In Brief – N.10 – April 5, 2015

“I think the time has come to discuss the possibility of creating a future currency union. Working shoulder to shoulder, it is easier to respond to financial and economic threats from outside and protect our common market,” Russian President Vladimir Putin said in a press statement following a tripartite meeting with counterparts of Belarus and Kazakhstan.

It has been bumping on and on and on. At last, the British index FTSE 100 has crossed the 7,000 points for the first time ever. Analysts said that both the USA and the UK could now catch up with continental Europe’s indices which have skyrocketed around an average 20% YTD.

No oil production cut in ahead. “We repeat that, as for prices, the market determines it, (…) we did not succeed (in finding consensus) because countries (outside OPEC) were insisting that OPEC carry the burden (of cuts) and we refuse that OPEC bears the responsibility,” Saudi Oil Minister Ali al-Naimi said.

Amazon is one step closer to launching its drone delivery service, CBS Baltimore said after the Federal Aviation Administration (FAA) approved the company to fly drones on a trial basis. Amazon has been lobbying the US Congress since it envisaged drone delivery service in 2013.

“Labour will make us as bad as France,” conservative UK Prime Minister David Cameron said. As the national election campaign is approaching its full swing, Cameron said the Labour leader Ed Miliband wanted “to follow the same path as the French government,” namely “catastrophic job losses, a drop in the quality of life, debt to make us weep, and a massive fall in all hope for the future.”

A rate hikelikely will be warranted before the end of the year,” US Fed Vice Chairman Stanley Fischer said. Moreover, “a smooth path upward in the federal funds rate will almost certainly not be realized,” Fischer added.

“I think reconciliation between what markets think and what the committee thinks will have to happen at some point, (…) that’s a potentially violent (encounter) … and I am concerned about that,” Fed policymaker James Bullard told reporters at London’s City Week financial conference.

Inflation hit zero for the first time, pushing Britain closer to deflation (…) the falling cost of bread, a beer or petrol does impact the housing market (…) if deflation goes on for a fraction too long it can flip a switch in (UK’s) housing market,” Anna White, The Telegraph’s property correspondent wrote.

“We will not accept a bad deal. Our diplomatic engagement with Iran has already delivered concrete results. (…) We know Iran is living up to its commitments so far because (…) we have gained unprecedented access to Iran’s nuclear program,” White House Chief of Staff Denis McDonough said after reports accused Israel of spying on US diplomatic activities as regards Iran.

Saudi Arabia and Gulf region allies – Qatar, Bahrain, Kuwait and the UAE – launched military operations including air strikes in Yemen against Iran-backed Houthis. “The operation is to defend the legitimate government (of President Abd Rabbuh Mansur Hadi),” Adel al-Jubeir, the Saudi envoy to the US, told reporters. Oil prices increased quickly.

China unveiled ambitious plans to upgrade manufacturing power. The implementation of the “Made-in-China 2025” strategy will be accelerated, Premier Li Keqiang announced. This will be key to helping China maintain economic growth at a medium-to-high level and to move up the global value chain, a communiqué said.

“We do not agree with sanctions (against Russia). I believe that this is a road to nowhere. I support the point of view that there is a need for a dialogue and diplomacy, we should sit down at the negotiating table and find the solutions to major problems,” Greek Prime Minister Alexis Tsipras said.

Student loans may emerge as a global threat to America’s economy. According to the Chicago Tribune, around 100 students seek to “pressure the government into forgiving their student loans.” Teaming with Occupy Wall Street activists, they – the “Corinthian 100” – affirmed their college broke the law.

“The successful experience of Tikrit will be repeated in other areas,” Iraqi Prime Minister Haider al-Abadi said after Iraq’s security forces have recaptured the city against the Islamic State (ISIS).

Transitioning from the euro to a new national currency is no straightforward task either for Greece or for Europe, Greece can’t just (re)introduce a national currency,” Goldman Sachs wrote as the risk of Grexit is becoming more likely.

“The weak investment demand resulting from deep structural problems in the Russian economy was an important cause of the slowing Russian growth in 2014 (…) and yet, despite the confluence of adverse factors, Russia has so far avoided recession,” World Bank’s latest Russia Economic Report said.

If it turns out the Greeks leave, that may not be a bad thing for the euro,” Billionaire investor Warren Buffett told CNBC. “If everybody learns that the rules mean something and if they come to general agreement about fiscal policy among members (…) that could be a good thing.”

“Research could help us better understand how much mobility at the individual level matters for overall growth in productivity and economic output,” Fed’s Chair Janet Yellen said at a conference about Economic Mobility.

According to Bloomberg News, the US trade deficit shrank in February 2015 to the lowest level in more than five years as a labor dispute at West Coast ports contributed to the weakest reading on purchases from abroad since 2011.

France has begun implementing a series of important pro-growth structural policy measures, but boosting medium-term growth will require more ambitious action to reform the labor market, curb high levels of public spending and taxation and create jobs, according to the latest OECD Economic Survey.