(…) “Even before elections the U.S had the highest level of government debt of any triple-A country. If we add on top of that Trump’s plans to cut taxes by $6.2 trillion over the next 10 years that could add around 33 percent to U.S. government debt,” he added. (…)
Other countries around the world could be in line for ratings cuts in 2017. Fitch’s negative outlooks on sovereign ratings currently outweigh positive outlooks by a factor of 6:1. (…)
German GDP Grows at Fastest Rate in Five Years Germany’s economy grew strongly, propelled by a buoyant labor market and a pickup in government spending, likely making it one of the fastest-growing of the G-7 industrialized nations.
Germany’s gross domestic product expanded by 1.9% in 2016 from 2015 in inflation-adjusted terms, the Destatis statistics body said Thursday.
A statistician with Destatis said Thursday that gross domestic product probably expanded by around 0.5% in the fourth quarter from the third quarter. An official forecast is due Feb. 14. (…)
The Bundesbank forecast in December that inflation, measured according to European Union harmonized standards, would rise to about 1.4% in 2017 from 0.3% in 2016. (…)
Government spending rose 4.2% in 2016 from 2015, according to Destatis. Household consumption increased 2.0%, while construction investment rose 3.1%.
A 2.5% rise in exports, meanwhile, was outstripped by a 3.4% increase in imports. Investment in plant and machinery was lackluster, up 1.7% from the 2015. (…)
China’s Car Sales Rose Fastest in Three Years in 2016 More than 24 million vehicles were sold in China in 2016, 15% more than the year before, but sales are expected to slow considerably this year.
A total of 24.38 million vehicles were sold in 2016, 15% more than the year before, the China Association of Automobile Manufacturers said Thursday. It was the strongest expansion since 2013 when sales grew 16%.
The car-manufacturers’ group predicted a considerably slower 5% rise in China’s car sales this year, however.
By contrast the U.S. sold a record 17.55 million light vehicles last year, an increase of less than 1% from the year earlier.
Domestic and foreign auto makers shipped a record 2.67 million passenger vehicles—sedans, crossovers and minivans—to dealers in December, 9% more than the same period in 2015, the association said.
Mr. Xiao said dealer inventories dropped quickly in the last two months of 2016 because of a rush by consumers to beat the expiration of the purchase tax discount.
Buyers of cars with engines up to 1.6 liters last year paid a 5% purchase tax. This year, buyers of such cars will instead pay a 7.5% rate. Although the duty is still lower than the normal 10%, the weaker stimulus measure will put pressure on manufacturers to ramp up their own discounts. (…)
Overall production capacity in China’s car market will rise by 10% this year, compared with demand growth of about 7%, says investment bank UBS. (…)
Sport-utility-vehicles remained the brightest spot in the Chinese market in 2016, with more than 9 million sold, up 45% from a year earlier. Ford Motor Co.’s overall China sales rose 14% to 1.27 million on strong demand for its expanded lineup of SUVs such as the Edge and the Explorer. (…)
China sold 336,000 electric cars last year, including both full and plug-in hybrid electric cars, up 62% from a year earlier.
Chinese Bank Lending Up Sharply in December Chinese banks greatly increased their lending in December, official data showed, possibly signaling a takeoff in corporate demand as Beijing continues to try to stabilize economic growth.
Chinese financial institutions issued 1.04 trillion yuan ($149.9 billion) in new yuan loans in December, up from 794.6 billion yuan in November, the People’s Bank of China reported Thursday.
The jump was a surprise, said Chen Ji, an economist at Bank of Communications, given that banks normally scale back on lending at the end of the year. They are constrained by annual loan quotas issued by the central bank. (…)
Medium- and long-term loans to nonfinancial corporations, a gauge of corporate-sector demand, came to 695.4 billion yuan, more than three times November’s 201.8 billion yuan, according Wall Street Journal calculations based on the central-bank data. (…)
Medium- and long-term household loans, predominantly mortgage loans, came to about 421.7 billion yuan, accounting for 41% of the new loans issued in December. That is down from around 72% in November. (…)
Total social financing, a measure of credit in the economy that includes both bank and nonbank financing, came to 1.63 trillion yuan in December, down from 1.74 trillion yuan in November.
China’s broadest measure of money supply, M2, ended December up 11.3% from a year earlier, slowing slightly from November’s 11.4% pace and short of the economists’ forecast, also 11.4%.
Another measure, M1, which covers liquid assets such as cash and demand deposits, ended December up 21.4% from a year earlier, down from November’s 22.7% pace.
US shale oil output remains resilient despite rig count fall Increasing productivity will be closely watched by Opec and other oil exporters
(…) Oil watchers obsess over the “rig count” statistics released each Friday by Baker Hughes, an oilfield services company. The tally is a good indication of oil companies’ intentions to expand supply. The 529 rigs now deployed are 213 more than the low in May and currently top the sum in the field a year ago, reflecting producers’ response to a modest rebound in crude prices to more than $50 a barrel. But the rig count is only part of the picture. While the number of US oil rigs is two-thirds less than the peak in October 2014, the EIA estimates that US onshore crude oil production has shrunk only 6 per cent. (…)
From The Daily Shot:
Stocks, Dollar Fall on Lack of Clarity on Trump Stimulus Pharmaceutical shares and bond yields fell Thursday while the dollar continued to weaken as investors world-wide digested comments President-elect Donald Trump made at his news conference.
(…) Drugmakers also fell sharply in Australia and Japan, echoing a drop in their U.S. peers Wednesday when Mr. Trump said the drug industry was “getting away with murder” and called for “new bidding procedures.” (…)
Analysts said a lack of clarity around Mr. Trump’s stimulus plans and trade policies at the news conference disappointed some investors who had hoped for more details on his plans to cut taxes and reduce regulation. (…)
U.S. vs CHINA
Bad news for US grain traders and ethanol producers – China has slapped higher-than-expected anti-dumping tariffs on a US animal-feed ingredient made from a by-product of corn ethanol production.
Trade tensions between the US and China are expected to increase after Beijing announced duties on distillers dried grain with solubles (DDGS) ranging from 42.2 per cent to 53.7 per cent, sharply higher than the 33.8 per cent figure in the Commerce Ministry’s preliminary decision in September. Anti-subsidy tariffs will be 11.2 per cent to 12 per cent, the ministry said.
The Obama administration is expected to launch a formal complaint Thursday against the Chinese government with the World Trade Organization over subsidies it says Beijing provides to the country’s vast aluminum industry, according to people familiar with the matter.
The complaint would represent an escalation of trade disputes between countries with the world’s two largest economies almost a week before Donald Trump assumes the U.S. presidency. Mr. Trump suggested again Wednesday in a news conference that trade relations with Beijing would be a top priority, saying the U.S. trade imbalance with China was too large. (…)
(…) To help you make sense of this, we have created two indexes based on Donald Trump’s tweet and other pre-presidential utterances. (…)