Trump dumps Obama climate change policies; Tough to stay rich without manufacturing; BlackRock bets on tech, cuts jobs, fees

1 Trump dumps Obama climate change policies (BBC) President Donald Trump has signed an executive order rolling back Obama-era rules aimed at curbing climate change. The president said this would put an end to the “war on coal” and “job-killing regulations”.

The Energy Independence Executive Order suspends more than half a dozen measures enacted by his predecessor, and boosts fossil fuels. Business groups have praised the Trump administration’s move but environmental campaigners have condemned it.

During the campaign, he vowed to pull the US out of the Paris climate deal agreed in December 2015. President Trump takes a very different approach to the environment from Mr Obama. The former president argued that climate change was “real and cannot be ignored”.

The Trump administration says that scrapping the plan will put people to work and reduce America’s reliance on imported fuel. It says the president will be “moving forward on energy production in the US. The previous administration devalued workers with their policies. We can protect the environment while providing people with work.”

2 Tough to stay rich without manufacturing (Noah Smith in Gulf News) A common assertion is that while manufacturing jobs have declined, output has actually risen. But this piece of conventional wisdom is now outdated. US manufacturing output is almost exactly the same as it was just before the financial crisis of 2008.

But even this may overstate US manufacturing’s performance. An alternative measure, called industrial production, shows an outright decrease from a decade ago. So it isn’t just manufacturing employment and the sector’s share of gross domestic product that are hurting in the US. It’s total output. The US doesn’t really make more stuff than it used to.

In other words, Asia is still solidifying its place as the workshop of the world, while the US de-industrialises. Manufacturing sceptics often draw parallels to what happened to agriculture in the Industrial Revolution. But the two situations aren’t analogous. In the 20th century, US agricultural output soared even as it shed jobs and shrank as a per cent of GDP. Machines replaced most human farmers, but the total value of US crops kept climbing.

So US manufacturing is hurting in ways that US agriculture never did. Many sceptics will question why the sector is important at all. Why should a country specialise in making things, when it can instead specialise in designing, marketing and financing the making of things?

Harvard University’s Kennedy School of Government economist Ricardo Hausmann believes that a country’s economic development depends crucially on where it lies in the so-called product space. If a country makes complex products that are linked to many other industries — such as computers, cars and chemicals — it will be rich. But if it makes simple products that don’t have much of a supply chain — soybeans or oil — it will stay poor.

In the past, the US was very successful at positioning itself at the top of the global value chain. But with manufacturing’s decline, the rise of finance, real estate and other orphaned service industries may not be enough to keep the country rich in the long run.

3 BlackRock bets on robots, cuts jobs, fees (Straits Times) BlackRock Inc has said it would overhaul its actively managed equities business, cutting jobs, dropping fees and relying more on computers to pick stocks in a move that highlights how difficult it has become for humans to beat the market.

The world’s biggest money manager has faced active stock fund withdrawals and the revamp is its biggest attempt yet to engineer a turnaround. Last May, BlackRock said it had recruited Mark Wiseman, the head of Canada’s biggest public pension fund, to oversee the stockpicking operations after he revamped that fund’s operations to embrace data-mining and other technological approaches to investing.

BlackRock is rebranding or adjusting investment strategies on about 11 per cent of its $275 billion active stock fund business, putting a greater emphasis on technology-driven investing approaches in the largest set of sweeping changes for the business since transformational mergers that allowed it to grow to manage more than $5 trillion in assets.

Among the changes, BlackRock is removing some seven traditionalist “Fundamental” portfolio managers from their current assignments, according to a source familiar with the matter. More than 40 employees are being laid off, including some of the portfolio managers, according to another source. The company will also cut fees on some products that are being rebranded as an “Advantage” series of lower-cost active funds.

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Cloudy future for EU; Populism as a result of global economic failure; Gender equality at work may take years to realise

1 Cloudy future for EU (Jonathan Eyal in Straits Times) The past 60 years were about Europe’s glory; the next 60 could well be about Europe’s survival. The European Commission, the bloc’s executive body, released earlier this month a White Paper identifying five “pathways” for the future of the EU. The Commission argued that EU governments could either carry on as they are now, concentrating on just a few areas of cooperation, or abandon all efforts at integration and just try to defend their single European market.

Carrying on as before after Britain leaves is not feasible, if only because the disappearance of Britain as a member-state – when it is the world’s fifth-largest economy and responsible for paying about 12 per cent of the EU budget – will necessitate some painful adjustments inside Europe.

Concentrating on just a few areas of cooperation won’t work either, because governments cannot agree on which areas are essential and which are desirable, or which matters are best done by the EU as a whole and which are better left to nation-states.

And just defending Europe’s single market while abandoning everything else is also nonsense, since the single market is not an abstract expression of economics, but the outcome of political coordination. Abandon that, and the single market will collapse as well.

In reality, there are only two potentially feasible approaches if the EU is to survive: Either all remaining EU member-states agree to pool together even more of their sovereignty, or those countries willing to do so are allowed to proceed, while others stay behind, resulting in a so-called multi-speed Europe.

The reality is that the EU is stuck with its existing structures, which no longer answer its needs but cannot be modified. It is also stuck with a deep divide between a poor south and a rich north, and between its eastern and western halves, which have different attitudes and aspirations. The Union won’t disintegrate. But it risks being paralysed in endless discussions about reforms that cannot be realised.

2 Populism as the result of global economic failure (Larry Elliott in The Guardian) Populism is the result of economic failure. The 10 years since the financial crisis have shown that the system of economic governance which has held sway for the past four decades is broken. Some call this approach neoliberalism. Perhaps a better description would be unpopulism.

Unpopulism meant tilting the balance of power in the workplace in favour of management and treating people like wage slaves. Unpopulism was rigged to ensure that the fruits of growth went to the few not to the many. Unpopulism decreed that those responsible for the global financial crisis got away with it while those who were innocent bore the brunt of austerity.

Anybody seeking to understand why Trump won the US presidential election should take a look at what has been happening to the division of the economic spoils. The share of national income that went to the bottom 90% of the population held steady at around 66% from 1950 to 1980. It then began a steep decline, falling to just over 50% when the financial crisis broke in 2007.

Unpopulism was touted as the antidote to the supposedly failed policies of the postwar era. It promised higher growth rates, higher investment rates, higher productivity rates and a trickle down of income from rich to poor. It has delivered none of these things.

Populism is seen as irrational and reprehensible. It is neither. It seems entirely rational for the bottom 90% of the US population to question why they are getting only 2% of income gains. It hardly seems strange that workers in Britain should complain at the weakest decade for real wage growth since the Napoleonic wars.

The good news is that the casting around for new ideas has begun. Trump has advocated protectionism. Theresa May is consulting on an industrial strategy. Even if the polls are right this time and Marine Le Pen fails to win the French presidency, a full-scale political revolt is only another deep recession away. And that’s easy enough to envisage.

3 Gender equality at work may take years to realize (Andy Campbell in Gulf News) The World Economic Forum (WEF) has predicted that it will take more than 100 years before the gender pay gap is closed. Even if we account for a large margin of error, this points to a sobering outlook for women in the workplace.

A major roadblock to improvement has been a lack of accountability for employers. Private organisations have historically only had to answer to themselves with regards to their hiring, pay and benefits approaches.

Some might argue that unless they impose sanctions on companies with a large gender pay gap governments cannot hope to effect change. However, this push for greater transparency should motivate organisations to tackle inequality in the interest of being viewed as an employer of choice and, one would hope, to help address wider gender issues.

Of course, fair pay is only one element of an equal opportunity workplace. Just as important are policies that allow male and female employees to thrive while enjoying a rewarding personal life. Programmes like shared maternity and paternity leave or flexible working schemes allow workers to focus on both their professional development and their families.

Importantly, they do not force women to bear more responsibility than men for raising their children and allow fathers to spend as much time with their newborns as mothers.

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China sees globalisation ‘unstoppable’; Eurozone growth near six-year high; When shrinkflation bites

1 China sees globalization ‘unstoppable’ (Gulf News) Chinese Vice-Premier Zhang Gaoli told a gathering of Asian leaders that the world must commit to multilateral free trade under the World Trade Organisation and needs to reform global economic governance.

Negotiations on the 16-nation Regional Comprehensive Economic Partnership, an Asia-wide agreement that’s favoured by China, should be concluded soon and regional cooperation such as with the Association of South East Asian Nations should be advanced, Zhang said.

“The river of globalisation and free trade will always move forward with unstoppable momentum to the vast ocean of the global economy,” Zhang said. China will remain a strong force in the world economy and for peace and stability, he said, adding that countries must respect one another’s core interests and refrain from undermining regional stability.

China has become a strong advocate for free trade after US President Donald Trump’s election, with President Xi Jinping and other top leaders working to boost its role in global governance. Zhang, 70, serves on the Communist Party’s seven-member standing committee, the top ruling body.

2 Eurozone growth near six-year high (BBC) Eurozone businesses grew at the fastest rate in nearly six years in March, led higher by France and Germany, a closely-watched survey has indicated. The latest Markit Composite Purchasing Managers’ Index (PMI) rose to 56.7 from February’s 56.0. A reading above 50 indicates growth.

The findings signalled the bloc’s recovery was “surging higher”, the report’s authors said. Job creation was at its best level for almost a decade, they added. Fuelling the growth were strong performances from France and Germany’s services sectors, the survey found.

Economists said the PMI data could encourage the European Central Bank (ECB) to move towards raising interest rates and further easing its monthly bond-buying programme.

3 When shrinkflation bites (Zoe Wood in The Guardian) Confectionery firm Mars is shrinking the pack size of favourite sweets including Maltesers, M&M’s and Minstrels by up to 15% in the latest example of an industry trend that is shortchanging shoppers.

It is the second time within a year that Mars has reduced the number of Maltesers in its sharing bags, which now weigh in at just 93g. Last autumn packs of Maltesers, billed as the lighter way to enjoy chocolate, shrank from 121g to 103g.

The American food giant appears to have taken action across its bestselling brands: family packs of M&M’s are now 25g lighter at 140g, while bags of Minstrels and Revels are also almost 10% lighter. Prices are unchanged.

Food manufacturers are either increasing prices or shrinking pack sizes – described as “shrinkflation” – as ingredient and transport costs rise and then presumably hoping that consumers don’t notice the difference.

Shrinkflation started during the last recession and in recent years chocolate-lovers have been regularly targeted. Last year Mondelēz, the American food giant that owns Cadbury, caused a furore after it cut the weight of Toblerone bars by widening the gaps between the chocolate “peaks”.

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Negative interest rates hit European banks; Fresh oil glut predicted; FTSE 100 CEOs earn 386 times average worker

1 Negative interest rates hit European banks (BBC) Swiss bank UBS will start charging customers who deposit more than a million euros, as negative interest rates hit banks’ profits. The annual 0.6% charge will take affect from May. UBS already imposes charges for large accounts held in Swiss francs by companies and some wealthy clients.

Banks’ profits have been hit by the European Central Bank’s policy of stimulating growth through negative interest rates and increased liquidity. The ECB penalises banks that store euros with it in an effort to make them lend rather than hoard their cash.

It imposes a so-called negative rate, equivalent to four euros annually on each 1,000 euros that lenders deposit with the central bank. Banks in Sweden and Switzerland, which are outside the eurozone, pay a similar charge.

A UBS spokesman said: “This charge reflects the increasing costs seen across the industry of reinvesting cash from deposits in money and capital markets, the continued extraordinarily low and negative interest rates in the euro area and increased liquidity regulations.”

Commerzbank has even considered storing cash in vaults to avoid paying ECB fees. The policy of penalising banks has come under criticism in Germany because it discourages saving.

2 Fresh oil glut predicted (Khaleej Times) New production projects and a fresh shale boom could boost oil output by a million barrels per day (bpd) year on year and result in an oversupply in the next couple of years, according to Goldman Sachs.

“2017-19 is likely to see the largest increase in mega projects’ production in history, as the record 2011-13 capex commitment yields fruit,” the US investment bank said in a research note. The Opec’s landmark decision to limit output for the first time in eight years in a bid to arrest the existing supply glut reduced price volatility and increased stability, unintentionally helping the shale producers, the bank said.

The Organisation of the Petroleum Exporting Countries agreed to curb its output by about 1.2 million bpd from January 1 this year. Russia and 10 other non-Opec producers agreed to jointly cut by an additional 600,000 bpd.

3 FTSE 100 CEOs earn 386 times average worker (Katie Allen in The Guardian) The average FTSE chief executive earns 386 times more than a worker on the national living wage, according to an analysis published by the Equality Trust as it steps up its campaign for new government rules to expose pay gaps.

The charity used annual reports from 2015 for all the companies in the FTSE 100 to calculate that their CEOs pocket an average of £5.3m each year, compared with £13,662 for someone on the national living wage of £7.20 an hour.

The trust issues its findings amid growing worries over a squeeze on living standards from sluggish pay growth and rising inflation. The pressures on households stem partly from Brexit worries knocking the pound lower and raising the price of imports to the UK. Those factors underscore the challenge for Theresa May to take the UK out of the EU while vowing to cut inequality and create an economy that “works for everyone”.

Chiming with research by other groups that suggests the squeeze will accentuate inequality, the trust found more than two-thirds (67%) of FTSE 100 CEOs were paid more than 100 times the average UK salary.

The trust’s “pay tracker” report highlights the big gaps between FTSE bosses such as Sir Martin Sorrell of advertising firm WPP, who was awarded more than £40m in 2016, and public sector workers, who have seen their incomes squeezed by years of austerity.

The Equality Trust analysis found that FTSE 100 chief executives are now paid 165 times more than a nurse, 140 times more than a teacher, 132 times more than a police officer and 312 times more than a care worker.

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Opec mulls oil cut extension; Older working women number doubles; World’s youngest new billionaires

1 Opec mulls oil cut extension (Khaleej Times) Opec oil producers increasingly favour extending beyond June a pact on reducing crude supply to balance the market, sources within the group said, although Russia and other non-members need to remain part of the initiative.

The Organisation of the Petroleum Exporting Countries is curbing its output by about 1.2 million barrels per day (bpd) from January 1 for six months, the first reduction in eight years. Russia and other non-Opec producers agreed to cut half as much.

The deal has lifted oil prices, but inventories in industrial nations are rising and higher returns have encouraged US companies to pump more. A growing number of Opec officials believe it may take longer than six months to reduce stocks.

The group wants stocks in the industrialised world to fall to the average of the past five years. According to the most recent data, for January, inventories of crude and refined products stood 278 million barrels above this level.

Five other Opec sources said it was increasingly clear that the market needed more than six months to stabilise but added that all producers – in Opec plus non-members – had to agree. Opec next meets to decide output policy on May 25 in Vienna. There will also be a gathering in May of Opec and non-Opec producers.

Russia, the largest of the 11 outside producers working with Opec, has not publicly said whether it supports extending the supply cut, but is wary about the revival of US shale output due to higher oil prices. The revival of shale oil production – whose growth added to the oversupply that battered oil prices in mid-2014 – has restrained the rally this year and may worry Opec leaders.

2 Older working women number doubles (Simon Gompertz on BBC) The proportion of women working into their 70s in the UK has doubled in the last four years and is starting to catch up with men. Analysis of official data reveals that 5.6% of women only stopped working after the age of 70 in 2012. This had risen to 11.3% in 2016.

Worries over pension income and a motivation to stay active have pushed up working ages. An estimated 15.5% of men stopped work in their 70s in 2016. Changing laws and workplace regulations, such as the end to age discrimination and the right to request flexible hours, have also helped people to work for longer as longevity increases.

An estimated 150,000 women in the UK are working into their early 70s. Women tend to have much smaller sums invested in private pensions, so have less to supplement their income in later life.

3 World’s youngest new billionaires (David Curran in San Francisco Chronicle) There are 195 new names on Forbes’ 2017 list of the world’s billionaires, and the youngest newcomers are two brothers working in San Francisco. Ireland natives John and Patrick Collison, aged 26 and 28 respectively, are the co-founders of online payments firm Stripe.

With his $1.1 billion net worth, John Collison actually becomes Forbes’ youngest self-made billionaire. He dethrones Snapchat’s Evan Spiegel, who’s also 26 but is a couple of months older than Collison. Snapchat co-founder Bobby Murphy joins the Collison brothers and Spiegel as the only self-made billionaires under 30 on the Forbes list.

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Climate change takes world to uncharted territory; Gates tops Forbes rich list; Robo-advisor to give investment advice

1 Climate change puts world in uncharted territory (Damian Carrington in The Guardian) The record-breaking heat that made 2016 the hottest year ever recorded has continued into 2017, pushing the world into “truly uncharted territory”, according to the World Meteorological Organisation.

Global warming is largely being driven by emissions from human activities, but a strong El Niño – a natural climate cycle – added to the heat in 2016. The El Niño is now waning, but the extremes continue to be seen, with temperature records tumbling in the US in February and polar heatwaves pushing ice cover to new lows.

“Even without a strong El Niño in 2017, we are seeing other remarkable changes across the planet that are challenging the limits of our understanding of the climate system. We are now in truly uncharted territory,” said David Carlson, director of the WMO’s world climate research programme.

“Earth is a planet in upheaval due to human-caused changes in the atmosphere,” said Jeffrey Kargel, a glaciologist at the University of Arizona in the US. “In general, drastically changing conditions do not help civilisation, which thrives on stability.”

2016 saw the hottest global average among thermometer measurements stretching back to 1880. But scientific research indicates the world was last this warm about 115,000 years ago and that the planet has not experienced such high levels of carbon dioxide in the atmosphere for 4m years.

Climate change harms people most directly by increasing the risk of extreme weather events and the WMO report states that these raised risks can increasingly be calculated. For example, the Arctic heatwaves are made tens of times more likely and the soaring temperatures seen in Australia in February were made twice as likely.

2 Gates tops Forbes rich list (BBC) Microsoft founder Bill Gates again tops Forbes’ list of the world’s richest people, in a year when the number of billionaires rose 13% to 2,043. According to the magazine’s annual rich list, Mr Gates’ fortune rose to $86bn, from $75bn, followed by investor Warren Buffett, up $14.8bn to $75.6bn.

It was bad news for US President Donald Trump, who slipped 220 spots to 544 and must now rub along on just $3.5bn. Forbes said the $1bn fall in his wealth was due to the slow US property market. There were 183 tech billionaires on the Forbes list, with a combined $1tn in wealth. The list is dominated by US billionaires.

Others in the top 10 included Amazon founder Jeff Bezos, who moved up to number three with the biggest gain of any person on the planet, a $27.6bn rise in his fortune of $72.8bn. Facebook founder Mark Zuckerberg was number five and Oracle co-founder Larry Ellison was number seven.

The global population of billionaires, now put at a record 2,043, marks the biggest annual increase in the 31 years since the magazine began compiling the list.
Forbes’ top ten: Bill Gates $86bn, Warren Buffett $75.6bn, Jeff Bezos $72.8bn, Amancio Ortega $71.3bn, Mark Zuckerberg $56bn, Carlos Slim $54.5bn, Larry Ellison $52.2bn, Charles Koch $48.3bn, David Koch $48.3bn and Michael Bloomberg $47.5bn.

3 Robo-advisor to give investment advice (Straits Times) Goldman Sachs Group, known for advising the world’s richest and most powerful, is building a so-called robo-adviser geared to mass affluent customers, according to a job listing on the bank’s website.

A Goldman spokesman declined to comment. The job posting for employees to help build the platform comes as Goldman is looking at ways to broaden its customer base outside the super wealthy, including making deeper inroads into new consumer-focused businesses.

The bank last year launched Marcus, its first major foray into consumer lending, as well as a complementary deposit-taking platform after acquiring GE Capital’s online bank. The robo platform would sit within the bank’s rapidly growing investment management division.

The unit, which Goldman has been trying to build out in recent years to diversify its revenue, posted a record US$1.38 trillion in assets under supervision at the end of 2016. Goldman has for years grappled with how to tap into the mass affluent segment, broadly defined as those with less than $1 million in investable assets, according to people familiar with the matter.

While the robo-advice market was initially developed by startups such as Wealthfront and Betterment with ambitions of upending the traditional financial advice sector, large firms such as Charles Schwab Corp and Vanguard have launched similar services.

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China reaffirms anti-protectionist stand; US school changes map to end 500 years of distortion; Camel as the new cash cow

1 China reaffirms anti-protectionist stand (Gulf News) China opposes various forms of trade protectionism and supports free trade, Vice-Premier Zhang Gaoli said on Sunday, reaffirming Beijing’s stance amid worries over weak global demand.

“China is willing to work with other countries to oppose various forms of trade and investment protectionism,” Zhang told the China Development Forum in Beijing. “We should unwaveringly push forward economic globalisation … we cannot stop our footsteps because of temporary difficulties.”

Zhang said world policymakers should make the globalisation process more “inclusive” by putting more emphasis on equality. Beijing is struggling to cope with weak global demand and faces risks from growing US trade protectionism as the administration under new President Donald Trump shows an aversion to globalisation.

In January, Chinese President Xi Jinping, as a keynote speaker at the World Economic Forum in Davos, Switzerland, offered a vigorous defence of globalisation and signalled Beijing’s desire to play a bigger role on the world stage.

2 US school changes map to end 500 years of distortion (Joanna Walters in The Guardian) When Boston public schools introduced a new standard map of the world this week, some young students’ felt their jaws drop. In an instant, their view of the world had changed.

The USA was small. Europe too had suddenly shrunk. Africa and South America appeared narrower but also much larger than usual. City authorities are confident their new map offers something closer to the geographical truth than that of traditional school maps, and hope it can serve an example to schools across the nation and even the world.

For almost 500 years, the Mercator projection has been the norm for maps of the world, ubiquitous in atlases, pinned on peeling school walls. Gerardus Mercator, a renowned Flemish cartographer, devised his map in 1569, principally to aid navigation along colonial trade routes by drawing straight lines across the oceans.

An exaggeration of the whole northern hemisphere, his depiction made North America and Europe bigger than South America and Africa. He also placed western Europe in the middle of his map.

Mercator’s distortions affect continents as well as nations. For example, South America is made to look about the same size as Europe, when in fact it is almost twice as large, and Greenland looks roughly the size of Africa when it is actually about 14 times smaller. Alaska looks bigger than Mexico and Germany is in the middle of the picture, not to the north – because Mercator moved the equator.

Three days ago, Boston’s public schools began phasing in the lesser-known Peters projection, which cuts the US, Britain and the rest of Europe down to size. Teachers put contrasting maps of the world side by side and let the students study them.

The respective merits of the Mercator and the Peters maps have long been debated. A spirited discussion about their implications even featured on an episode of the West Wing, in which characters argued for the Peters map to be used in US public schools and told the administration the Mercator projection had “fostered European imperialist attitudes for centuries”, creating an “ethical bias” for “western civilization” against the developing world.

3 Camel the new cash cow (Farhana Chowdhury in Khaleej Times) The price of camel milk may be twice as much as traditional cow milk in the UAE market, but it is slowly gaining attention of health-conscious residents for its nutrient-rich features.

Mutasher Awad Al Badry, business development manager of Emirates Industry for Camel Milk and Products, explains the reason behind the cost: “Camel milk production is less than cow milk production, taking note that it is only up to 30 per cent of cow milk production.

“Also, camel breeding costs are more than cows. Cows produce milk over the year, but with camels, the cycle is repeated once every three years. Therefore, the cost of a litre of camel milk may exceed the cost of three litres of cow’s milk.”

While Al Badry states that there are no accurate figures about the camel milk industry as of yet, a general report by Euromonitor titled ‘Dairy in the UAE’ reveals that drinking milk products recorded a value CAGR of two per cent in 2016 and are expected to reach sales of Dh1.6 billion in 2021.

To date, camel milk is available in original as well as flavoured varieties – such as chocolate, strawberry and dates – to appeal to demanding tastebuds. It is further blended into other appetising treats such as laban, cheese, and even ice cream.
One of the key players in the consumer market is the Emirates Industry for Camel Milk and Products with an assortment of dairy items under the brand Camelicious.
According to Al Badry, Camelicious stands as the only camel milk brand and dairy production facility in the world to receive EU Commission approval to export to the EU zone.

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