Seven Things I Learned while Looking for Other Things

Here is to the serendipity of learning:

1.  Chinese buying of Hong Kong shares has dried up this month compared with the record equivalent of $8 bln in September.  So far this month's purchases are less than $1 bln.  In September, the flows from the mainland accounted for about 17% of the turnover over in Hong Kong.  This month it is closer to 7%.  Bank shares were particularly in strong demand last month, but considerably less now.  

2.  The Chinese Communist Party's annual plenum session is being held this week.  It seems to be primarily about setting the stage for next year's congress that will see 11 of the 25 members of the ruling Politburo retire.  This includes five of the seven of the standing committee (except President Xi and Premier Li).   It is seen as an opportunity for XI to further consolidate power.  Any failure to stick to tradition, especially regarding mandatory retirement age, will be seen as precedent for Xi.  

3.  Wallonia is continues to reject the EU-Canadian free-trade agreement (CETA).  Opinion is seems universally aligned against this small French-speaking region in Belgium.  However, the situation is more complicated than it may appear.  Gone barely unmentioned by most is the fact that the EC changed the rules for approving trade agreements.  It had been an issue for member states and the EU Parliament.  However, reportedly under the pressure from Germany's Vice Chancellor to appease the anti-free-trade wing of his own SPD, CETA required parliamentary approval.  In Belgium's case it also required the regional parliament's to approve.   

4.  Since the failed coup attempt, Europe and US relations with Turkey have deteriorated markedly.  The EU has been ambivalent at best about Turkey's negotiations for accession for EU membership.  The crackdown and arrest of tens of thousands of people over the coup attempt antagonizes EU human rights concerns, which was already jeopardizing the agreement over immigration and visa-free travel for Turkish passport holders.    Turkey is build a rapprochement with Russia, which has implications for the war in Syria.  Greece is protesting Turkey violation of Greece's airspace, and is concerned that Turkey is questioning the validity of the Treaty of Lausanne,  The treaty is more than 90-year old and defines the Turkey's borders.  

5.  Germany horrible demographics is widely known. More than a quarter of Germany's population is 60-year old or over.  It is the second oldest population after Japan.   What is less appreciated is that its birthrate reached a 33-year high in 2015 (1.5 births vs 1.47 births in per woman in 2014).   As is the case in the US, the higher birthrate is partly a function of immigration.  The birthrate among migrant woman was 1.95, up from 1.86 in 2014.   The birthrate of native German woman rose to 1.43 from 1.42 births.  However, there are some notable exceptions.  Saxony, which has is proportionally host for few immigrants has among the highest birthrates in Germany.  Berlin, where one in three have multicultural backgrounds has among the lower birthrates.  

6.  If anything, the eurozone economy appears to be accelerating in Q3.  Today's flash composite PMI reading (53.7) is the highest of the year and well above the Q3 average of 52.9.  The rise in October  (from 52.6 in September, which matched the lowest since January 2015) was the largest in 22 months. On the other hand, the collective budget deficit of eurozone members fell to an eight-year low in Q2.  The shortfall was 1.5% of the collective GDP, down from 2.1% in Q2 15.  The total government debt declined to 91.2% from 92.1% Q2 15.  

7.  Bank of England Governor Carney was criticized by many government officials that favored the UK leaving the EU.  However, Prime Minister May seemed to join the fracas by publicly being critical of the easier monetary policy.  Tomorrow he appears before the House of Lords, many of which claim that the BOE misjudged the fallout from Brexit.  Although Carney is thought to be ambitious (swapped heading the Bank of Canada for heading up the Bank of England, and some suspect a political future, his intentions are not clear.  When he took the post three years ago, the idea was that he would leave in 2018, but more recently the talk was he was amenable to a full eight-year term, which would keep him at the helm of the BOE through 2021.  He has reportedly indicated he will announce his plans before the end of the year. 

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