Tuesday, June 2, 2015

Fed's Brainard says US economic slowdown may be more than temporary

JUN 2, 201510:10 PM

[WASHINGTON] The US economy's recent poor performance may be more than transitory, as the full impact of weak consumer spending, low investment and the high value of the dollar become apparent, Federal Reserve board member Lael Brainard said on Tuesday.

"It would be difficult...to dismiss the possibility of a more significant drag on the economy," Ms Brainard said in a speech at the Center for Strategic and International Studies at which she indicated a rate hike may still be a ways off.

"There is value to watchful waiting while additional data help to clarify the economy's underlying momentum."

Adding a bearish voice to the debate over the economic outlook, Ms Brainard gave the fullest exposition yet of how a high dollar, weak foreign demand and the collapse in oil prices have complicated the US outlook. The expected benefits - of higher consumer spending, for example - have yet to materialize, while the drag on exports has been more severe and lasting than anticipated.

"The data are presenting a mixed picture...There may be reason not to ignore recent readings entirely," with the second quarter not yet showing signs of the expected "bounceback" from the dismal start of the year, Ms Brainard said.

Brainard said the recovery so far has been a story of "fits and starts," and that may be playing out again. "The underlying momentum of the recovery has proven relatively susceptible to successive headwinds," Ms Brainard said.

"Data in hand pertaining to the second quarter do not suggest a significant bounceback." Current headwinds from broad, including the risks associated with a Greek default and a slowdown in China, "may persist for some time," she said.

The Fed's policy setting committee meets in June and for the first time since the crisis will have the door open to an interest rate increase. Fed officials have signaled a hike is unlikely in June, given recent disappointment in some economic data and the concern that a more significant slowdown may be taking shape.

Ms Brainard's speech adds significantly to that impression.

A recent appointee to the Fed, Ms Brainard was previously the head of international economic matters at the Treasury Department, closely attuned to issues like the structural economic problems faced by China and the implications of the eurozone crisis.

Many Fed officials have suggested the troubles overseas would have only a transitory effect on the US economy. Brainard's comments are the most forceful statement yet of how overseas troubles may further delay the Fed's liftoff of interest rates.

REUTERS

Eurogroup chief says 'not enough' progress in Greek debt talks

JUN 2, 201511:21 PM

[ATHENS] Eurogroup chief Jeroen Dijsselbloem on Tuesday said he was unimpressed with the progress made in debt talks with Greece, after Athens claimed to have submitted a "realistic" plan to its creditors.

"There is some progress, but it's really not enough," Mr Dijsselbloem said on Dutch television of the talks aimed at unlocking 7.2 billion euros in remaining bailout funds and helping Athens make a critical repayment on Friday.

"We're still nowhere far enough, that's the conclusion and time is pressing," said Mr Dijsselbloem, who is also the Dutch finance minister.

Earlier on Tuesday, Greek Prime Minister Alexis Tsipras had raised hope of a breakthrough after four months of fractious talks.

"Last night a complete plan was submitted... a realistic plan to take the country out of the crisis," Mr Tsipras told reporters in Athens.

"We have made concessions because a negotiation demands concessions, we know these concessions will be difficult," the leader of the country's left-wing Syriza government admitted.

In Brussels, the European Union called the exchange of documents a positive step but stopped short of confirming it had received Greece's reform plan.

"Many documents are being exchanged between the institutions and the Greek authorities... The fact that documents are being exchanged is a good sign," European Commission spokeswoman Annika Breidthardt said.

Asked about the possibility of a deal, she added: "We're not there yet."

The Greek government said the proposals were in line with a column Tsipras wrote and was published in France's Le Monde daily on Monday.

In it the 40-year-old prime minister defended his government's determination to bolster labour rights in a country staggering under massive unemployment.

Mr Tsipras added that his administration would implement a series of privatisations that it had previously opposed, and reform the value added tax system as well as the pension system.

"I am confident, I believe the political leadership of Europe will approach our positions with respect and join the side of realism," Mr Tsipras said.

The move came as the chiefs of the International Monetary Fund and the European Central Bank met with the leaders of Germany and France and the head of the European Commission on Monday to reportedly come up with a "final proposal" to put to Athens.

A government source told AFP that a 46-page draft agreement had been submitted, but declined to go into further detail.

Mr Dijsselbloem said that while there could be some concessions on the bailout package, there would be no half-way compromises.

"The bottom line is not that we can meet each other halfway, the whole package must be solid," he told RTL television.

A European source close to the negotiations nevertheless reported tangible progress in the talks.

"There is a clear political push to complete a deal this week," the official told AFP.

The creditors in Europe and the IMF are pushing for greater reforms in return for the cash, which Greece's anti-austerity government has refused to match.

Greece is staring at a Friday deadline to repay more than 300 million euros to the IMF. Overall it needs to repay the global lender some 1.6 billion euros this month, funds it currently lacks.

But Mr Dijsselbloem said it was impossible for bailout payments to resume this week, although the Eurogroup is reportedly mulling some kind of possible temporary aid for Greece.

"If there's an agreement this week, it would then have to go through the Eurogroup," comprised of all 19 finance ministers from eurozone countries, Mr Dijsselbloem said.

"It's not even theoretically possible this week."

Meanwhile there are fears that Greece could default, possibly setting off a chain reaction that could end with a messy exit from the eurozone.

The EU's commissioner for economic and monetary affairs Pierre Moscovici on Tuesday said there had been "serious progress" in talks over Greece's debt crisis, but much still needs to be achieved.

Providing a little more detail on the talks, Moscovici said Athens had submitted a number of proposals on overhauling the fragile pension system.

Mr Tsipras is under pressure from his party's influential radical wing to reject any reform plan that piles more austerity on the recession-hit country.

"We do not accept ultimata or succumb to blackmail," deputy prime minister Yiannis Dragasakis said in a tweet on Tuesday.

Other officials said the government would rather hold snap elections than accept a deal with more austerity.

"If the agreement is bad for the government, the people and the country it will not even be tabled in parliament... We will have to hold elections," junior social security minister Dimitris Stratoulis told Skai Radio.

AFP

Greece calls on lenders to accept "realistic" plan sent on Monday

JUN 2, 20156:59 PM

[ATHENS] Greece has sent creditors a"comprehensive" and "realistic" package of reforms for consideration and is calling on Europe's leaders to accept it so a long-awaited deal can be struck, Prime Minister Alexis Tsipras on Tuesday.

Mr Tsipras said the proposal was sent to EU and IMF lenders on Monday night, without elaborating on its contents. A Greek official said it was submitted in time for a late-night meeting in Berlin between the leaders of Germany, France, the European Commission, the European Central Bank and the International Monetary Fund to discuss Greece's fate.

"We have submitted a realistic plan for Greece to exit the crisis," Mr Tsipras told reporters, calling on Europe to accept the plan to end "divisions in Europe".

"We are not waiting for them to submit a proposal, Greece is submitting a plan - it is now clear that the decision on whether they want to adjust to realism ... the decision rests with the political leadership of Europe."

Sources close to the talks said the latest proposal did not contain major new concessions on issues holding up a deal, such as pension and labour issues.

Greece and its lenders have been locked in talks for months without an agreement and the creditors have accused Tsipras of failing to offer enough concessions - criticism he rejected.

"We have made concessions - because a compromise demands concessions - we know these concessions will be difficult but we have submitted a realistic plan for Greece to exit the crisis," he said.

Failure to reach agreement this month could trigger a Greek default and lead to the imposition of capital controls and a potential exit from the eurozone, dealing a blow to Europe's supposedly irreversible single currency.

"The negotiations are tough, we are determined, we are negotiating with a plan, with a strategy, under difficult circumstances," Mr Tsipras said.

REUTERS

Monday, June 1, 2015

Copper trades near US$6,000 amid signs of slowing in US, China

JUN 2, 201511:50 AM

[HONG KONG] Copper traded near US$6,000 a metric ton before data forecast to show US manufacturing is losing traction amid slower growth in the China, the biggest consumer.

Copper in London slid as much as 0.6 per cent, extending May's 5.1 per cent decline, the first monthly loss since January. US manufacturers' new orders dropped 0.1 per cent in May from a gain of 2.1 per cent in April, according to a survey of economists before the figures on Tuesday. China's economy has slowed below the government's 7 per cent target rate in recent months, according to Bloomberg's monthly growth tracker.

"A drop in US manufacturing would be a bad news for copper," said Xiao Jing, an analyst at Beijing Capital Futures Co. "Investors have also started to question the effectiveness of China's monetary easing."

Copper for delivery in three months on the London Metal Exchange fell 0.2 per cent to US$6,014 a ton (US$2.73 a pound) by 11.15 am in Hong Kong. In New York, copper on the Comex was little changed at $2.7235 a pound, after dropping for a sixth day on Monday, the longest run of losses in more than a year. In Shanghai, the metal for August fell 0.3 per cent to 43,530 yuan (US$7,023) a ton.

A lack of supply disruptions in the last month may add to a forecast global surplus this year of the metal, analysts at Barclays Plc said in a report Monday. China's new low-voltage cable standards starting Sept 1 may accelerate a switch from copper to aluminum alloy, Goldman Sachs Group Inc. said in a separate report the same day.

BLOOMBERG

Tuesday, June 2, 2015