Denmark's government now has no foreign currency debt — for the first time in 183 years

• Will Martin, Business Insider UK

• 13h
• 5,976

Marko Djurica

LONDON — Denmark's central government paid back the entirety of all its foreign currency loans for the first time in "at least 183 years," the country's central bank said on Monday.

"On 20 March 2017, the Danish central government will repay its last loan in foreign currency, totalling 1.5 billion dollars. Thus – for the first time in at least 183 years – the Danish central government has no foreign currency loans," a statement from the Danmarks Nationalbank said.

The government had previously undertaken foreign loans to ensure that it could keep its foreign exchange reserves at adequate levels. However, reserves have plunged in recent years, meaning that no more loans have been taken, allowing existing ones to be repaid.

FX reserves have shrunk thanks to huge interventions in the market from the central bank in order to keep the Danish krone pegged to the euro, which have drained the reserves.

"The sole reason why the Danish central government raises loans in foreign currency is to ensure that the foreign exchange reserve is sufficient. In recent years, the central government has not needed to raise any loans in foreign currency, and the loans have been gradually repaid," the bank says.

Previously, the Danish government had had some form of debt obligation in foreign currency continuously since at least 1834. Prior to that point, record keeping was not accurate enough to determine whether or not foreign loans were owed.

"The central government was close to repaying all foreign currency loans back in 1894 when the central government’s debt was as low as kr. 168 million, equivalent to just under 1 per cent of GDP," the Nationalbank said.

You can see the history of Denmark's foreign debts below:

Danmarks Nationalbank

Denmark's central bank makes clear that Monday's news does not mean it is without any debt, just that all debt it has is now denominated in Danish currency.

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More: Denmark FX Reserves Government Debt Apester Poll

The G20 deals a setback for export champion Germany

• Michael Nienaber, Reuters

• 11h
• 613

German Finance Minister Wolfgang Schaeuble addresses a news conference at the G20 Finance Ministers and Central Bank Governors Meeting in Baden-Baden Thomson Reuters

(Reuters) - The failure of the world's financial leaders to agree on resisting protectionism and support free trade marks a setback in the G20 process and poses a risk for growth of export-driven economies such as host Germany, economists said on Sunday.

Acquiescing to an increasingly protectionist United States after a two-day meeting in the German town of Baden-Baden, the finance ministers and central bank governors of the 20 biggest economies dropped a pledge to keep global trade free and open.

Instead, they only made a token reference to trade in their main communique by saying the G20 would work together to strengthen the contribution of trade to their economies.

"The weak wording on trade is a defeat for the German G20 presidency," Ifo economist Gabriel Felbermayr told Reuters.

"This is particularly true in the light of the fact that Germany is one of the world's strongest export nations and relies on open markets to maintain its prosperity like hardly any other country."

Private consumption and state spending have become the main growth drivers of Europe's biggest economy, but exports still account for roughly 45 percent of its gross domestic product.

"The lack of a rejection of protectionism is a clear breach of tradition. Now everything is possible," Felbermayr said. The future would probably bring a weakening of the World Trade Organization (WTO) and a more aggressive use of protectionist policies, he added.

The Association of German Chambers of Commerce and Industry (DIHK) said the token reference to trade was a serious setback for the multilateral trade order.

"The result is a warning shot for every trading nation and this means also for the German economy," DIHK foreign trade economist Volker Treier told Reuters.

"The German economy has to adapt itself to the fact that 'America First' will also mean a loss for us. So instead of a win-win situation, there will probably be a lose-lose situation."

German Vice Chancellor Sigmar Gabriel has suggested that the European Union should refocus its economic policy toward Asia, should the Trump administration pursue protectionism.

German Finance Minister Wolfgang Schaeuble tried to play down the lack of a clear rejection of protectionism on Saturday, saying some delegations did not have a mandate to support far reaching commitments on commerce.

U.S. President Donald Trump has already pulled out of a key trade agreement and proposed a new tax on imports, arguing that certain trade relationships need to be reworked to make them fairer for U.S. workers.

Germany managed to rescue some of the previously common G20 language supporting free trade and open markets in a separate document adopted by policymakers in Baden-Baden.

The list of principles summarizes reform recommendations for governments to boost the resilience of their economies against future shocks, including the advice to strengthen policy frameworks to reap the benefits of open markets.

A senior G20 official said the resilience principles were probably more important than the main communique because the list would also be adopted at the G20 leaders summit in Hamburg in July while Baden-Baden was only a "snapshot of today".

"The German G20 presidency is not over yet. Now it's up to the state and government leaders at the G20 summit in Hamburg to send a clear signal," Treier said.

(Reporting by Michael Nienaber; Editing by Elaine Hardcastle)

Read the original article on Reuters. Copyright 2017. Follow Reuters on Twitter.

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Janet Yellen just made an unsettling admission about the economy

• Pedro Nicolaci da Costa
 

• 13h
• 24,820

Federal Reserve Board Chair Janet Yellen testifying before the Joint Economic Committee on Capitol Hill on November 17.Win McNamee/Getty Images

It didn't take long for Janet Yellen to rid investors of that rare feeling of predictability from the Federal Reserve.

"The data have not notably strengthened," the Fed chair said during her Wednesday press conference after the central bank raised interest rates for just the third time since the financial crisis.

This hike was one of the least surprising to markets, with traders pricing in a full 100% chance that it would take place. The Fed chair just killed that kind of confidence for any move going forward.

Yellen was talking about the lack of economic progress since the Fed's most recent meeting, in January. She went further, though, saying the Fed didn't see any evidence that the optimism of a record-breaking stock market had made its way into spending by companies or people.

Investors are desperately seeking clarity on the timing of future rate increases, and they will now be left to speculate as to whether May, June, or September will bring the next move. Much hangs on President Donald Trump's ability to push through the promised agenda of tax cuts and infrastructure spending that has fueled Wall Street's benchmark higher. The early reception of the healthcare plan put forward by Trump and House Republicans is hardly encouraging.

The Fed has a lot of wiggle room, though. US inflation continues to run below its target and is expected to do so for the foreseeable future. Another reason not to rush the next hike: The Atlanta Fed's GDPNow indicator has just slipped rather sharply in a matter of weeks to just 0.9% from 2.5% for the first quarter.

Federal Reserve Bank of Atlanta

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It's time to start paying attention to one of the Fed's most controversial charts

• Pedro Nicolaci da Costa
 

• Mar. 14, 2017, 8:39 AM
• 4,792

Federal Reserve Chair Janet Yellen tours Daley College in Chicago, Monday, March, 31, 2014. AP Images

The Federal Reserve has been infamously overoptimistic about the US economy in recent years, prompting them to frequently revise down their forecasts for economic growth as the year progresses.

Yet Wall Street will let bygones be bygones this week as the Fed looks set to raise interest rates by another quarter point. That’s because, with the widely-telegraphed rate increase all but baked into expectations, the market’s attention is now turning to the projected path of interest rates — that is, how quickly will the Fed raise rates later this year.

Such expectations were ratcheted higher recently by a string of rather hawkish comments from top central bank officials.  

The comments, in addition to a stronger than expected jobs report for February, prompted many market participants, who had originally simply pushed forward the timing of the next rate hike to March, to foresee another two increases, with even whispers of a third, for the remainder of 2017.

Economists at Goldman Sachs now see the Fed hiking not just in March but also in June.

Morgan Stanley offers a similarly hawkish outlook: “Following the March meeting, we look for two additional hikes this year and have placed those in June and December, followed by four hikes in 2018,” the bank’s economists write in a research note.

Which is why the Fed’s dreaded “dot plot,” often ignored and sometimes derided by economists as fairly useless as a predictor of future policy, will gain particular importance at the March meeting, which will also include a press conference with Fed Chair Janet Yellen and the release of policymakers’ quarterly economic forecasts.

Here’s what Morgan Stanley expects things to look like.

Morgan Stanley

Michelle Marcussen, global head of economics at Societe Generale, writes in a research notes that "all eyes" will be on "the Fed dots."

"With a March fed funds hike now fully priced in, attention will turn to the quarterly update of the dot plot and any clues that Chair Yellen may offer at the press conference on the balance sheet," she says in a research note.

However, just as the dots have been inaccurate in the past, they might just be wrong about the future as well. But that may not matter for the immediate market reaction, which will hinge on how the Fed sees the future, not the future itself. 

"One thing is the dots, another is market pricing," writes Marcussen. "Indeed, in both 2015 and 2016, the markets choose to disagree with the dots and, with the benefit of hindsight, rightly so."

There’s another major source of uncertainty: a number of open positions at the central bank, and the expiration of Yellen’s term as chair in early 2018, give Trump wide leeway to reshape the central bank. This means the Fed’s dot plot, while significant for the market’s short-run calculus may say even less about the future than usual. 

SEE ALSO: The Fed could be on the verge of making a big mistake

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More: Federal Reserve Economy Interest Rates

'No country would find 173 billion barrels of oil in the ground and just leave them': Justin Trudeau gets a standing ovation at an energy conference in Texas

• Jeremy Berke
 

• Mar. 10, 2017, 3:38 PM
• 171,656

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Canada's prime minister, Justin Trudeau, at the CERAWeek energy conference in Houston, Texas, on March 9.REUTERS/Trish Badger

Canadian Prime Minister Justin Trudeau received an unusually warm reception of his keynote address at an energy industry conference in Texas on Thursday evening.

"No country would find 173 billion barrels of oil in the ground and just leave them there," Trudeau said in his address to oil and gas industry executives at Houston's CERAWeek conference, discussing Alberta's vast oil sands reserves.

Trudeau's speech was met with a standing ovation from the more than 1,200 attendees — an unordinary reaction to a keynote speaker, conference-goers told the CBC. The prime minister was also given an award for his efforts to balance environmental protection and energy production.

"The resource will be developed. Our job is to ensure that this is done responsibly, safely, and sustainably," Trudeau said. "Nothing is more essential to the US economy than access to a secure, reliable source of energy. Canada is that source."

Trudeau has been under fire from Canada's oil industry after he stumbled while discussing the topic in January. He told an audience in Ontario that the oil sands should be phased out, later telling The Globe and Mail that he "misspoke."

Trudeau's speech also touted his support for the Keystone XL pipeline, one of the few areas where he and US President Donald Trump share common ground.

He further discussed juggling the priorities of combatting climate change and bolstering Canada's oil and gas industry.

Alberta's oil sands.Robert Johnson — Business Insider

Under Trudeau, Canada's Liberal government has approved new pipelines while working with provinces to implement a carbon-pricing scheme.

The prime minister has long maintained that developing fossil-fuel resources can go "hand in hand" with fighting climate change.

"It's a tremendous business opportunity to lead on climate change," Trudeau told The Guardian in December. He said that one of the fundamental responsibilities of his office was to get "resources to market" in "sustainable ways" while also working to strengthen Canada's middle class.

"You cannot make a choice anymore on what's good for the environment and what's good for the economy," Trudeau told The Guardian.

Trudeau on Thursday also took a parting shot at the Trump administration's proposed border adjustment tax, which wouldn't allow business to deduct the cost of imported goods.

"Anything that creates impediments at the border, extra tariffs, or new taxes is something we are concerned with," Trudeau said. "You can applaud against the border adjustment tax."

Watch Trudeau's full speech:

Get the latest Oil WTI price here.

SEE ALSO: Americans can't get enough of Trudeau — but his Canadian approval ratings are tumbling

MNUCHIN TO CONGRESS: Raise the debt ceiling

• Jonathan Garber
 

• 23h
• 1,937

In a letter to House Speaker Paul Ryan sent on Wednesday, Treasury Secretary Steve Mnuchin said "the outstanding debt of the United States will be at the statutory limit" at midnight on March 16. At that point, Treasury will have to utilize "extraordinary measures" for the federal government to keep paying its bills. 

Mnuchin told Ryan at that point "Treasury will suspend the sale of State and Local Government Series (SLGS) securities" until "the debt limit is either raised or suspended" in order to prevent a default.

Here's a copy of the full note from Mnuchin to Ryan:

Department of the Treasury

South Korea's president, Park Geun-hye, has been removed from office

• Peter Farquhar, Business Insider Australia

• 15h
• 6,897

Park Geun-hye. Jeon Heon-Kyun-Pool/Getty Images

South Korea’s Constitutional Court has voted unanimously to remove the country's president, Park Geun-hye, from office, prompting protests for and against the decision that left two dead from clashes with the police, Reuters reports.

The decision is "final and unchallengable," according to The Korea Herald.

Park is the first South Korean president to be removed from office by the courts. Her successor must be elected within 60 days.

While many took to the streets to cheer the decision, two people died in confrontations between Park's supporters, many of them elderly, and the police during demonstrations opposing the ruling. Six others were injured, according to Reuters.

Park was suspended from official duties in December after being accused of colluding with a friend who is suspected of pressuring companies to donate money in return for government favors.

Both Park and her friend have denied the accusations.

Park faced 13 charges, and citizens of South Korea took part in massive rallies in recent weeks calling for her final impeachment. The political scandal unfolded at a time of increased tensions in South Korea, as North Korea continues to aggressively test missiles and China condemns South Korea's decision to accept US missile-defense batteries.

The Samsung Group's chief, Jay Y. Lee, arriving at the office of the independent counsel team in Seoul, South Korea. Thomson Reuters

By far the biggest corporate head on the block in the scandal is the Samsung chief and heir to its $316 billion empire, Jay Y. Lee.

Park was initially impeached in December following allegations she had her friend Choi Soon-sil pressure big businesses to donate to two foundations set up to back Park's policy initiatives.

Up to $50 million from Samsung was allegedly paid into entities overseen by Choi in return for help cementing Lee’s control of Samsung.

In a statement detailing the findings of its investigation, the special prosecutor’s office said the National Pension Service voted in favor of a merger of two Samsung Group affiliates in 2015, despite anticipating a $158 million loss.

Lee, with a net worth of $8.2 billion, has been in a jail cell since February 17, but just hours before Park's verdict was handed down, he appeared in court for a preliminary hearing.

Lee denied any wrongdoing.

Read the original article on Business Insider Australia. Copyright 2017. Follow Business Insider Australia on Twitter.

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The heir to the Samsung empire denies all charges against him as the 'trial of the century' begins

• Suyeong Lee, Reuters

• 13h
• 3,923

Jay Y. Lee, center, vice chairman of Samsung Electronics Co., arriving at the office of the independent counsel in Seoul, South Korea, on February 22. AP Photo/Ahn Young-joon

SEOUL, South Korea — The head of South Korea's Samsung Group, Jay Y. Lee, denies all charges against him, his lawyer said Thursday at the start of what the special prosecutor said could be the "trial of the century" amid a political scandal that has rocked the country.

Lee has been charged with bribery, embezzlement, and other offenses in a corruption scandal that has already led to the impeachment of President Park Geun-hye.

Lee, who is being detained at Seoul Detention Centre, did not attend court. A defendant does not have to turn up during a preparatory hearing, held to organize evidence and set dates for witness testimony.

Lee's defense denied all charges against him on his behalf, saying the special prosecution's indictment cites conversations, evidence, or witnesses the prosecution did not actually hear, investigate, or interview according to the rules — or states opinions that are not facts.

"It is unclear what kind of order Lee Jae-yong is supposed to have given," Song Wu-cheol, defending Lee, told the court, using his Korean name.

"The indictment cannot have statements that can create prejudices in the court about the case," Song told reporters as he left court.

The Samsung Group has repeatedly denied wrongdoing.

Among the charges against Lee, 48, are pledging bribes to a company and organizations linked to a friend of Park, Choi Soon-sil, the woman at the center of the scandal, to cement his control of the smartphones-to-biopharmaceuticals business empire.

Lawyers for defendants being tried with Lee — Samsung Group's former vice chairman Choi Gee-sung and former president Chang Choong-ki, and Samsung Electronics' former president Park Sang-jin — also denied all charges.

The courtroom, seating more than 150, was packed with press and spectators, with some who had waited in line since morning to get a seat.

At one point during the hearing, which lasted about an hour, an elderly woman in the audience began yelling and was dragged out by court officers. It was unclear what she was saying.

Legislation appointing the special prosecutor says the current lower-court trial should be finished within three months of the indictment on February 28.

Park, the daughter of a former military strongman, has had her powers suspended since her impeachment by parliament in December.

Should the Constitutional Court uphold the impeachment, she would become the country's first democratically elected president to be thrown out of office.

A decision is due Friday.

(Reporting by Suyeong Lee; Writing by Joyce Lee; Editing by Nick Macfie)

Read the original article on Reuters. Copyright 2017. Follow Reuters on Twitter.

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