March 5th – The BESA Times


Image Source: https://www.ricability-digitaltv.org.uk/

Thirty-Third Edition - Sunday, 5th

Every week, a complete snapshot of what happened around the world in the past seven days

 

Notable Headlines

The U.S effort to roll back the Dodd-Frank law has stalled as the Trump administration shifts focus. The proposed 2017 Federal Budget consisted of an increase of $54 billion, or nearly 10%, in military spending offset by cuts in non-defense agencies. In essence, the country spends the largest portion of its GDP towards defense will now spend $603 billion on military and non-defense spending will total $462 billion, with a swing of 54 billion in both directions. The increased funding levels drew criticism from some GOP lawmakers who have pushed for even higher spending at the Pentagon and who said the boost was insufficient.


Venezuela is down to its last $10.5 billion in foreign reserves. According to the country's recently released 2016 financial report, about $7.7 billion of its remaining $10.5 billion of reserves is in gold. To make debt payments in the past year, Venezuela shipped gold to Switzerland. Massive government overspending, a crashing currency, mismanagement of the country's infrastructure and corruption are all factors that have sparked extremely high inflation in Venezuela. Inflation is expected to rise 1,660% this year and 2,880% in 2018, according to the IMF. Another key problem is the relatively low price of oil, which stands at half of what it was in 2014. Venezuela has more oil reserves than any other nation in the world, and oil shipments make up over 90% of the country's total exports.


Water prices in Singapore will be raised by 30 per cent over two years. The price hike will be made in two steps, on July 1 this year and next year. The increase will amount to less than S$25 a month for three quarters of businesses in Singapore, said Finance Minister Heng Swee Keat during his Budget speech. Singapore last raised water prices in 2000, when water demand amounted to 300 million gallons a day. This has since risen to 430 mgd. The increase in demand has been met by building new plants, upgrading existing ones and expanding the potable and used water networks, said PUB (Public Utilities Board). Taking into account the increase in water tariff, Water Conservation Tax and used-water charges, the total water price will rise from S$2.15 per cubic metre to S$2.74 per cubic metre for non-domestic users.

 

What to remember of last week's news?

It just made its debut on the public market, but Snap Inc.’s valuation already surpassed several established names. Snap SNAP, +1.72% the parent of Snapchat, started trading on the New York Stock Exchange Thursday and closed at $24.53, up 44% from its issue price, which gave it a public market capitalization of $28.4 billion. Snap sold 200 million shares to raise $3.4 billion in the offering. It set an issue price of $17. It was a miserable year for IPOs in 2016: 169 companies went public, a nearly 40 percent decline from 2014.


Bitcoin value tops gold for the first time when it closed at $1,268 on Thursday while a troy ounce of gold stood at $1,233. The current high is being attributed to surging demand in China, where authorities warn it is used to channel money out of the country. The past months' surge is a major reversal for Bitcoin, which plummeted in value in 2014 after the largest exchange collapsed. The value of Bitcoin has been volatile since it was first launched in 2009, and many experts have questioned whether the crypto-currency will last. Earlier this year, Chinese authorities cracked down on Bitcoin trading in an attempt to stop money flowing out of the country illegally.


Eurozone inflation has risen above the European Central Bank's (ECB) target rate for the first time in four years. Inflation in the 19-nation bloc hit 2% in February, according to Eurostat, up from a rate of 1.8% the month before. The rate is the highest since January 2013 and is slightly above the ECB's target of just below 2%. However, the increase in inflation is largely due to rising energy prices, and analysts do not expect the ECB to alter its current stimulus programme. In December, the ECB said it would extend its bond-buying programme until at least December 2017, although the €80bn-a-month quantitative easing (QE) scheme will be trimmed to €60bn a month from April. The bank has cut its main interest rate to zero and embarked on the bond-buying programme to try to stimulate growth in the eurozone and avoid deflation, or falling prices. Although inflation is now above its target rate, February's core inflation rate - which strips out the impact of energy and food prices - was unchanged at 0.9%.


Canada’s current account deficit in the fourth quarter narrowed sharply to $10.73-billion, its lowest in more than five years, thanks largely to rising exports, Statistics Canada said on Wednesday. Analysts polled by Reuters had expected a $9.75-billion deficit. The shortfall was the lowest since $10.17-billion recorded in the third quarter of 2011. For 2016 as a whole, the current account deficit hit a second consecutive annual high, edging up to $67.70-billion from $67.55-billion in 2015. The balance on international trade in goods in the fourth quarter posted a surplus of $793-million, the first since the third quarter of 2014. Exports, a key part of the Bank of Canada’s economic outlook, jumped by $6.29-billion to $136.55-billion. Energy products were the major contributor to export growth, benefiting from both higher prices and volumes. The deficit on trade in services dipped slightly to $5.46-billion while foreign investment in Canadian securities totaled $33.26-billion.

 

Understand in Pictures...

Why Big Oil Is Pivoting More to Shale. Jason Gammel discusses the price of oil, the shift of capital to shale drilling and the growth of the Permian Basin. He speaks with Bloomberg's Alix Steel on "Bloomberg Daybreak: Americas. Understand why here.

 

A Week in the Financial Markets

 

Our Homemade Article

Bitcoin: What kind of money is this?

by Yiannis Kontinopoulos

 

What to expect for next week?

An improving economy highlighted by solid job growth is spurring Federal Reserve officials to strongly signal that they’ll nudge up a key interest rate again this month. It is the clearest sign yet that the central bank is ready to move further away from the extraordinary measures it took to fight the Great Recession. Fed Chairwoman Janet L. Yellen said Friday that another hike “would likely be appropriate” when monetary policymakers meet March 14-15, as long as incoming economic data remain positive. That would be the second increase in three months, after the Fed waited 6½ years for the first hike following the end of the recession in 2009. It waited another year — until December 2016 — for the second increase.

 

WRITTEN BY CHETAN SHARMA

PLEASE DIRECT ANY INQUIRY TO AS.BESA@UNIBOCCONI.IT

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