China says up to Philippines to heal rift over South China Sea case

China's Foreign Minister Wang Yi said the Philippines' case against China at an arbitration tribunal over rival claims in the South China Sea had strained relations between Beijing and Manila, and that it was up to the Philippines to improve ties. 

PHOTO: REUTERS

NOV 11, 201512:32 PM

[BEIJING] China's Foreign Minister Wang Yi said the Philippines' case against China at an arbitration tribunal over rival claims in the South China Sea had strained relations between Beijing and Manila, and that it was up to the Philippines to improve ties.

The arbitration case against China in the Hague "is a knot that has impeded the improvement and development of Sino-Philippine relations", a statement on the Foreign Ministry's website cited Wang as saying in Manila. "We do not want this knot to become tighter and tighter, so that it even becomes a dead knot," Mr Wang, who was in the Philippines for talks on Tuesday, told reporters in Manila. "As for how to loosen or open the knot, (we'll) have to look at the Philippines."

Beijing's claim to almost the entire South China Sea is shown on Chinese maps with a nine-dash line that stretches deep into the maritime heart of Southeast Asia. Vietnam, the Philippines, Taiwan, Malaysia and Brunei also claim parts of the waterway.

For years, China has insisted that disputes with rival claimants be handled bilaterally.

In a legal setback for Beijing, the arbitration court in the Netherlands ruled late last month that it had jurisdiction to hear some territorial claims the Philippines had filed against China over disputed areas in the South China Sea.

The Philippine government has welcomed the decision and its Foreign Affairs department said on Wednesday it would pursue the case "to its logical conclusion". "China's nine-dash line claim is expansive, excessive and has no basis under international law," said foreign affairs spokesman Charles Jose. "If left unchallenged, we could lose about 80 per cent of our EEZ (exclusive economic zone)."

China has boycotted the legal proceedings and rejects the court's authority in the case.

Mr Jose said on Tuesday after a meeting in Manila between Wang and his Philippine counterpart Albert del Rosario that the two countries agreed to resume foreign ministry consultations after a two-year break to explore areas where relations can move forward despite the territorial row.

Manila filed the case in 2013 to seek a ruling on its right to exploit the South China Sea waters in its 200-nautical mile EEZ as allowed under the United Nations Convention on the Law of the Sea (UNCLOS).

"The person who caused the problem should solve it," Mr Wang said. "We hope that the Philippines can make a more sensible choice."

REUTERS

    
 

British unemployment unexpectedly slumped in September and employment smashed to a new historical high

• Mike Bird
 
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• 10h
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REUTERS/Robert GalbraithA man prepares a meal near a "help wanted" sign hanging in a restaurant window in San Francisco, California November 17, 2011.

UK unemployment just keeps on falling.

It touched 5.3% in September, according to official figures released on Wednesday.

Analysts expected the unemployment rate for September, which takes the average of that month and the two that preceded it, to come in at 5.4% again. 

The rate fell to 5.4% in August, when analysts were expecting it to stay at 5.5% — similarly, it fell to 5.5% in July, when analysts were expecting it to hold at 5.6%.

Average weekly earnings, on the other hand, were a little weaker than expected, rising by 2.5% in comparison to the same month last year.

In August, average weekly earnings excluding bonus payments rose by 2.8%, a shade less than the 2.9% growth seen in July.

Weekly earnings figures are watched extremely closely for a couple of reasons. Firstly, rising earnings are a sign that the labour market is getting closer to full capacity — when employers have to compete more to find the right workers, pay tends to rise.

Secondly, strong wage growth strengthens overall inflation figures. Since the Bank of England targets inflation, the stronger wage growth is, the more likely people are to expect a coming hike in interest rates. 

After years of negative real wage growth, where pay rose by less than overall inflation, workers are getting a bit of a boost — consumer prices aren't rising at all at the moment, with inflation bumping around 0%. 

The UK's employment rate keeps powering ahead too, smashing to a new historical high of 73.7%. The employment rate is the total number of people of working age, minus both unemployed people and people who are both out of work and not looking, like students.

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Get ready for a ton of Fedspeak

• Sam Ro
 
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• Nov. 9, 2015, 7:06 AM
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The US economy had a blockbuster October.

US companies added a whopping 271,000 jobs during the month, crushing expectations for an increase of 185,000. This helped bring the unemployment rate down to a 7-year low of 5.0% from 5.1% a month ago. Even the U-6 "underemployment" rate tumbled to 9.8% from 10.0%.

Importantly, wages jumped withaverage hourly earnings growing at a 2.5% rate, the highest rate since 2009.

All of this has implications for the direction of monetary policy. Indeed, traders are now pricing in a 70% likelihood that the Federal Reserve will lift rates in December, which would be the first such hike since June 2006. An initial rate hike from the Fed would signal the end of extremely loose, zero-interest rate policy, which it introduced in December 2008 in its effort to stimulate the economy out of the the financial crisis.

"We've indicated that conditions look like they could be right for an increase," Chicago Fed President Charles Evans said to CNBC on Friday. "The real side of the economy is looking a lot better."

"We are doing about as good as we could ever do," St. Louis Fed president James Bullard saidat an event in St. Louis.

But the tone at the Fed is not unanimous. Indeed, Fed Governor Lael Brainard remains concerned about the slowdown overseas. "The ability to offset spillovers from adverse developments in foreign economies with conventional policy is constrained, suggesting greater caution than normal," Brainard told a conference sponsored by the International Monetary Fund.

This week comes with a lot more "Fedspeak" from America's monetary policymakers. So as we prepare to engage in some Fed Kremlinology, here's your Monday Scouting Report:

Top Stories

• All ears on Fedspeak. Economists, analysts and investors will all be obsessing over every word coming from Fed speakers. After all, that's what former Fed Chair Ben Bernanke would probably recommend. Here's Wells Fargo's Sam Bullard with what's coming up: "...after Friday’s jobs report release, Chicago Fed President Evans (voter, dove) and St. Louis Fed President Bullard (2016 voter, hawk) agreed that the December 15-16 FOMC meeting is a ‘live possibility’ for a rate hike. While not specifically mentioning the December meeting, San Francisco Fed President Williams (voter, dove) stated the U.S. economy has reached full employment and that an earlier liftoff would enable a gradual rate path. Fed Governor Brainard (voter, dove) was a little more cautious on policy after the jobs report, highlighting foreign risks to the U.S. outlook. Looking ahead to this week, on Monday, Boston Fed President Rosengren (2016 voter, dove) speaks in Portsmouth, RI on the U.S. economy. Thursday is a busy day with multiple Fed speakers–St. Louis Fed President Bullard and Richmond Fed  President Lacker (voter, hawk) speak in Washington at a monetary policy conference hosted by the Cato Institute; Fed Chair Yellen (voter, dove) gives the welcoming remarks at a Fed policy conference titled ‘Monetary Policy Implementation and Transmission in the Post-Crisis Period’; Chicago Fed President Evans speaks in Chicago on monetary policy and the U.S. economic outlook; New York Fed President Dudley (voter, dove) speaks in New York on the U.S. economic outlook and what it means for monetary policy; and Fed Vice Chairman Fischer (voter, moderate) speaks in Washington on financial stability and monetary policy. On Friday, Cleveland Fed President Mester (2016 voter, hawk) speaks in Cleveland on the U.S. economy and monetary policy. Bottom line, the financial markets will be interested to see whether there is a coalescing of Fed officials’ opinion over the increased probability of a December rate hike."
• It would take a "disaster" to keep the Fed from hiking in December. After theFed's October FOMC statement, economists increasingly warmed up to the idea that the first rate hike would come in December. And after Friday's huge US payrolls report, more and more economists were comfortable saying that a December rate hike was a "done deal." Even Barclays' Michael Gapen, who was among the minority forecasting the first rate hike to come in March 2016, flipped and moved his call to December.
  
  Here's what others on Wall Street are saying: Goldman Sachs' Jan Hatzius: "The October employment report was solidly better­-than-­expected, and we now see a rate increase from the FOMC at the December meeting as very likely." Bank of America Merrill Lynch's Ethan Harris: "We have been arguing that ‘something bad’ has to happen to stop the Fed; now we think ‘something really bad’ has to happen to stop them." UBS’s Drew Matus: “[C]ancel December 16 vacation plans.” BNP's Bricklin Dwyer: "[The] payrolls report meets the Fed's threshold for hiking rates in December, but we need to see the positive string of data continue and no major financial market shocks." Capital Economics' Paul Ashworth: "Unquestionably, [the falling unemployment rates] will be enough to convince Fed Chair Janet Yellen and Vice Chair Stanley Fischer to vote for a rate hike at the next FOMC meeting in mid-December." Pantheon Macroeconomics' Ian Shepherdson: "Barring a disaster in November, rates are going to rise in December."PNC's Stuart Hoffman: "Federal Reserve Chair Janet Yellen will testify before Congress on December 3, and she is likely to clearly signal that a 25 basis point increase in the federal funds rate is coming at the December 15-16 FOMC meeting." RBC's Tom Porcelli: "The case for December was made prior to this payroll report." Societe Generale's Aneta Markowska: "Financial conditions and further dollar strength remain potential hurdles, but we expect the Fed to manage this by delivering a dovish rate hike at the December meeting (as we expected in September)." Deutsche Bank's Joe LaVorgna: "[T]he latest labor news will further embolden Fed members who want to raise rates next month. Whether the Fed ultimately decides to raise rates at the December 15-16 FOMC meeting will depend on the significant amount of data still to be released between now and then. The behavior of financial markets will also be taken into consideration by policymakers." 

Economic Calendar

• Initial Jobless Claims (Thurs): Economists estimate initial claims slipped to 270,000 from 276,000. Here's Bank of America Merrill Lynch: "We expect initial jobless claims to improve to 270,000 for the week ending November 7, partially reversing the gain to 276,000 in the prior week. If our forecast proves correct, the 4-week moving average would rise to 266,250 from 262,750, which would still be a healthy low level of firings."
• Job Openings & Labor Turnover Survey (Thurs): Economists estimate US companies had 5.385 million job openings in September. Here's Credit Suisse: "Job openings fell to 5.4M in August after rising sharply in July to 5.7M. But with further declines in unemployment, the drop in openings pushed the ratio of vacancies to unemployed workers down only slightly to 0.67 from 0.69. The August V-U ratio was still above the 2006-2007 peak and was the second-highest reading since 2001. The JOLTS numbers suggest the underlying health of the labor market continues to improve at a fast clip. However, the considerable tightness in the labor market is not yet translating into accelerating wage pressures. Measures of job turnover, which tend to lead wage acceleration, remained lukewarm. The rate of job quits was unchanged and has now stagnated for nearly a year."
• Retail Sales (Fri): Economists estimate sales increased by 0.3% in October. Excluding autos and gas, core sales climbed by 0.4%. Here's Nomura: "Retail sales surprised to the downside in September, suggesting that consumer activity lost some momentum in the latter part of Q3. Consumer spending has been one of the main drivers of growth this year, so any sustained slow pace of consumer activity could raise some concerns about the US economy. We expect to see some bounce back in retail sales in October, as consumer fundamentals continue to be favorable."
• Producer Price Index (Fri): Economists estimate producer prices climbed by 0.2% month-over-month in October, while falling 1.2% year-over-year. Excluding food and energy, core prices are estimated to have climbed by 0.1% and 0.5%, respectively. Here's Wells Fargo's John Silvia: "Energy prices were more stable in October, which likely supported headline prices in the month. Despite the dramatic swings in the headline number, core PPI has softened as well. Broad-based declines in commodity prices have pulled down the goods index, while services have held up somewhat better. We expect the producer prices ticked up slightly in October. The import price index is also set to be released next week, and energy will likely weigh on the index once again. The dollar was weaker on balance in October, which may soften some of the impact of lower energy prices."
• U. of Michigan Sentiment (Fri): Economists estimate this index of sentiment improved to 91.5 in November from 90.0 in October. Here's Barclays: "With positive economic momentum, as evidenced by strong motor vehicle sales and low jobless claims, we expect consumer sentiment to trend higher in the coming weeks."

Market Commentary

Despite the strong jobs report, which increased the odds the Fed would tighten monetary policy sooner than later, the stock market didn't sell off.  Rather, it closed on Friday effectively unchanged.

In the coming weeks, Wall Street strategists will unveil their outlooks for the stock market in 2016. For now, some are reflecting on how far we've come.

“I don’t know about you, but to me it feels like these past 6-plus years were a particularly challenging (and often tiring) global cycle,” Morgan Stanley’s Neil McLeish said in his Sunday Start note. “The S&P500 is back within a few points of a new cycle high, but it is hard to feel good about the world.  I guess we can blame a rolling series of debt-related problems along the way, morphing from the eurozone crisis almost seamlessly into an EM bear market that gathered ferocity this past six months.  Or perhaps this is what all bull markets are supposed to feel like:  a wall of worry.”

REUTERS/Michael DalderTeam China performs in the synchronised swimming team free final at the Aquatics World Championships in Kazan, Russia.

It's an unconventional take. But arguably a sound one.  The idea here is that there were always uncertainties out there that prevented investors and traders from going all in, which prevented the market from getting ahead of itself.

"At some level ... it is the lack of synchronization that has kept the global cycle intact," McLeish articulated. "Our economics team has long argued that an unsynchronized global cycle implies a lack of overheating and an ever-ready supply of central bank ammunition to tackle post-crisis disinflationary pressures.  Hence, the wall of worry performs a fundamental as well as its more traditional psychological purpose."

Obviously, if unsynchronized growth is a good thing for the markets, than the opposite must be true, right?

"To my mind, a China mini-cycle-led reacceleration of global growth combined with somewhat higher DM inflation is a realistic 2016 scenario not fully priced by markets," McLeish continued. "Given the great global growth scare of 2015, our Chief US Equity Strategist Adam Parker likes to say that 'good is good'.  In the near term, this sentiment makes sense to me.  However, I can’t help thinking that a more synchronized upswing for the global economy would ultimately be a less good thing for global markets.  But we’ll worry about this scenario if and when we get there."

SEE ALSO: THE MOST IMPORTANT CHARTS IN THE WORLD

NOW WATCH: Fed's Bullard gave us a great baseball analogy to explain what the Fed is doing wrong

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German motor vehicle watchdog is widening its diesel probe to 23 brands

• Ludwig Burger, Reuters

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Thomson ReutersA logo of VW is pictured at a Volkswagen dealership in Camas

FRANKFURT (Reuters) - Germany's motor vehicle regulator will run tests on more than 50 car models of 23 German and foreign auto brands on suspicion of more manipulation of nitrogen oxide emissions from diesel engines, it said on Wednesday.

KBA said the tests were triggered by Volkswagen's admission that it had rigged such tests but also cited "verified indications from third parties regarding unusual pollutants emissions".

The watchdog has since end-September compared emissions readings in a testbed setting with those from portable meters in real-life tests, with two-thirds of the measurements already taken.

(Reporting by Ludwig Burger; Editing by Maria Sheahan)

Read the original article on Reuters. Copyright 2015. Follow Reuters on Twitter.

Portugal's government has been ousted by an alliance that includes 2 of Europe's most left-wing parties

• Mike Bird
 
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• Nov. 10, 2015, 1:11 PM
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(AP Photo/ Francisco Seco)Portuguese communists during a demonstration against economic austerity measures taken by Portugal's Socialist government, in 2010 in downtown Lisbon.

Portugal's centre-right government was ejected from office on Tuesday evening, only a month after the country's most recent parliamentary election.

A vote of no confidence from the country's parliament sent Prime Minister Pedro Passos Coelho packing, with a left-wing coalition waiting in the wings.

The two centre-right parties that formed a coalition after the 2011 election ran under a "Portugal Ahead" banner in 2015, winning 38.6% of the vote and 106 of the parliament's 230 seats.

The October election was generally reported as a victory for the centre-right movements, which presumably would return to government. Though they had lost their majority, they overturned a long-term polling lead for the mainstream centre-left Socialist Party (PS), led by Antonio Costa.

Since then, it has become clear that there's a possibility of a coalition among the divided left.

The "triple left" alliance includes the Socialist Party, the Left Bloc, and the Communist Party. Though all parties are categorised on the progressive end of the political spectrum, there are major divisions, too.

On a left-right economic spectrum, few parties are more to the left than the Left Bloc or the Communist, according to the European Union Centers of Excellence at Chapel Hill, North Carolina.

Of the 268 EU political parties it assesses, the Left Bloc is the eighth-most left-wing party, and the Communist is the fourth-most left-wing. PS is the 122nd-most left-wing, pretty close to the middle of the distribution.

Here's how it looks:

Mike Bird, Business Insider

To put that in perspective, Syriza, the radical coalition that won Greece's election and orchestrated a six-month standoff with Europe's governing institution, comes only 22nd. That's based on a 2014 survey before the party split from its hard-left flank this year.

The Communist Party and Left Bloc are also by some distance the country's most eurosceptic parties, coming 25th and 59th for opposition to EU integration on the same survey of 268 organisations. PS, on the other hand, comes 205th, making it much more obviously pro-EU.

Demands from the two harder-left parties include bringing back four recently abolished bank holidays and the general reversal of many austerity policies introduced in recent years.

The likelihood of the new government taking over has sent Portugal's 10-year government bond yields climbing. Bond yields are a common measure of the risk associated with holding a country's debt, with higher yields meaning greater returns for more elevated risk.

The 10-year yields are now back to levels most recently seen during the summer's bund tantrum:

Apple announces 1,000 new jobs in Ireland as EU tax ruling nears

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REUTERS/Brendan McDermidAn Apple store Genius (R) assists a customer at the Apple flagship store on 5th Ave in New York April 22, 2014.

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DUBLIN (Reuters) - Apple is to hire an additional 1,000 staff in Ireland, the government said on Wednesday, as the iPhone maker bids to boost its presence in the country where it declares much of its overseas profit for tax purposes.

The European Union last year accused Ireland of swerving international tax rules by letting Apple shelter profits worth tens of billions of dollars from revenue collectors in return for maintaining jobs.

A decision on whether the tax deal with Apple constituted unfair state aid is due after Christmas, Finance Minister Michael Noonan told journalists on Wednesday.

The decision could force Apple to pay substantial back taxes.

Ireland's main foreign investment agency, the IDA, said Apple was to add 1,000 jobs to its office in Cork by mid-2017 from 5,000 at present. It said the company had also added 1,000 jobs in the past year.

Noonan said the decision showed that the controversy around Apple's tax deal "hasn't affected their enthusiasm for Ireland".

"I think they are bringing a lot of intellectual property onshore too, but that's less clear," he said.

Apple this year announced the construction of a new 850-million-euro data center.

The European Commission has already ordered Dutch authorities to recover up to 30 million euros ($32.23 million)from U.S. coffee chain Starbucks and Luxembourg to do the same with Fiat Chrysler for their tax deals.

Rulings on Apple and Amazon's tax arrangement with Luxembourg authorities are still pending.

Apple paid an average tax rate of just 2.5 percent on around $109 billion of non-U.S. profits in the five years to 2014, a fraction of Ireland's 12.5 percent tax rate.

(Reporting by Conor Humphries; editing by Jason Neely)

Read the original article on Reuters. Copyright 2015. Follow Reuters on Twitter.

A BILLION DOLLARS IN 8 MINUTES: These insane stats show how crazy China goes for the world's biggest shopping day

• Josh Nicholas, Business Insider Australia

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REUTERS/Jason LeeA sorting centre of Zhongtong (ZTO) Express ahead of the Singles' Day shopping festival, Chaoyang District, Beijing, on Sunday.

Transactions on Alibaba have passed $9 billion (£5.9 billion) in the first 12 hours of Singles' Day,passing the mark from last year with half the day still to go.

More than $1 billion (£659 million) was bought within the first eight minutes, and the site saw $3.9 billion (£2.5 billion) in sales in the first hour.

Sales on Singles' Day in 2014 were $9 billion, up from $5.8 billion (£3.8 billion) the year before.

Alibaba alone is expecting to ship 20 million parcels from this year's sales.

Singles' Day is an annual event held on November 11 as a response to Valentine's Day. It is billed as a time for a celebration of single life.

Alibaba became involved in 2009 when then-CEO Daniel Zhang came up with the idea to cut prices on the bachelor's day. It has since become the biggest 24-hour shopping period in the world, spreading to more than 400,000 outlets. Many of these outlets receive more orders in one day than they would in a month.

REUTERS/Aly SongAn employee working at a Tmall logistic centre in Suzhou, Jiangsu province, China, on October 28.

Total sales for Alibaba this year are projected to top $14 billion (£9.2 billion).

The day far eclipses the $5.6 billion (£3.6 billion) spent by Americans on Black Friday and Cyber Monday combined.

Read the original article on Business Insider Australia. Copyright 2015.