 4, 2016 4:20 a.m. ET

1 COMMENTS

Global stocks sold off sharply on the first trading day of 2016 following fresh signs of an economic slowdown in China.

Weaker-than-expected manufacturing data and a falling currency triggered declines in mainland Chinese stocks so steep that authorities halted trading there for the rest of the day.

European stocks also fell sharply, with the Stoxx Europe 600 down 2.2% in early trade, led by a 3.3% drop in Germany’s exporter-heavy DAX index.

The euro area's uninspiring recovery

Sep 2nd 2015, 13:29 BY P.W. | LONDON

Economist

EARLIER this year, a genuine revival in the euro area appeared to be under way. European equity markets were buoyant and consumers had become more confident. The recovery, which had been faltering and feeble since the spring of 2013, looked set to accelerate. That bout of optimism has proved fleeting and there is now increasing doubt about whether the euro area can pull itself out of a rut of low inflation and sluggish growth. The European Central Bank (ECB) is not expected to act on September 3rd when its governing council meets. But it may well indicate a preparedness to provide more stimulus, if necessary.

Get Receipts, Win a Car: How Greece’s VAT Lottery Plan Worked in Portugal

By  PATRICIA KOWSMANN

The Wall Street Journal

Greece has been mocked for coming up with unusual measures to tackle tax evasion, from hiring students and tourists as undercover inspectors to offering lottery prizes tied to sales-tax receipts.

To know if at least one of these measures work, take a look at Portugal.

Since April last year, the Portuguese government has been running a raffle for people who demand receipts for the goods and services they buy, thereby forcing those businesses to pay value-added taxes. The result? More than 40 lucky Portuguese are now in the possession of a brand new Audi. And revenue from VAT has risen more than 4%, or €563 million ($611 million), while private consumption rose just 2%.

What Greece Has to Do Now: Fix Its Economy

Michael G. Jacobides

FEBRUARY 27, 2015

After weeks of media frenzy around the Greek election and the new government’s once-ambitious plans to renegotiate with the Eurozone over its debt crisis, the searchlights of publicity are shifting. For all of its bravado, Greece was pushed into a corner in an eleventh-hour deal that will extend a bailout agreement for four more months. And although it has been given a temporary lifeline, little has been resolved.

GREECE'S FUTURE IS ITS PAST

Posted by Rebecca Harding on Feb 23rd 2015,

A deal was done at the last minute: Greece’s €172bn debt bailout was extended for a further four months after a turbulent week of bluff and counterbluff. Even now, there are no formal agreements on the required reform process ahead and without these agreements the deal will not be ratified. It appears that the Greek government is keen to demonstrate its willingness to reform by focusing on tax evasion and civil service reform, but it is unlikely that this will be sufficient for either Germany or the ECB.

What Good Are Economists?

Robert J. Shiller

http://www.project-syndicate.org/commentary/are-economists-good-by-robert-j--shiller-2015-01

NEW HAVEN – Since the global financial crisis and recession of 2007-2009, criticism of the economics profession has intensified. The failure of all but a few professional economists to forecast the episode – the aftereffects of which still linger – has led many to question whether the economics profession contributes anything significant to society. If they were unable to foresee something so important to people’s wellbeing, what good are they?

Gold Rises to Highest Since October as U.S. Rate Outlook Weighed

By Laura Clarke and Glenys Sim  Jan 13, 2015 12:23 PM GMT+0200

Bloomberg

Gold extended gains to the highest in almost 12 weeks as investors assessed the timing of higher borrowing costs and the strength of the U.S. economy amid slumping oil prices. Silver climbed to a four-week high.

Bullion rose for a third day after U.S. data last week showed falling incomes even as hiring accelerated. Fed Bank of San Francisco President John Williams has said raising rates in June would be a close call amid “strong momentum” in the labor market and weaker wage gains.

Euro sinks to fresh nine-year low

 BBC

8 January 2015 Last updated at 15:52 GMT

The euro has hit a fresh nine-year low against the dollar, in part after a surprise decrease in German manufacturing.

German factory orders fell by 2.4% in November compared with the previous month, worse than expected.

China's Economy: Don’t Bet on Beijing

A recent report makes clear the enormous challenges facing China’s economy.

The Diplomat

http://thediplomat.com/2014/12/chinas-economy-dont-bet-on-beijing/

By Sam Winter-Levy

December 02, 2014

The Financial Times recently reported that China has wasted nearly $7 trillion since the global financial crisis. According to research by China’s state planning agency, the National Development and Reform Commission, “ineffective investment” made up nearly half the total amount invested in the Chinese economy since 2009. The soaring ranks of empty skyscrapers and residential complexes that crowd the skylines of so many of China’s third- and fourth-tier cities are the most obvious sign of this prodigality, although alongside extraordinary levels of misallocated capital, billions of dollars of post-crisis stimulus has simply disappeared into the opaque pockets of Communist Party officials. Following the widely hailed conclusion of the Asia-Pacific Economic Cooperation forum earlier this month in Beijing, where Chinese President Xi Jinping insisted once again on a “new type of great-power relations” between the United States and a rising China, these reports of waste on an immense scale should be a salutary reminder of the extent of the challenges the Chinese Communist Party faces before any supposedly inevitable transition of global power takes place.

Greece Expects Primary Budget Surplus for 2015

But Spending Plans Not Agreed with Creditors

The Wall Street Journal

By STELIOS BOURAS and  ALKMAN GRANITSAS

Updated Nov. 21, 2014 7:03 a.m. ET

0 COMMENTS

ATHENS—Greece’s 2015 budget, submitted by the government to parliament on Friday, aims to meet the fiscal demands of the country’s creditors but comes without the prior approval of its troika of international inspectors.

Why the run on banks?

Bulgaria

Jul 1st 2014, 17:32 by G.K. | SOFIA

IN A country struggling with rampant corruption, a weak judiciary and unstable government, the Bulgarian banking system has consistently won praise for its stable institutions, high liquidity and low risk. In the past few weeks that system has come under attack in the worst run on banks in 17 years.

The central bank said runs on First Investment Bank (FIB) and Corporate Commercial Bank (CCB), the country’s third and fourth largest lenders, in the past two weeks were part of a “deliberate and systematic attempt to destabilise Bulgaria's banking system”. According to the authorities, criminals tried to disrupt the system by sending e-mails and text messages urging people to withdraw their funds from several large banks.

China economic clout good for U.S.: Column

Ted C. Fishman 4:05 p.m. EDT June 15, 2014

USA Today

Instead of feeling threatened, Chinese buying power can help us and improve relations.

Early this spring, the World Bank announced that, by one measure, the size of the Chinese economy at the end of 2011 was nearly equal to that of the U.S. and, this year, it will be bigger. Americans are fearful of China lately. A bigger economy seems to be giving China sharper elbows. The Asian giant has been pressing territorial demands. China's military supports cyber spies who steal American industrial secrets. China's President Xi Jinping warns the U.S. in speeches that America will get burned if America stymies China's assertion of its goals.

Should Americans feel threatened? Surprised?

A Plan to Revitalize Greece Harvard Business Review

By Alexander S. Kritikos  Jun 9, 2014 3:00 PM GMT+0300

Bloomberg

Greece is finally showing signs of recovering from its 2008 crash. However, as much as macroeconomic reforms are needed, the future of the Greek economy will be determined by its competitiveness, which concerns costs, but is also measured by innovation.

In that regard, Greece finds itself at a crossroads. It can improve its competitiveness by reducing costs in its traditional sectors, such as tourism, agriculture, and trade. Or it can aim higher – by laying the groundwork for higher value-added goods production.