DUBAI: Speakers at the World Government Summit (WGS) 2017 that kicked off in Dubai on Sunday expressed their concerns over the growing protectionist sentiments around the world, particularly in the US.
“Whatever its size or power, no country today can exist autonomously,” said President of Senegal Macky Sall.
“It would be a mistake to fall back on our own economies because economies are interdependent. Capital, goods and people are constantly moving from one country to another and rules are needed to protect these investments,” President Sall added.
The comments were made at a plenary session entitled “The Value of Trade, Growing Economies, Improving Lives” on the first day the 5th World Government Summit (WGS) 2017. Moderated by international journalist Richard Quest, the panelists included President Sall and Sultan Bin Sulayem, group chairman and CEO, DP World.
On the predicted decline of globalization, Bin Sulayem said, “I believe that these anti-globalization sentiments are a phase and I do not think this will affect our business in the perceived manner.”
On fair trade, President Sall said, “The economies of the US and Africa are not the same. Trade policies need to be adopted to the levels of development and there should be an approved system of rules governing these policies.”
The panelists also highlighted the importance of Public-Private Partnerships (PPPs).
Bin Sulayem said: “In our business, the biggest danger is the inefficiencies in supply chain. We need to have better infrastructure to connect the Port of Dakar into the many landlocked countries in Africa. This is where I see an opportunity for growth, and is something that the public sector not the private sector can do on its own. We need to witness transparency and good governance from African countries to qualify for safe investment in infrastructure.”
President Sall added: “There are several African countries that are landlocked and they need more interconnectivity with the ports and the markets. This foreign investment can be developed in Africa through Public-Private partnerships.”
Speaking on the newly launched strategy agency that focuses on a plan for Emerging Senegal, President Sall said: “Our strategy is based on three different pillars that are centered around structurally transforming the economy through infrastructure, energy and agriculture in order to achieve inclusive growth, while focusing on the state and role of law. We have been able to achieve over 2.6 percent growth in 2015-16 and hope that we will be able to share this strategy with others as well.”
Bin Sulayem also discussed the relative stagnation in world trade by stressing that over 75 percent of DP World’s business growth is in emerging markets. He said: “What we need to do is to remove inefficiencies. Today if I see 1 percent growth in the gross domestic product (GDP) of Senegal, for example, it translates to the number of containers being transported there multiplied by three!”
Both speakers predicted that the current slow down in globalization was a temporary phenomenon and expressed interest in enhancing trade operations with each other, as well as other developed and emerging countries across the globe.
DUBAI: Speakers at the World Government Summit (WGS) 2017 that kicked off in Dubai on Sunday expressed their concerns over the growing protectionist sentiments around the world, particularly in the US.
DUBAI: International Monetary Fund (IMF) chief Christine Lagarde on Sunday voiced optimism for US economic growth under President Donald Trump but warned it could herald trouble for the rest of the world.
“From the little we know, and I will insist on the little we know, because this is really work in progress… but from the little we hear, we have reasons to be optimistic about economic growth in the US,” Lagarde said at the annual World Government Summit (WGS) in Dubai.
Lagarde predicted tax reform and more investment in infrastructure were both likely under Trump, whose Thursday teaser of fresh tax cut proposals pushed Wall Street stocks to new records.
The Dow, Nasdaq and S&P 500 all closed up 0.6 percent Thursday after the new US president promised a “phenomenal” tax cut plan would be unveiled within two or three weeks.
Yet the IMF chief did not mince words in raising concern over the global repercussions of a boon in the US economy.
“Now that is the good news,” said Lagarde. “The more worrying news, if you will, is that it will have consequences on the rest of the world, and we are seeing it.”
She highlighted the strength of the dollar against other currencies, predicting a hike in interest rates regulated by the Federal Reserve.
“That is a tightening that will be difficult on the global economy and for which economies will have to prepare,” said Lagarde.
The IMF in January raised the US growth estimate a tenth of a point this year to 2.3 percent, and four-tenths of a point to 2.5 percent for 2018.
The World Bank, meanwhile, has not changed its forecasts for the US, citing the uncertainty of Trump’s policy plans.
Both the IMF and World Bank continue to point to uncertainty as a mitigating factor for economic projections in the US.
The two organizations are expected to announce clearer forecasts at the World Economic Outlook in April.
Lagarde, whose organization has backed taxation in the largely energy-rich and tax-free member countries of Gulf Cooperation Council (GCC), was also unwavering in her support for the impending regional five percent value-added tax (VAT).
“Whether you want to talk about education, whether you want to talk about roads… to have public investment, you need public funding,” said the IMF chief.
“Now if that funding is reduced because the price of the barrel has gone down… that money needs to be found somewhere else, and as a result there has to be a degree of taxation.”
The IMF in 2016 had recommended the GCC states impose revenue-raising measures, including excise and VAT, to adjust to lower crude prices, which have slowed regional growth.
The GCC countries, which include Saudi Arabia and the United Arab Emirates (UAE), have already agreed to implement selective taxes on tobacco, and soft and energy drinks this year.
A broader five percent VAT is slotted to take effect across the Gulf on Jan. 1, 2018.
DUBAI: “The human mind begins as an empty space, and the information that first reaches it has the power to control it,” said Ibrahim Al-Buleihi, writer and thinker and a former member of the Saudi Shoura Council.
His remarks came during his presentation titled “The Ideology of Ignorance” on first day of the World Government Summit (WGS) 2017.
Speaking on the need to consciously embrace changes and move forward, Al-Buleihi said: “The mind is not automatically inclined to think positively and be open. It needs to be trained to do so through systematic learning and concerted effort. The benchmark of a civilization is its ability to evolve. The human mindset can remain narrow or regress, even after acquiring the highest education. We cannot teach a mind to be narrow and then expect it to be broad and tolerant. It is vital to train the mind to not just collect information but also to be critical and analytical of the knowledge it acquires. It should learn to test each idea and consciously acquire desirable traits.”
The author of “The Qualitative Changes in Human Civilization” pointed out that ignorance is the original state of a human mind. Later, as it acquires information, the mind is programed by the first set of ideas, ideologies, environment and culture that it is exposed to. The mind may eventually be privy to a wealth of knowledge, but can still remain confined in its own identity, which often stems from inherited culture.
Al-Buleihi said: “Acquisition of knowledge alone will not root out ignorance. On the contrary, education is often used to spread radicalism. Scientific and technological advancements do not impact a mind that is controlled by religion and inherited culture. Prejudice is not a rare state of mind but the most basic human nature. Unless human beings learn to analyze and be objective in their thinking, they will stay trapped in their own prejudices, unable to change and move ahead.”
He stressed the need for educational institutions to teach inclusion and tolerance in a systematic way.
The latest retailer to join the “anti-Trump resistance“, is also the one which despite being closest to death managed to crush short sellers on Friday after its stock soared on the announcement of yet another hail ymary restructuring: according to Reuters, Sears and Kmart are discontinuing online sales of 31 Trump Home items.
An obvious publicity stunt meant to distract the public’s attention from the company’s chronic woes while hopefully attracting at least some of its discretionary dollars, Sears and subsidiary Kmart disclosed their decision on Saturday, saying it was “part of a push to focus their online business on the most profitable items.” Of course, considering that Sears’ Q4 losses rose 16% to $635 million, one would be curious to learn just what those “most profitable” items are.
Neither Sears nor Kmart carried the Trump Home products in their retail stores, a Sears Holdings Corp spokesman said, which is why one wonders just how much of this decision was margin based, and how much, marketing.
“As part of the company’s initiative to optimize its online product assortment, we constantly refine that assortment to focus on our most profitable items,” spokesman Brian Hanover said in a statement. “Amid that streamlining effort, 31 Trump Home items were among the items removed online this week,” he said, adding those items can be found through a third-party vendor, without providing additional information about the products.
The Trump Home collection includes lines of furniture, bedding and lighting, often from makers that supply Trump hotels, according to the collection’s website.
In any case, the Trump “retail” image certainly suffered this past week, highlighted by Nordstrom’s decision to stop carrying Ivanka Trump’s products. The Wall Street Journal reported on Saturday that Nordstrom sales of Ivanka Trump’s brand had dropped sharply before the retailer discontinued sales this week. Citing company data, WSJ reported that sales of Ivanka Trump’s fashion line were off 26% year-over-year in January and fell as much as 70% in the weeks before the election.
The developments were the latest in a week of controversy swirling around commercial activity connected to the Trump name. And the moves may be a rare sign of companies taking calculated risks in making business decisions that might invite criticism from President Donald Trump’s Twitter account: Nordstrom’s stock soared the most in a year on the day of its twitter spat with the president because clearly there is no better publicity than being prominently named in Trump’s timeline.
Neil Stern, a retail consultant for McMillan Doolittle, said Nordstrom may have felt insulated given its stores tend to be located in cities and affluent suburbs, which tend to tack Democratic. “If there is a political blowback they will survive it given where there stores are,” he said. Meanwhile, for Sears, which last month announced plans to close 150 stores, any publicity that draws attention away from the retailer’s financial struggles is welcome, Stern added.
Elsewhere, on Friday three athletes sponsored by Under Armour took to social media to distance themselves from comments by the company’s chief executive, Kevin Plank, in support of Trump.
Adding to Trump’s retail troubles, earlier in the week, a congressional committee said it was seeking a review into whether senior White House adviser Kellyanne Conway had violated ethics rules by using her position to promote Ivanka Trump’s product lines. Prior to Conway’s comments, Donald Trump used Twitter to defend his daughter in the wake of Nordstrom’s decision to discontinue her product line. White House spokesman Sean Spicer characterized the Nordstrom move as a “direct attack” on the president’s policies.
Nordstrom, in announcing the discontinuation of Ivanka Trump’s line last week, said sales had “steadily declined to the point where it didn’t make good business sense” to continue selling the products.
Finally, for those curious which retailers are or are not still selling the Ivanka Trump brand, here it is courtesy of Bloomberg:
- Feb. 9 – Belk: Belk says it dropped Ivanka Trump from its online shop and most stores, but still offers the brand in its three flagship locations, according to AL.com.
- Feb. 8 – Nordstrom: President Trump lashes out at Nordstrom for dropping Ivanka Trump’s fashion line, calling the decision “terrible” and unfair to his daughter.
- Feb. 8 – TJ Maxx: TJ Maxx tells employees to get rid of all Ivanka Trump signage in its stores, according to a report by the New York Times.
- Feb. 7 – ShopStyle: Online fashion seller ShopStyle says in a statement that it removed Ivanka Trump’s line from its database because of a “decline in demand,” BuzzFeed reported.
- Feb. 6 – Jet.com: Online retailer Jet appears to drop Ivanka Trump’s products from its website, according to a report from Mic.
- Feb. 6 – Belk: Ivanka Trump items disappear from Belk’s website, according to Racked. The department store said in a statement that it made adjustments to its assortment “as part of our normal course of business operations.”
- Feb. 5 – Macy’s: Macy’s falls under increased pressure from customers and employees to stop selling Ivanka Trump products.
- Feb 3. – Neiman Marcus: Ivanka Trump jewelry vanishes from the Neiman Marcus website. The company acknowledges in a statement that it has a “very small” Ivanka Trump consignment business that’s assessed by productivity.
- Feb. 2 – Nordstrom: Nordstrom confirms that it will stop selling the Ivanka Trump brand, citing poor sales.
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Ever since the gold report was published, the gold price moved up. This caught several investors by surprise, as some of them even continued to dump gold, scared by what appeared to be a good jobs report.
‘Appeared to be’, because?
Yes, 227,000 new jobs were created, and we can’t deny that’s a positive evolution. However, the increased job number is also the only positive thing in the jobs report, and there are two other issues that haven’t really been highlighted.
Two issues that could, and probably will, have an impact on the interest rate decisions later this year.
First of all, the unemployment rate in the USA actually increased from 4.7% to 4.8%, despite the job growth.
How is that possible?
Simply put, due to the way the Bureau of Labour Statistics is gathering its data, almost 700,000 people have been ‘removed’ from the civilian population. The total size of the civilian population is rebalanced on a yearly basis, in January.
Source: Bureau of Labor Statistics
The smaller size of the civilian population caused the labor force participation rate to increase by 0.2%, and this by itself caused the unemployment rate to increase as well, despite the job creation number.
And as the unemployment rate is one of the key factors the Federal Reserve is looking at to determine whether or not a rate hike is appropriate, this small increase could have an impact on the decision making process. And keep in mind this is the second consecutive increase in the unemployment rate as the December unemployment rate also came in higher than the unemployment rate in November (and this did not include any population rebalancing exercise).
But perhaps even more important is the extremely disappointing update on the average hourly earnings (‘AHE’). The AHE increase fell to just 0.1% in January on a month/month comparison, but the real catch is in the details.
Exactly because the 0.1% increase is focusing on a monthly update, the revision of the wage increase in December is actually telling you something more serious is going on. The December wages have been revised down by 0.2%, so if that would NOT have happened, the average hourly wage would have DECREASED in January.
And that’s a horrible conclusion, considering the official inflation estimates are currently hovering at around 2.3-2.5% by the end of 2017, it’s pretty easy to see and understand the inflation will eat a lot of the wealth of the lower income class and middle class people away. Indeed, let’s have a look at the expected five year forward inflation rate, as expected by the Federal Reserve:
Source: St Louis Fed
After all, the salaries are remaining relatively stable, whilst the inflation rate is eating away 2% of the families’ purchasing power. You don’t have to be a genius to see this could go terribly wrong as a declining purchasing power will reduce the so-called ‘disposable income’, causing the demand for non-essential goods to increase. We aren’t just ‘inventing’ this. Just have a look at the next chart which shows you the consumer confidence level in the USA.
Indeed, despite the job growth in January, the consumer confidence level was decreasing and this should tell you the common man in the street doesn’t feel too confident about the ‘job growth’ numbers and the economic prospects for the middle class man.
The numbers don’t lie, and even though the Bureau of Labour Statistics was proud to announce yet another increase in the job numbers, the data that wasn’t shouted from the rooftops is far more important. The US Consumer Confidence is decreasing, and the wages are stalling. This means inflation is eating away the people’s purchase power ànd savings.
Secular Investor offers a fresh look at investing. We analyze long lasting cycles, coupled with a collection of strategic investments and concrete tips for different types of assets. The methods and strategies are transformed into the Gold & Silver Report and the Commodity Report.
BERLIN: Billed as Germany’s “anti-Trump,” center-left former foreign minister Frank-Walter Steinmeier was elected Sunday as the new ceremonial head of state.
The 61-year-old, who regularly polls as Germany’s most popular politician, will represent the EU’s top economy abroad and act as a kind of moral arbiter for the nation.
His Social Democrats (SPD) hope the appointment will boost their fortunes just as their candidate Martin Schulz, the former European parliament president, readies to challenge Chancellor Angela Merkel in September elections.
Steinmeier received 931 of 1,239 valid votes after Merkel’s conservatives, lacking a strong candidate of their own, agreed to back him to replace incumbent Joachim Gauck, 77, a former pastor from ex-communist East Germany.
The vote was held in Berlin’s glass-domed Reichstag building by a special Federal Assembly, made up of national lawmakers and electors sent from Germany’s 16 states — among them deputies but also artists, writers, musicians and national football coach Joachim Loew.
With his snowy white hair, round glasses and dimpled smile, Steinmeier is one of Germany’s best-known politicians, having twice served as top diplomat under Merkel for a total of seven years.
Though the trained lawyer is usually measured in his speech, in the thick of last year’s US election campaign Steinmeier labelled Donald Trump a “hate preacher.”
After the billionaire won the White House, Steinmeier predicted relations would get “more difficult” and said his staff were struggling to detect any “clear and coherent” foreign policy positions from Trump.
As Steinmeier has prepared for the new post, which he assumes on March 19, he has vowed to serve as a “counterweight to the trend of boundless simplification,” calling this approach “the best antidote to the populists.”
The Berliner Morgenpost newspaper judged that Steinmeier looks set to be “the anti-Trump president.”
Steinmeier is only known to have lost his cool once, in 2014, when he yelled at Berlin protesters who had accused him of being a “warmonger” over his Ukraine policy. The outburst was so unusual it became a minor YouTube hit.
A policy wonk by nature, Steinmeier served as adviser and then chief of staff to Merkel’s predecessor, the SPD’s Gerhard Schroeder.
In 2009, Steinmeier ran against Merkel and lost badly, only to return years later to serve in her cabinet.
Political scientist Michael Broening of the SPD’s think-tank the Friedrich Ebert Foundation said that “as foreign minister, Steinmeier often acted as a voice of reason, bridging gaps and bringing people together.”
“It is hardly surprising that Steinmeier has branded himself as the essential anti-Trump,” he added.
Steinmeier is well known in the world’s capitals, but his appointment worries some in eastern Europe, who see him as too soft on Russian President Vladimir Putin.
He raised eyebrows with NATO partners last year when he criticized a military exercise in Poland as “sabre rattling.”
Having Steinmeier move into the presidential Bellevue Castle in Berlin has emboldened the SPD.
After years in the shadow of Merkel, the Social Democrats are smelling blood as the chancellor faces deep divisions within her own conservative camp, and the rise of the hard-right populist party Alternative for Germany (AfD) after opening German borders to a million asylum-seekers since 2015.
Since Schulz took over the candidacy in late January, the SPD has risen sharply in the opinion polls.
It scored 32 percent — its highest in a decade and only one point behind Merkel’s conservatives — in an Emnid poll for the Bild am Sonntag newspaper, which asked in a headline: “Is this the beginning of the end of the Merkel era?“
The election may still be more than seven months away, but the SPD finally hopes to have a realistic shot at toppling Merkel.
“For Germany’s Social Democrats, Steinmeier’s election is a prelude to something bigger to come: a victory in September’s elections against Merkel,” said Broening.
“While this seemed impossible only a few days ago, the recent rise in polls has changed the equation.”
Two days after democratic senators Elizabeth Warren and Tammy Baldwin sent a letter to Goldman CEO Lloyd Blankfein, asking if Goldman effectively runs the country through its extensive alumni links at the Trump administration, and requesting details on “lobbying” activities in the bank related to review of the Dodd-Frank Act and the Obama-era fiduciary rule on financial advice, as well as asking for any communication between the bank’s employees and Cohn, Mnuchin, nominee for the SEC chair Jay Clayton and chief strategist Steve Bannon, Bloomberg reported overnight that yet another Goldman banker, Jim Donovan, was under consideration for the No. 2 job at the Treasury Department, however it appears he has “got one big thing working against him.”
That “thing” is the overdue realization by the new president that his cabinet openly appears to have been created and staffed by populism arch nemesis #1, Goldman Sachs. Besides Steven Mnuchin, Trump’s pick for Treasury Secretary, former Goldman officials working for the new administration include former president Gary Cohn, now director of the National Economic Council; Stephen Bannon, the chief White House strategist; and Dina Powell, formerly the bank’s head of philanthropic investment, who’s an assistant to the president and senior counselor for economic initiatives.
So just like Goldman would staff every central bank’s core positions prior to Trump, after the US election, the world’s most influential investment bank has shifted all of its attention on just one person, and he is finally starting to realize that that may not be a good thing.
Too many “Goldman guys” already have high-up positions in the Trump administration, the person said, and that could knock Donovan down to one of the undersecretary positions — possibly undersecretary of the Treasury for domestic finance.
The presence of several former Goldman officials at the highest reaches of the administration runs counter to the president’s regular attacks on Wall Street firms during the campaign. “Donald Trump’s Argument for America,” a two-minute advertisement that ran in prime-time days before the election, featured Goldman Chief Executive Officer Lloyd Blankfein in an segment about corporate chieftains pocketing the wealth of American workers.
Having reneged on this core populist angle of his campaign, and opening himself up to democratic attacks over the extensive presence of Goldman bankers in his team, “now the White House seems sensitive to the issue and is taking it into consideration as it attempts to fill remaining top posts.“
Donovan, whose time at Goldman overlapped with Mnuchin, most recently was a managing director at the bank’s private wealth management division and has been at Goldman since 1993. He would be subject to Senate confirmation. At Treasury, Donovan “would join the effort to execute the extensive economic policy agenda that the new administration has promised. Trump has vowed to cut regulations and taxes with the goal of unlocking economic growth. The Treasury Department will also be responsible for navigating economic diplomacy for a White House not shy about jawboning currencies.”
Donovan’s name emerged in January as a front-runner for undersecretary of domestic finance, a key Treasury position that helps oversee the $13.8 trillion market for Treasuries.
Meanwhile, underscoring the coverage Trump’s Goldman ties are getting in the press, on Saturday Gary Cohn, the former Goldman Sachs President and COO who runs economic policy inside the White House and who is now in charge of drafting Trump’s “phenomenal” tax plan, got the star treatment when both the Wall Street Journal and New York Times published two very similar, laudatory pieces detailing Cohn’s rise. Some of the highlights via Axios::
- WSJ: “At Donald Trump’s first meeting with Gary Cohn in late November, he appeared so impressed with the then-president of Goldman Sachs Group Inc. that he joked about offering him the post of Treasury secretary, said a person who recalled the moment. Sitting nearby was the odds-on favorite for the job, Steven Mnuchin, who got the nod.”
- NYT: “People with knowledge of his new role said that Mr. Cohn, a Democrat, is summoned to the Oval Office for impromptu meetings with the president up to five times a day — and that he reaches out to the president on other occasions. Mr. Trump, said one of these people, is oriented toward the bottom line when it comes to shaping policy, often asking Mr. Cohn, “What do you want to do?”
- NYT: “Mr. Cohn collaborates frequently with Mr. Kushner, who is now a senior adviser to Mr. Trump. Along with Mr. Kushner and his wife, Ivanka Trump, Mr. Cohn recently helped persuade the president not to pursue an executive order that would have rolled back rights for gay, lesbian, bisexual and transgender people.”
Goldman Sachs CEO Lloyd Blankfein, left, with COO Gary Cohn, in April 2010
awaiting a speech on financial regulation by then-President Barack Obama
The best part: Goldman’s response to Elizabeth Warren:
On Friday, Sens. Elizabeth Warren (D., Mass.) and Tammy Baldwin (D., Wis.) sent a letter to Mr. Blankfein asking whether Goldman officials have been in contact with Mr. Cohn or other Goldman alumni in the White House and whether the firm expects to benefit from changes to financial regulation Mr. Cohn is pushing through executive orders.
A spokesman for Goldman said it had no involvement in drafting executive orders. In an interview before the executive orders were signed, Mr. Cohn said the administration’s goal of deregulating financial markets “has nothing to do with Goldman Sachs” but was focused on maintaining the nation’s dominant position in global banking.
And if you believe that, the Trump adminstration, pardon, Goldman Sachs has a nice, refurbished, 10-year-old CDO squared in pristine shape to sell you.
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