Month: December 2018

Trade Optimism Lifts Stocks, But 2018 Ends in Red

Equities around the world rose Monday as possible progress in resolving the trade dispute between the United States and China engendered some investor optimism in what has been a punishing end of year for markets.

The U.S. benchmark S&P 500 stock index advanced in light trading volume after U.S. President Donald Trump said he held a “very good call” with China’s President Xi Jinping on Saturday to discuss trade and said “big progress” was being made.

Chinese state media were more reserved, saying Xi hoped the negotiating teams could meet each other halfway and reach an agreement that was mutually beneficial.

The rise in U.S. equities mirrored that in Asian and European markets, which were also buoyed by trade optimism.

Despite Monday’s advance, equities ended the year largely in the red, victims of investor anxiety over trade tensions and slowing economic growth. Asian and European shares had been sluggish for much of the year, and in recent months, U.S. stocks followed suit.

“If the European economy continues to decelerate and the Chinese economy decelerates because of tariffs, there is definitely going to be spillover to the United States,” said Shannon Saccocia, chief investment officer at Boston Private.

The S&P 500 dropped more than 9 percent in December, its largest decline since the Great Depression. For the year, the index slid more than 6 percent, its biggest drop since the 2008 financial crisis.

Asia-Pacific shares outside Japan ended down 16 percent for the year, while the STOXX 600 was more than 13 percent lower.

MSCI’s gauge of stocks around the globe fell 11.1 percent in 2018.

A further blow to the Chinese economy could spur a quicker resolution to the U.S.-China trade dispute and thus boost global equities, Saccocia said. Survey data on Monday showed Chinese manufacturing activity contracting for the first time in two years even as the service sector improved.

On Monday, the Dow Jones Industrial Average rose 265.06 points, or 1.15 percent, to 23,327.46, the S&P 500 gained 21.11 points, or 0.85 percent, to 2,506.85 and the Nasdaq Composite added 50.76 points, or 0.77 percent, to 6,635.28.

MSCI’s emerging markets index rose 0.32 percent, while the MSCI world stock index gained 0.66 percent.

No more hikes

Yields on U.S. Treasuries fell on Monday, keeping with the trend over the past two months as investors moved to lower-risk investments.

Benchmark 10-year notes last rose 15/32 in price to yield 2.686 percent, compared with 2.738 percent late Friday.

The fall in Treasury yields reflects expectations of a slowdown, if not a pause altogether, in the Federal Reserve’s progression of interest-rate hikes.

The precipitous drop in yields has undermined the U.S. dollar in recent weeks. The dollar index, which measures the greenback against a basket of six other currencies, was down 0.3 percent and on track to end December with a loss. It is, however, still set for its highest yearly percentage gain since 2015.

On Monday, the dollar fell to a six-month low against the yen.

The euro was up 0.2 percent to $1.1459, on track to end the year down nearly 5 percent against the dollar.

Oil posted its first year of losses since 2015, with Brent crude futures down 19.5 percent and U.S. West Texas Intermediate crude futures down 24.8 percent.

On Monday, Brent crude settled 59 cents higher, or 1.11 percent, at $53.80 a barrel. U.S. crude settled up 8 cents, or 0.18 percent, at $45.41 a barrel.

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China Factory Activity Shrinks for First Time in 2 Years

China’s factory activity shrank in December for the first time in more than two years, an official survey showed Monday, intensifying pressure on Beijing to reverse an economic slowdown as it enters trade talks with the Trump administration.

The purchasing managers’ index of the National Bureau of Statistics and an industry group, the China Federation of Logistics & Purchasing, fell to 49.4 from November’s 50.0 on a 100-point scale. Any reading below 50 shows that activity is contracting. The December figure was the lowest since February 2016 and the first drop since July 2016.

 

In the quarter that ended in September, China’s economic growth sank to a post-global crisis low of 6.5 percent compared with a year earlier. The slowdown occurred despite government efforts to stem the downturn by ordering banks to lend more and by boosting spending on public works construction.

 

Forecasters expect annual growth of about 6.5 percent, down slightly from 2017’s 6.7 percent. But some industry segments, including auto and real estate sales, have suffered more serious declines.

 

“Downward pressure on the economy is still large,” economist Zhang Liqun said in a statement issued with the PMI.

 

Overall orders and exports both contracted, indicating that Chinese factories are suffering from weak demand at home and abroad. Exports to the United States kept growing at double-digit monthly rates through late 2018 despite President Donald Trump’s punitive tariffs. But growth in exports to the rest of the world fell sharply in November and forecasters expect American demand to weaken in early 2019.

 

That adds to complications for Chinese leaders who are trying to reverse a broad economic slowdown and avert politically dangerous job losses.

 

Chinese and U.S. envoys are due to meet in early January for negotiations that are intended to resolve their economically threatening trade war. Over the weekend, Trump sounded an optimistic note, tweeting that he had spoken with President Xi Jinping by phone.

 

“Deal is moving along very well,” Trump tweeted. “If made, it will be very comprehensive, covering all subjects, areas and points of dispute. Big progress being made!”

 

But economists say the 90-day moratorium on new penalties that was agreed to by Trump and Xi on Dec. 1 is likely too little time to resolve their sprawling dispute.

 

Chinese economic activity already was weakening after Beijing tightened controls on bank lending in late 2017 to cool a debt boom. The downturn was more abrupt than expected, which prompted regulators to shift course and ease credit controls. But they moved gradually to avoid reigniting a rise in debt. Their measures have yet to put a floor under declining growth.

 

Chinese leaders promised at an annual economic planning meeting in mid-December to shore up growth with tax cuts, easier lending for entrepreneurs and other steps.

 

 

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Kenyan GDP Growth at 6 Percent in Third Quarter 2018

Kenya’s economy expanded faster in the third quarter of this year than in the same period last year due to strong performance in the agriculture and construction sectors, the statistics office said on Monday.

The Kenya National Bureau of Statistics said the economy grew 6 percent in the third quarter of 2018, compared with 4.7 percent in the same period in 2017.

It said the agriculture sector expanded by 5.2 percent compared with 3.7 percent in the third quarter of 2017, helped by better weather.

“Prices of key food crops remained low during the quarter compared to the corresponding quarter of 2017, an indication of relative stability in supply,” KNBS said.

Manufacturing grew by 3.2 percent from a 0.1 percent contraction in the third quarter of 2017, KNBS said.

It said that the electricity and water supply sector grew by 8.5 percent from 4.5 percent in the third quarter of 2017, mainly due to a big increase in the generation of electricity from hydro and geothermal sources.

Gross foreign reserves increased to 1,222.5 billion from 1,085.6 billion in the same period of last year.

The current account deficit narrowed by 23 percent to 116 billion Kenyan shillings ($1.14 billion), it said.

This was mainly due to lower imports of food and higher value of exports of goods and services.

The government forecasts that the economy will expand by 6.2 percent in 2019, up from a forecast 6.0 percent this year.

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A Big Build-Up to a Big Drop: The Times Square New Year’s Ball

An estimated 1 million people will pack New York City’s Times Square to watch the huge, brilliantly lighted, crystal ball drop to signal the start of the new year. It is an American New Year’s tradition that goes back more than a century. As VOA’s Kevin Enochs reports, lot of work goes into making sure that ball lights up the sky in spectacular fashion, exactly on time.

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Young Libyan Women Play for Equal Rights on the Soccer Field

Young women looking to play the world’s most-popular sport have a place all their own in Libya. An all-girls soccer academy in the capital looks to break societal norms in the Muslim majority country that frown upon women wearing shorts or competing on the same fields as men. But it is not without criticism that coaches turn constructive. Arash Arabasadi reports.

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Nigeria Targets 26M People in Yellow Fever Campaign

Nigeria’s campaign to vaccinate more people against yellow fever appears to be making headway. The government is partnering with the World Health Organization (WHO), Gavi, the Vaccine Alliance and UNICEF to immunize more than 26 million people. It is the second phase of Nigeria’s preventive campaign after a yellow fever outbreak in September 2017. Timothy Obiezu has more from Abuja.

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The Euro Currency Turns 20 Years Old on Tuesday

The euro currency turns 20 years old on January 1, surviving two tumultuous decades and becoming the world’s No. 2 currency.

After 20 years, the euro has become a fixture in financial markets, although it remains behind the dollar, which dominates the world’s market.

The euro has weathered several major challenges, including difficulties at its launch, the 2008 financial crisis, and a eurozone debt crisis that culminated in bailouts of several countries.

Those crises tested the unity of the eurozone, the 19 European Union countries that use the euro. While some analysts say the turmoil and the euro’s resilience has strengthened the currency and made it less susceptible to future troubles, other observers say the euro will remain fragile unless there is more eurozone integration.

Beginnings 

The euro was born on January 1, 1999, existing initially only as a virtual currency used in financial transactions. Europeans began using the currency in their wallets three years later when the first Euro notes and coins were introduced.

At that time, only 11 member states were using the currency and had to qualify by meeting the requirements for limits on debt, deficits and inflation. EU members Britain and Denmark received opt-outs ahead of the currency’s creation.

The currency is now used by over 340 million people in 19 European Union countries, which are: Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Portugal, Slovakia, Slovenia and Spain.

Other EU members are required to join the eurozone when they meet the currency’s monetary requirements.

Popularity

Today, the euro is the most popular than it has ever been over the past two decades, despite the rise of populist movements in several European countries that express skepticism toward the European Union.

In a November survey for the European Central Bank, 64 percent of respondents across the eurozone said the euro was a good thing for their country. Nearly three-quarters of respondents said they thought the euro was a good thing for Europe.

In only two countries — Lithuania and Cyprus — did a majority of people think the euro is a bad thing for their nation.

That is a big contrast to 2010, the year that both Greece and Ireland were receiving international bailout packages, when only 51 percent of respondents thought the euro was a good thing for their country.

Challenges

The euro faced immediate challenges at its beginning with predictions that the European Central Bank (ECB) was too rigid in its policy and that the currency would quickly fail. The currency wasn’t immediately loved in European homes and businesses either with many perceiving its arrival as a price hike on common goods.

Less than two years after the euro was launched — valued at $1.1747 to the U.S. dollar — it had lost 30 percent of its value and was worth just $0.8240 to the U.S. dollar. The ECB was able to intervene to successfully stop the euro from plunging further.

The biggest challenge to the block was the 2008 financial crisis, which then triggered a eurozone debt crisis that culminated in bailouts of several countries.

Tens of billions of euros were loaned to Greece, Ireland, Portugal, Cyprus and Spain, either because those countries ran out of money to save their own banks or because investors no longer wanted to invest in those nations.

The turmoil also highlighted the economic disparity between member states, particularly between the wealthier north and the debt-laden southern nations.

Poorer countries experienced both the advantages and disadvantages to being in the eurozone.

Poorer countries immediately benefited from joining the union, saving trillions of euros due to the lowering borrowing costs the new currency offered.

However, during times of economic downturn, they had fewer options to reverse the turmoil.

Typically in a financial crisis, a country’s currency would plunge, making its goods more competitive and allowing the economy to stabilize. But in the eurozone, the currency in poorer countries cannot devalue because stronger economies like Germany keep it higher.

Experts said the turbulent times of the debt crisis exposed some of the original flaws of the euro project.

However, the euro survived the financial crisis through a combination of steps from the ECB that included negative interest rates, trillions of euros in cheap loans to banks and buying more than 2.6 trillion euros in government and corporate bonds.

Future

ECB chief Mario Draghi was credited with saving the euro in 2012 when he said the bank would do “whatever it takes” to preserve the currency.

Some experts say the flexibility of the bank proves it is able to weather financial challenges and say the turmoil of the past two decades have left the ECB better able to deal with future crises.

However, other observers say that the 19 single currency nations have not done enough to carry out political reforms necessary to better enable the countries to work together on fiscal policy and to prepare for future downturns.

Proposals for greater coordination, including a eurozone banking union as well as a eurozone budget are still in the planning phases.

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New Year’s Eve Ball Drop to Honor Journalism

A group of journalists will usher in the New Year Monday in New York City’s Times Square as the time-honored tradition of the annual ball drop recognizes journalism and free speech.

Leading American reporters and editors will be on stage just before midnight to push the button that begins the countdown to the New Year.

According to the Committee to Protect Journalists, at least 53 journalists were killed on the job in 2018 and another 251 were imprisoned around the world.

In another first, New York police will use a drone to monitor the crowds. The camera-carrying drone will be added to the arsenal of more than 1,200 fixed video cameras that will be deployed by the police.

The security plan also includes road closures, thousands of uniformed and plainclothes officers, sharpshooters on rooftops of surrounding buildings and the sealing of manhole covers.

On Sunday, officials did a test run of the 544-kilogram ball sliding down a pole. This year’s ball will feature 2,688 crystal triangles and is backlit with LED lights capable of producing a number of colors and patterns.

New York Mayor Bill de Blasio said Friday that the city expecting “up to 2 million people in Times Square itself” for the celebration.

 

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NASA Probe to Make History New Year’s Day

NASA scientists are getting a very special New Year’s Day gift. The New Horizons spacecraft is moving into unexplored space beyond Neptune to investigate objects so far out in our solar system they can hardly be seen by telescope. As VOA’s Kevin Enochs reports, the trip far out in space may help scientists figure out how the solar system was created.

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Elections, Films Help Effort to Ban Gay Conversion Therapy 

Activists urging more states to ban gay conversion therapy for minors are expecting major gains in 2019, thanks to midterm election results and the buzz generated by two well-reviewed films. 

 

Fourteen states and the District of Columbia have already enacted laws prohibiting licensed therapists from trying to change a minor’s sexual orientation. Leaders of a national campaign to ban the practice are hopeful that at least four more states — Colorado, Maine, Massachusetts and New York — will join the ranks in the upcoming legislative sessions. 

 

“We’d be disappointed if we don’t get those this year — they’re overdue,” said Shannon Minter, legal director of the National Center for Lesbian Rights, one of the groups campaigning to impose bans in all 50 states. 

 

The campaign has gained momentum in recent months thanks to the national release of two films dramatizing the experiences of youths who went through conversion therapy — The Miseducation of Cameron Post and the higher-profile Boy Erased starring Lucas Hedges, Nicole Kidman and Russell Crowe. 

Joining ‘in droves’

Sam Brinton of the Trevor Project, another of groups leading the ban campaign, said thousands of people have signed up to assist the effort since Boy Erased was released on Nov. 2. 

 

“They’re recognizing this is still a problem and joining our campaigns in droves,” said Brinton, a child of Baptist missionary parents who has written about agonizing conversion therapy sessions experienced as an adolescent in Florida. 

 

Brinton recalls being bound to a table by the therapist for applications of ice, heat and electricity. 

 

Just four days after the Boy Erased release came the midterm elections, which altered the partisan political dynamic at several statehouses and boosted prospects for conversion therapy bans.  

In three of the states now being targeted, previous efforts to enact a ban gained some bipartisan support but were thwarted by powerful Republicans. In Maine, a bill was vetoed last year by GOP Gov. Paul LePage. In New York and Colorado, bills approved in the Democratic-led lower chambers of the legislature died in the Republican-controlled state senates. 

 

In January, however, a Democrat will succeed LePage as Maine’s governor, and Democrats will have control of both legislative chambers in New York and in Colorado, where gay Gov.-elect Jared Polis is believed eager to sign a ban. 

A lead sponsor of the New York ban bill, Democratic Sen. Brad Hoylman, predicted passage would be “straightforward” now that his party controls the Senate. 

 

“For a lot of my colleagues, they consider conversion therapy to be child abuse,” he said. 

Outlook in Massachusetts

 

In Massachusetts, both legislative chambers voted last year in support of a ban but were unable to reconcile different versions of the measure before adjournment. Chances of passage in 2019 are considered strong, and Republican Gov. Charlie Baker, who was re-elected, is viewed as likely to sign such a measure given his strong support for LGBT rights. 

 

More Republican governors like Baker are getting behind the bans, reflecting activists’ belief that opposition to conversion therapy is increasingly bipartisan. 

 

Bills proposing bans are pending or anticipated in several GOP-controlled legislatures, including Florida, Ohio and Utah. LGBT activists are particularly intrigued by Utah because of the possibility that the powerful Mormon church, which in the past supported conversion therapy, might endorse a bill to ban the practice for minors. 

 

In Florida, the proposed ban faces long odds in the legislature in 2019, but activists note that about 20 Florida cities and counties have passed local bans — more than in any other state. 

 

In Ohio, supporters of a bill that would ban conversion therapy for minors realize they have an uphill fight in a legislature with GOP supermajorities.  

 

Still, Sen. Charleta Tavares, a Columbus Democrat, believes her proposal got “new legs” in November. That’s when the state board overseeing counselors, social workers, and marriage and family therapists warned the 40,000 professionals it regulates that anyone found practicing conversion therapy on LGBT patients could lose his or her license.  

 

“I am glad to see that our state boards are carrying this movement, regardless of the inaction by our General Assembly,” Tavares said.  

 

For now, LGBT activists are not seeking to ban conversion therapy for adults. A gay California legislator, Evan Low, withdrew a bill he introduced earlier this year that would have declared conversion therapy a fraudulent practice and banned commercial use of it for adults and minors. Some opponents had threatened to sue to block the bill, saying it would jeopardize free speech and free exercise of religion. 

​Model for movie

 

Low says he may try again after revising his bill. If so, his arguments could be bolstered by input from John Smid, the real-life model for the Boy Erased character who ran a coercive conversion therapy program. 

 

For years, Smid was director of Tennessee-based Love in Action, a ministry that operated such a program. Smid left the organization in 2008. He subsequently renounced the concept that sexual orientation could be changed and apologized for any harm he had caused. In 2014, he married his same-sex partner, with whom he lives in Texas. 

 

Smid recently cooperated with a law firm as it compiled a report about Love in Action for the Washington-based Mattachine Society, which studies past instances of anti-LGBT persecution. 

 

One of the report’s co-authors, Lisa Linsky, said Smid depicted Love in Action as “a complete and utter failure,” with none of its participants actually changing sexual orientation. 

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