It is expected an interim, six-month agreement in which Iran would suspend its higher-grade uranium enrichment in return for the easing of some sanctions. The six-month deal would give negotiators time to hash out a more challenging and far-reaching agreement on Iran’s nuclear program. — Business Insider
Merkel signaled today that she will accept the SPD’s demand for a national minimum wage. She may also back curbing companies’ hiring flexibility and cutting the retirement age to 63 for some workers, reversing a remedy she tried to administer on troubled euro-area countries. — Bloomberg
SAO PAULO—Economic growth in Brazil has started to recover as investment picks up, and in Mexico the economy is poised to bounce back along with exports, the Organization for Economic Co-operation and Development said in an economic report published Tuesday. — (Marketwatch)
Lawmakers are not anticipating any sort of âgrand bargainâ emerging from the talks, considering the restricted timeframe.
In the agreement to end the partial government shutdown and raise the debt ceiling, Congress also gave a bipartisan budget committee a Dec. 13 deadline to cut a new deal.
While many outside the group are pessimistic, members of the panel are still striking a hopeful tone – despite the fast-approaching deadline.
Lawmakers are not anticipating any sort of “grand bargain” emerging from the talks, considering the restricted timeframe. Both sides, though, agree they’d like to rework the sequester cuts in a more logical way — but Democrats and Republicans have different ideas.
US Treasury Secretary Jacob Lew — as special representative of President Barack Obama — arrived in China on Friday for a two-day visit on the last leg of a five-nation Asian tour.
While he is expected to hear about China’s commitment to market opening when meeting Chinese leaders, China will require a US commitment on issues such as the debt ceiling, observers say. — (ChinaDaily)
“She is an extraordinarily good economist,” Greenspan said today at the National Press Club in Washington. “It was very helpful to me because she was a professor and academic who had very significant insights into where various new theories were coming up and the like in academia.”—
The bond market has been buzzing this week following the publication of two papers from staff at the Federal Reserve that could provide officials with a possible way out of their quantitative easing box.
The papers, presented at a conference this week hosted by the International Monetary Fund, suggest a lower unemployment rate of 5.5 per cent before triggering a tightening of policy, while also tolerating a higher rate of inflation of around 2.5 per cent. — (Financial Times)
The longer the Federal Reserve continues its bond-buying stimulus, the higher the odds it will face a year without any money to give the US Treasury after taxpayers received a record $88.4 billion profit in 2012.The Fed’s financial-crisis actions -
The Fed’s financial-crisis actions - from acquiring debt in the 2008 rescues of Bear Stearns Cos and American International Group Inc to three rounds of quantitative easing - have led so far to the record payments. Now, the prospect of a stronger economy and rising interest rates means the value of the Fed’s bond holdings will fall at the same time its funding costs climb because the central bank pays interest on the excess reserves it holds for banks….
This could cause operating losses and invite increased scrutiny from lawmakers already critical of the central bank’s policies.
"If the balance sheet expands further from here, the possibility of a loss becomes more and more real," said Roberto Perli, a partner at Cornerstone Macro LP in Washington and a former Fed economist.
At the current balance-sheet level, an interest rate of 4.9 percent would be sufficient to wipe out the Fed’s income, according to Perli’s calculations.
If the balance sheet grows for another year, the rate that causes interest on reserves to produce a loss falls to 4.3 percent.
"It’s not dangerous yet, but it’s getting there," said Perli. That’s because, in the longer-run, most Fed officials see their target rate rising to 4 percent. — (Business Standard / Bloomberg)
While each manufacturer has a variety of motives for reshoring jobs and production, it is clear that many manufacturers are responding to strong economic incentives to create jobs and expand production in the United States. The United States appears poised to regain some of the jobs that were “offshored” and factories that were closed. This is a positive sign for U.S. manufacturing and the economy as a whole. — King & Spalding LLP’s Clint Long
Germany rejected Washington’s criticism of the country’s export-focused economic policies as “incomprehensible,” as tensions between the longtime allies escalated.
Responding to a pointed critique of Berlin’s economic course by the U.S. Treasury, German officials said the global appetite for German cars and machinery was driven by market factors and nothing else.
"The trade surpluses reflect the strong competitiveness of the German economy and the international demand for quality products from Germany," the Economics Ministry said.
In Washington, U.S. officials held firm to a position outlined in a report published late Wednesday accusing Germany of dragging down its neighbors and the rest of the global economy by consuming too little while running significant surpluses with many of its key trading partners.
Chinese Politburo member Yu Zhengsheng said reforms to be discussed at a Communist Party meeting next month will be unprecedented, adding to signs that leaders are resolved to spur far-reaching policy changes.
But what worries Maduro the most is the economic crisis he has inherited, one of the worst in decades. Even though during Chavez’s regime Venezuela experienced the most profitable oil revenues in its history, it didn’t save it from the Dutch disease (“negative consequences arising from large increases in a country’s income”). The main problem now is the Venezuelan economy’s dependence on imports — 70 percent of the goods Venezuela consumes are from imports — and its lack of foreign currency to satisfy its demand.
This means that every time a Venezuelan goes to the supermarket, he won’t find one out of five basic food products, such as milk, flour, butter, sugar, or chicken. — (The Canal)
“It’s just good enough to live with but not good enough to be happy about. Divorce remains a possibility until the existing crisis resolves, and a truly good marriage seems to me at the moment very remote.”—
I have seen reports of major league reshoring by Apple, Motorola, General Electric, and others, and we all saw the announcement by Walmart that it will steer billions to U.S. manufacturers, but I have been waiting to see this movement reflected in the economic data.
According to the BCG survey of 200 decision makers at companies across a broad range of industries, the share of executives who are planning to “reshore” or are considering it rose to 54 percent from 37 percent a year ago.
"Over the past couple of years, we’ve projected an improvement in U.S. manufacturing competitiveness by 2015 that would help drive an American manufacturing revival," said Harold L. Sirkin, a BCG senior partner and co-author of the study. "The results of our latest survey make clear that a profound shift in attitude is beginning." — Huffington Post
Not only will this benefit the U.S. but Mexico is in prime position to reap the advantages from this budding dynamic. My thought though is with incredibly loose monetary policy and this interplay, is the top for the US bond market in view?
On 9 October, the European Parliament voted in favor of applying the Environmental Impact Assessments to shale gas firms before they embark on new drilling projects. The EIA Directive was put into law in 1985 in order to assess the environmental effects of public and private projects, and a 2009 amendment expanded the directive to include the capture and storage of carbon dioxide. However, as the industry for the exploitation of unconventional fuels takes off around much of the world, Europeans are expressing concerns surrounding the largely contested environmental impacts of drilling for shell gas. Thus, the Commission is formulating a proposal that will give European citizens protection from the risks caused by hydraulic fracturing, or “fracking”, of shale gas that currently apply to the extraction of conventional energy sources. — (The Malta Independent)
Japan’s Government Pension Investment Fund, Tokyo, isn’t ready for Abenomics, according to the head of an expert panel advising on public investments.
An interim report from the panel on Sept. 26 showed some members wanted the ¥121 trillion ($1.25 trillion) GPIF to add new assets such as real estate trusts, infrastructure and private equity investments and commodities. The group will meet two to four more times before issuing its final report next month, Mr. Ito said. — (Bloomberg)
Millions of people are in for a shock at the end of the week when their food stamp benefits will be cut across the board.
There is little chance that Congress will act to avert what hunger activists call the “food stamp cliff” — a cut to benefits that will affect some 47 million beneficiaries, including children and the elderly. — (The Hill)
A cut in food stamp benefits will lead to less disposable income. Will consumption suffer? If this is to affect 47 million beneficiaries, then 47/316 = 15% of the American population will need to modify their spending habits.