Latest News Clips 2018.06.25

                      

1.      China's economy shows signs of slowing. A trade war won't help

CNN   June 20, 2018:

The start of a trade war between the United States and China comes at an inconvenient time for the Chinese economy.

In recent weeks, concerns have been mounting that growth in the world's second-biggest economy is cooling faster than expected. Weaker Chinese growth will have repercussions for big trading partners, such as the United States and Europe, and for global companies who do business there.

Now, an intensifying clash with the United States is adding to the difficulties. Both sides announced tariffs on $50 billion of each other's products last week, and President Donald Trump upped the ante further on Monday with a threat to impose duties on at least another $200 billion of Chinese goods.

"The trade dispute is escalating at a time when doubts about the domestic economic picture are rising," Mark Williams, chief Asia economist at research firm Capital Economics, wrote in a research note last week.

The Chinese economy performed strongly last year, growing 6.9%, according to government figures. That momentum continued into the start of this year, but many economists were skeptical it would hold. Signs of a slowdown are starting to appear.

Official economic data for last month showed that growth in important areas like exports, investments by companies and consumer spending all declined compared with the same month a year ago.

The numbers "suggest a broad-based slowdown is now emerging, and we expect this to continue," said Louis Kuijs, head of Asia economics at research firm Oxford Economics.

He predicts China's economy will grow 6.4% this year, or slightly below the Chinese government's growth target for of about 6.5%. Some analysts have repeatedly questioned the accuracy of official GDP data.

This is what a trade war looks like

The deepening trade fight with the United States is likely to contribute to the loss of momentum.

Haibin Zhu, chief China economist at JPMorgan, estimates that US tariffs on Chinese exports could slice between 0.1 and 0.5 percentage points off Chinese economic growth, depending on the scale and intensity of the tariffs.

The fallout may spread beyond the direct impact of tariffs, too, hurting business confidence and delaying investment decisions in the country, Zhu added.

Weaker growth ahead

That's even more of a concern after the recent soft economic data.

"Economic growth appears likely to weaken further over the second half of the year," said Capital Economics' Williams.

Some economists say a key reason for the apparent slowdown is the Chinese government's push to rein in the huge levels of debt in the country, which have risen sharply since the global financial crisis a decade ago.

By the middle of last year, debt was more than two and a half times the value of the entire Chinese economy, according to the Bank of International Settlements. Ratings agencies Moody'sand S&P last year downgraded China's credit rating.

Xi and other top officials have talked about reducing risks in China's financial system, which is often referred to as "deleveraging." They have also tried to crack down on China's huge shadow banking sector in which murky forms of lending are kept off banks' official balance sheets.

2.      Turkey elections 2018: everything you need to know

Erdoğan is running for president, of course, but who else is in the running for control?

The Guardian  18 Jun 2018

  

What is happening in Turkey?

The country will hold presidential and parliamentary elections on 24 June. If no candidate wins an outright majority in the first round of the presidential elections, a second round will be held on 8 July between the top two candidates in the race.

Why are the elections being held now?

The elections were supposed to be in November 2019. President Recep Tayyip Erdoğan, however, called for early elections back in April. He said that Turkey needed to “overcome uncertainty” at a troubled time in the region, amid its ongoing military operations in Syria and Iraq.

Critics, however, say the race was brought forward because Turkey’s currency and economy are suffering and the president wanted to preempt the downward trend. He may also be hoping to capitalise on nationalist sentiment after military victory in Syria, where rebels backed by Turkey defeated Kurdish militias near the border in a region called Afrin.

Why are these elections important?

This is arguably the most important election in Turkey’s modern history. The new president will assume an office imbued with sweeping executive powers that voters narrowly approved in a constitutional referendum last year. These include the power to issue decrees with the force of law, appoint the cabinet and vice-presidents as well as senior judges. If he wins, Erdoğan will continue to shape Turkey and its society for years to come.

Who is running for president?

Erdoğan, of course. He remains the most popular political leader in Turkey. But he faces several important opponents who have done unexpectedly well so far in the campaign, and, as a result, a second-round contest is now the most likely outcome.

There is Muharrem İnce, a charismatic physics teacher who is the candidate of the main opposition group, the Republican People’s party (CHP), and Meral Akşener, nicknamed the ‘she-wolf’. She is the leader of the new nationalist Iyi (Good) party and is popular with both youth and working-class Turks.

Temel Karamollaoğlu, the leader of the Islamist Felicity party, is also running, and has emerged as a key critic of Erdoğan even though their parties share ideological roots. Selahattin Demirtaş, a charismatic politician once dubbed the ‘Kurdish Obama’ and who leads the leftist and Kurdish issue-oriented People’s Democratic party (HDP), is running for the presidency from his prison cell in the city of Edirne. He awaits trial on terrorism charges.

What’s happening in parliament?

There are two main coalitions running for parliament.

The first includes the ruling Justice and Development party (AKP) of Erdoğan, which are in a coalition with the nationalists.

On the opposite side is an alliance that includes the secularists of the CHP, the breakaway nationalists of the Iyi party, and the Islamists of the Felicity party. They make strange bedfellows in a political system where secularists and Islamists have traditionally been bitter enemies, but such is the importance of these elections that former rivals have banded together to oust the president and his entourage. The HDP is running by itself.

The Turkish constitution requires that parties obtain at least 10% of the national vote to enter parliament, a law that favours larger parties. A new bill recently allowed the formation of election alliances like those described above, which will allow smaller parties like Felicity to win some seats in the legislature if their alliance as a whole crosses the 10% threshold.

If the opposition alliance performs as expected, and the HDP gets over 10% of the popular vote, the ruling AKP could lose its majority in parliament.

So who will win?

Erdoğan was hoping to catch his opponents by surprise when he called for a vote, but attendance at ruling party rallies has been lacklustre, and the Turkish leader does not appear to be at the top of his game. The economy has also caused headaches, with the Turkish lira falling in value against the dollar, concerns mounting over the long-term health of the economy, and fears over the Central Bank’s independence.

Still, Erdoğan is the most popular Turkish politician, and is likely to win the presidential race. Polls are notoriously unreliable in Turkey, but for now it looks like he will easily win the first round, but without an outright majority. A second-round race against Ince or Aksener still favours the president, but is increasingly looking too close to call. It will depend on whether the opposition can draw away conservative and nationalist voters, as well as Kurdish voters angry about Erdogan’s alliance with the nationalists.

Also, there is a very real possibility that Erdoğan will win the presidency but lose parliament to the opposition, which has promised to roll back the constitutional amendments passed last year.

But, under those same amendments, the president can dissolve parliament, and the legislature can call new presidential elections in response. According to some ruling party officials, that’s exactly what Erdoğan might do, which would give his party a chance at a do-over, but plunge Turkey into uncertainty.

3.      Why the AT&T-Time Warner Case Was So Closely Watched

The New York Times   2018.06.12

If Media Giants Grow, So May Your Bills

The government doesn’t want you to pay too much to watch your shows. That’s why the Justice Department says it is challenging the proposed merger between AT&T and Time Warner.

AT&T took a step closer to becoming a telecom-media giant after a judge ruled on Tuesday that its $85.4 billion takeover of Time Warner can proceed. Read our detailed coverage of the ruling here.

The decision was no less momentous for President Trump’s Justice Department which, in suing to block the deal, was advocating a new approach to antitrust regulation.

Here’s a primer on what happened:

What’s the big deal?

AT&T, which most Americans know as a mobile-phone service provider, is trying to buy Time Warner, owner of big media brands including HBO, Warner Bros. and CNN.

The takeover was announced in October 2016, and is the latest effort by a big telecom or cable company to acquire media assets. The cable company Comcast owns NBCUniversal, and Verizon owns websites including Yahoo and HuffPost.

The Justice Department sued to block the deal last year, arguing that it would limit competition and raise costs. The companies countered that the deal would allow Time Warner and AT&T to compete more effectively against Silicon Valley companies like Google and Netflix.

What was the judge’s decision?

The takeover can proceed without any conditions, Richard J. Leon, a United States District Court judge, ruled. AT&T and Time Warner can now push on with the deal, which they aim to close later this month.

The decision is expected to be taken as a green light for more takeovers. For example, Comcast is expected to make a bid for most of 21st Century Fox’s television assets — setting up a bidding war against the Walt Disney Company.

It’s possible that the Justice Department will appeal the ruling, though, so things may not end here.

What was the reaction?

AT&T said in a statement that it hoped to close the merger “on or before June 20 so we can begin to give consumers video entertainment that is more affordable, mobile, and innovative.”

The Justice Department said it would consider its options.

Shares of other companies involved in mergers rose after the ruling. T-Mobile which is seeking to merge with rival mobile-service provider Sprint rose about 1.5 percent in after-hours trading. Sprint gained 1 percent.

CVS and Aetna also rose, while Express Scripts, which is being acquired by insurer Cigna, added about 5 percent. Cigna also rose.