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EconVue Spotlight

Dear R. Hunter,

Last year at this time, I was attending the G7 finance meetings in
Sendai, Japan. Sadly I missed this year's event in Italy, but Angus
Deaton's interview for Bloomberg

https://www.bloomberg.com/news/videos/2017-05-12/nobel-laureate-deaton-on-globalization-inequality-video

today after his lecture in Bari makes me hope that the G7 ministers
listened to him . Deaton's key points:

- A s a non-believer in the Laffer curve , he is not supportive of the
Trump tax plan, calling it massively redistributional without benefit to
those most in need.

- US manufacturing is not in trouble, it is growing, but manufacturing
employment is shrinking and no one really knows how much of that is due
to technology and how much is due to trade.

- He is a convert to a single payer health care system, taking Warren
Buffett's analogy that it is a tapeworm one step further to say that $1
trillion in annual health care expenditures is a cancer on enterprise in
America-especially when life expectancy is actually falling for some
demographic groups.

Post our French election edition, in this week's Spotlight we focus on
the zigging and zagging of the US-China relationship. The joint release
of the 100-Day Action Plan by the US Commerce Department was met with
applause from some sectors, but one has to question whether it can or
should do anything to address US-China trade imbalances. Details are
scarce, but on the same day, it was announced that the US will now
export LNG to China.

It is likely that all this was timed for announcement before China's
huge summit this weekend, the Belt and Road Forum

http://news.cctv.com/2017/05/10/VIDEj1JhhtiTL9mpeHv3MzVb170510.shtml

which will be attended by numerous heads of state including Teresa May,
but on the US side will be represented by Matt Pottinger. All of which
will deflect attention from China's equity markets, which have been
dropped since April, and its looming debt debacle, at a level that now
approaches Greece, keeping in mind that Greece's population is 10
million people, and China's is over 1.3B

http://content.davidhaleweb.com/acton/ct/3037/s-01d3-1705/Bct/l-sf-cl-701C0000000UEmJIAW-0024/l-sf-cl-701C0000000UEmJIAW-0024:15c/ct3_1/1?sid=TV2%3AEXxVvsmXt

.

Finally, the US seems to be holding its own, and EconVue expert Michael
Lewis

https://econvue.com/experts/michael-lewis

writes that hard and soft data is now in general alignment and a June
rate hike is virtually assured.

STORIES IN OUR SPOTLIGHT

China

JOINT RELEASE: Initial Results of the 100-Day Action Plan of the U.S. -
China Comprehensive Economic Dialogue

https://www.commerce.gov/news/press-releases/2017/05/joint-release-initial-results-100-day-action-plan-us-china-comprehensive

U.S. Department of Commerce 5/11/2017

President of the United States Donald Trump and President of the
People's Republic of China Xi Jinping agreed at their Mar-a-Lago meeting
to advance U.S. - China economic cooperation with a 100-day action plan
under the framework of the U.S. - China Comprehensive Economic Dialogue.

Trump administration hails US-China trade deal

https://www.ft.com/content/9a5ee6b8-36c0-11e7-bce4-9023f8c0fd2e

Shawn Donnan & Tom Mitchell 5/10/2017 Financial Times

Is this breakthrough due to Chinese strength and American weakness, or
US strength and Chinese weakness?

US allow LNG exports to China

https://www.naturalgasworld.com/us-allows-lng-exports-to-china-37560

Natural Gas World 5/12/2017

US allows export of LNG to China- will impact competitors in Australia,
Canada, and big oil intermediaries who won't be needed under the new
agreement.

China 'Belt' plans criticised

https://www.omfif.org/analysis/commentary/2017/may/china-belt-plans-criticised/?utm_source=OMFIFupdate

John West 5/10/2017 OMFIF

Should China tighten its Belt to concentrate on domestic expansion in
Western China?

China's rising leverage is a growing risk

http://asia.nikkei.com/magazine/20170511/On-the-Cover/China-s-rising-leverage-is-a-growing-risk

Alicia Garcia-Herrero 5/11/2017 Nikkei Asian Review

Worries over China's rising leverage have been growing, especially since
the country's ratio of debt to gross domestic product surpassed 250% in
2016.

What Deleveraging?

https://twitter.com/HayekAndKeynes/status/862427602342096898

The Long View 5/10/2017

Debt to GDP ratios around the world. China is approaching Greek debt
levels.

Listing Chinese Companies & Wealth Management Products, Good or Bad
Luck

http://opinion.caixin.com/2017-05-09/101088244.html

? (in Chinese)

Cao Wenjiao 5/9/2017 Caixin Online

3,204 of domestically listed zombie firms are involving in wealth
management products, 814 billion yuan in 2016, a jump of 48% from 2015.

Friedrich Engels is still shaping Chinese cities, 120 years after
his death

https://andrewbatson.com/2017/05/11/friedrich-engels-is-still-shaping-chinese-cities-120-years-after-his-death/

Andrew Batson Blog 5/11/2017

China's urbanization policy is not just arbitrary choices of
authoritarian governments, but part of the intellectual heritage of
socialism itself. It goes all the way back to the founding fathers.

China cracks down on coastal fisheries

http://science.sciencemag.org/content/356/6338/573

Dennis Normile 5/12/2017 Science Magazine

Once this ban is lifted, will overfishing resume? China, which has the
world's largest fishing fleet, cracks down on coastal fisheries

U.S.

Trump's Biggest Hurdle on Tax Cuts? Congress's Daunting Calendar

https://www.bloomberg.com/politics/articles/2017-05-08/trump-s-biggest-hurdle-on-tax-cuts-congress-s-daunting-calendar

Sahil Kapur 5/8/2017 Bloomberg

https://www.bloomberg.com/politics/articles/2017-05-08/trump-s-biggest-hurdle-on-tax-cuts-congress-s-daunting-calendar

President Donald Trump faces many hurdles in delivering his promised tax
cut, but none may be more formidable than the congressional calendar.

‘Competitive' distractions

http://www.epi.org/publication/competitive-distractions-cutting-corporate-tax-rates-will-not-create-jobs-or-boost-incomes-for-the-vast-majority-of-american-families/

Josh Bivens and Hunter Blair 5/9/2017 Economy Policy Institute

Cutting corporate tax rates will not create jobs or boost incomes for
vast majority of American families

Safety, Liquidity, and the Natural Rate of Interest

https://www.newyorkfed.org/research/staff_reports/sr812

Federal Reserve Bank of New York 5/2017

The US role as a safe haven keeps interest rates down. New paper by the
NY Fed.

Advocates say bump-up for Census Bureau won't keep it on track for 2020

http://www.sciencemag.org/news/2017/03/advocates-say-bump-census-bureau-won-t-keep-it-track-2020

Jeffrey Mervis 3/20/2017 Science Magazine

2020 census-the biggest US civilian undertaking- was in trouble before
its director resigned. Critical for economic data and analysis.

The American Obsession with Lawns

https://blogs.scientificamerican.com/anthropology-in-practice/the-american-obsession-with-lawns/?WT.mc_id=SA_FB_ARTC_BLOG

Krystal D'Costa 5/3/2017 Scientific American

It's finally spring! US lawns cover more land than the entire state of
Texas. Grass is not native to America; it was imported from Europe, and
over time acquired the socioeconomic status it has today. Is it a waste
of resources however? Something to think about as mowing season begins.

Cyber Security

Fixing the Cell Network Flaw That Lets Hackers Drain Bank Accounts

https://www.wired.com/2017/05/fix-ss7-two-factor-authentication-bank-accounts/?mbid=social_fb

Lily Hey Newman 5/9/2017 Wired

Security researchers have warned about SS7 for years. Now hackers have
used to rob banks, here is how telecoms can finally fix it.

Cyberthreat Real Time Map

https://cybermap.kaspersky.com/

Kaspersky Lab

Britain's health care system was hacked today. Expect more of this-you
can use this map as your screensaver if you are not easily distracted.

Rest of the World

Moody's takes Canadian banks down a notch

http://business.financialpost.com/news/fp-street/moodys-takes-canadian-banks-down-a-notch-warns-of-more-challenging-operating-environment

Barbara Shecter 5/11/2017

The slowing of capital outflows from China is impacting Canada. House
prices, retail credit problems, all could come together at just the
wrong time.

Africa 'attracting worldwide pension funds'

https://www.omfif.org/analysis/commentary/2017/may/africa-attracting-worldwide-pension-funds/?utm_source=OMFIFupdate

5/11/2017 OMFIF

Will the savings of workers in developed markets be used to finance
infrastructure in Africa? The search for yield continues.

This Infographic Shows How Only 10 Companies Own All The World's Food
Brands

https://food.good.is/articles/food-brands-owners?c=ufb1&utm_source=gd1&utm_medium=fb&utm_campaign=upw

Kate Ryan 3/31/2017 GoodFood

10 companies own almost all of the world's food brands. Brands are
goods.

EconVue Research

)

https://econvue.com/reports/michael-lewis/data-round-core-cpi-lull-continues-now-retail-sales-spring-forward-gradually

Michael Lewis

https://econvue.com/experts/michael-lewis

Today's core CPI results came in below expectations for the second
month; at first glance, the rebound in retail sales also seemed light,
but upward revisions more than compensated (especially with the lower
inflation). We continue to expect a solid rebound in 17Q2 real GDP,
e.g., real consumption growth above +3%.

The Evolution of Transnational Organized Crime in Peru

https://econvue.com/pulse/evolution-transnational-organized-crime-peru

R. Evan Ellis

https://econvue.com/experts/r-evan-ellis

Dr. Ellis's newest article on the evolution of transnational organized
crime in Peru, and the efforts of the Peruvian government of Pedro Pablo
Kuczynski to combat it. The article is based on his recent research trip
to Lima, including conversations with a number of persons in that
nation's security sector.

The 2017-18 Budget and the Australian Economy

http://www.saul-eslake.com/2017-18-budget/#sthash.2UCw1c6Q.dpbs

Saul Eslake

https://econvue.com/experts/saul-eslake

5/11/2017

A presentation by EconVue expert and eminent Australian economist Saul
Eslake.

With all best wishes,


Lyric Hughes Hale

Editor-in-Chief

Econvue.com
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