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12/01/2017

Weekly News Bites: Sparks Flying

Our top picks from this week's Morning Chat

Sparks flying: The relentless competition between Airbus and Boeing carried on in 2016 unabated. Deliveries of Airbus planes grew by 8% last year to a record 688, smashing through expectations of 650. Still, it was behind Boeing, which delivered 748 aircraft. However, Airbus nosed ahead with 731 new orders – $132.7 billion at list prices – including the coveted contract to supply 98 aircraft to IranAir.  Boeing, in contrast, closed deals on 668 new planes last year. (12/01)

Breaking the news: At his much anticipated press conference, US president-elect Donald Trump virulently denied any chance that videos exist showing him consorting with prostitutes in Moscow, or of him colluding with Russian spies to weaken Hillary Clinton's presidential candidacy. There was also a vicious attack on his own country's intelligence agencies for perhaps leaking this "fake news", and a vitriolic exchange with a CNN reporter. US equities largely took all this in their stride, but pharmaceutical stocks were hit as Mr. Trump accused them "getting away with murder" by charging high prices. The US dollar also came under pressure ($1 = ¥114.5). (12/01)

Dennis the menace: Federal Reserve President Dennis Lockhart said the US economy is primed for "moderate" growth, but he was "less certain the economy is positioned for a breakout." With a not-so-subtle piece of advice for the incoming US administration, he warned against wildly pumping stimulus into a "full-employment"  economy. The reason is simple: tight labour markets are already causing big wage increases. A big spending spree now may well catalyse inflationary forces. This could force a faster pace of rate increases, triggering a recession. (10/01)

Liar, liar, sales on fire: Volkswagen has agreed a draft settlement with US authorities totalling $4.3 billion. While the figure now puts the total costs associated with the emissions scandal above the $19.2 billion the company has set aside, it draws a line under any remaining US legal risk. Also, the saga doesn't appear to have dented the brand. Volkswagen sold 10.3 million vehicles last year, making it the world’s biggest automotive group by sales. Still, in a sign of humility, it did not publicise the achievement of this highly coveted goal. In past years, the company would boast that it was on track to overtake Toyota and GM. (11/01)

House of ill repute: The Chinese Vice Finance Minister said he is confident his country grew at an annual rate of 6.7% in the fourth quarter of 2016. Remarkably, it is the exact same rate as the first three quarters, and bang in the centre of its stated target of between 6.5% and 7%. Nevertheless, this is welcome news – fears of an economic implosion rocked markets early last year, forcing authorities to rely once again on leverage-driven infrastructure spending. Banks were also encouraged to lend, but much of this ended up in housing: prices in first-tier cities such as Shanghai were up by 30% in 2016. (09/01)

 

 

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