The Bank Of England Just Explained How Inflation Could Jump Higher | ||
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The Bank of England's latest minutes just came out. It was another unsurprising month for votes, with seven votes in favour of holding rates, and two in favour of the Bank's benchmark rate from 0.5% to 0.75% There's one passage that stands out: Given the pace at which spare capacity appeared to have been eroded over the past year and the possibility that productivity growth would remain weak, there was a risk that any remaining slack might soon be exhausted, causing inflationary pressures to build. The Bank of England has been fairly dovish lately: in its latest inflation report, it suggested that inflation might not come back to target in the next two years. This snippet is an interesting alternative view, that when unemployment drops further, and if productivity doesn't rise (as the Bank thinks it will), a lot more inflationary pressure could be created. If workers become a lot more productive and efficient, that tends to keep inflation low. If they don't, companies need more workers to produce the same amount, and that drives up wages without generating any extra output. Given the UK's massive productivity problem, this could be a big problem for the Bank. Join the conversation about this story »  | ||
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Israel destroys home of Palestinian car killer | ||
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Jerusalem (AFP) - Israeli forces Wednesday razed the east Jerusalem home of a Palestinian who killed two Israelis with his car last month as it speeded up the application of a controversial demolition policy. "The home of the terrorist, who killed an Israeli baby and a young woman on October 22 in a tram station in Jerusalem, was destroyed in Silwan," an army statement said. The demolition came after Israeli Prime Minister Benjamin Netanyahu vowed a harsh response to a deadly attack on a Jerusalem synagogue on Tuesday, the city's bloodiest in year. Two Palestinians armed with a gun and meat cleavers ran amok among worshippers, killing four of them and a policeman. Netanyahu pledged to speed up demolitions of homes of perpetrators of attacks in Jerusalem in line with a policy announced earlier this month. "This evening, I ordered the destruction of the homes of the Palestinians who carried out this massacre and to speed up the demolitions of those who carried out previous attacks," he said. Home demolitions have long been used as a deterrent punishment in the occupied West Bank but it is the first time that they have been adopted as a matter of policy in annexed Arab east Jerusalem. The practice is condemned by human rights watchdogs as collective punishment that targets not perpetrators of attacks but their families. "Punishing the families of suspects by destroying their homes is collective punishment and is prohibited by international law," Amnesty International said on Tuesday. "Authorities must not trample over the rights of Palestinians through collective punishments and other heavy-handed measures in order to restore security," said the watchdog's Middle East and North Africa director Philip Luther. The Palestinian, whose home was destroyed, Abdelrahman Shaludi, was shot dead by police after his car rampage as he attempted to flee on foot. The three-month-old baby he killed, Haya Zissel Braun, also had US citizenship. Karen Mosquera, 22, of Ecuador, died later of her injuries.
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Shell wins multi-million dollar India tax case | ||
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Mumbai (AFP) - Anglo-Dutch energy giant Royal Dutch Shell has won a multi-million dollar court battle against Indian authorities, marking a significant victory for multinationals involved in tax wrangles in the country. The Bombay High Court ruled in favour of Shell, whose Indian unit had been accused of under-pricing shares issued to its parent firm by about 180 billion rupees ($3 billion). The company had challenged a demand by India authorities for tax on the interest that would have been earned. The judges on Tuesday quashed the income tax department order, a move Shell welcomed. "This is a positive outcome which should provide a further boost to the government initiatives to improve the investment climate," the company said in a statement. The high tax claim was one in a series ordered by Indian authorities on foreign firms including HSBC, IBM and Nokia. A court ruled in October in favour of British mobile giant Vodafone, which had been engaged in a $490-million tax battle with Indian authorities after they accused the company of also underpricing its shares. Foreign companies allege that Indian tax laws are sometimes applied in an uneven and capricious manner, making it difficult to do business in the country. Vikram Dhawan, Director of Equities at Equentis Capital, described the ruling in the Shell case as "a very positive development", which showed India "is walking the talk of being friendly and fair to businesses". But he said the government now had to remove ambiguity around inward capital rules in India "if more of such suits that hurt investor sentiment are to be avoided". So-called transfer pricing -- the value at which companies trade assets between units in different countries -- has become a major legal issue in India and in other countries. Tax authorities often contend that companies set the prices for transferring assets for their own gain. Legally, prices for cross-border transfer of assets are supposed to be set as if the transactions were carried out with separate companies. Uncertainty about India's regulatory climate has dampened foreign investment at a time when the country urgently needs it to upgrade dilapidated infrastructure and spur economic growth. Join the conversation about this story »  | ||
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European Stocks Are Down | ||
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European stocks are down a hair ahead of construction figures later Wednesday. Here's the scorecard: France's CAC 40 is down 0.16% Germany's DAX is down 0.05% The UK's FTSE 100 is down 0.25% Italy's FTSE MIB is the only riser, up 0.09% after opening down. Spain's IBEX is down 0.45% Asian markets closed down. Japan's Nikkei finished 0.32% down after some heavy volatility in recent weeks, and Hong Kong's Hang Seng finished down 0.66%. US futures are down a smidgen too: the Dow is 21 points lower, and the S&P 500 is 3.25 points down. It's not a busy day for data: at 10 a.m. GMT, European construction output figures for September are released, and US building permits and housing starts follow at 1.30 p.m. GMT. There are also two sets of central bank minutes out today: at 9.30 a.m. GMT, the Bank of England's minutes for the latest monetary policy meeting will be released, followed by the Fed's at 7 p.m. GMT. Join the conversation about this story »  | ||
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Massive Snowstorm In Buffalo Kills 4 People | ||
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A snowstorm on Tuesday that covered New York's Buffalo area with more than 4 feet of snow killed four people, The New York Times reports. One person died in a car accident and three others from heart attacks, officials said. The lake-effect snow, created when a cold front moves over a large body of warmer water, stranded cars, trucks, and buses. Whiteout conditions caused by wind gusts of more than 30 mph closed more than 100 miles of the New York State Thruway, the Associated Press said. The season's first big winter storm encased homes in feet of snow. | ||
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10 Things You Need To Know In Markets Today | ||
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The Takata Airbag Recall Issue Just Got Much Worse. The government announced Tuesday that it's calling for a nationwide recall of millions of cars due to potentially faulty airbags produced by auto parts giant Takata corporation. As many as 16.8 million cars around the world are reportedly affected by the recall. Hong Kong Protesters Tried To Break Into The Parliament Building. Hong Kong police clashed with pro-democracy demonstrators Wednesday after a small group attempted to break into the city's legislature. Repsol Is Searching For Oil Off The Canary Islands. Spanish energy firm Repsol began searching for oil Tuesday in the waters off the Canary Islands, a top holiday destination, despite objections from environmentalists and the local government. Rebels At The Bank Of Japan Have Changed Their Minds. The central bank's board voted 8-1 to keep stimulus at its current level, after a much closer 5-4 vote at the previous meeting, according to the Financial Times. Asian Markets Are Down A Little. Japan's Nikkei ended down 0.32% and Hong Kong's Hang Seng is currently trading down 0.55%. The Shanghai-Hong Kong Stock Exchange Link Has Slowed To A Trickle. Purchases of mainland Chinese stocks have dropped to just a tenth of what they were on Monday, leading some analysts to call the link-up a "ghost train" according to Bloomberg. Central Bank Minutes Are Coming. Minutes from both the Bank of England and Fed are out at 9.30 a.m. GMT and 7 p.m. GMT respectively. Figures on the euro area's construction output in September will also be released at 10 a.m. GMT, giving some idea of the European economy's strength. BNP Paribas Might Face An Insider Trading Probe. According to sources who spoke to the Financial Times, French prosecutors have started a preliminary prosecution against the bank. An Indian Court Found In Favour Of Shell In A $1.4 Billion (£870 Million) Case. The ruling is being seen as a win for pro-business prime minister Narendra Modi in his pursuit of a more corporate-friendly economy. Join the conversation about this story »  | ||
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The US Senate Rejected The Keystone Oil Pipeline. 