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Market Turmoil Continues Amid Rate Concerns

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Council on Foreign Relations Newsletter If you are unable to see the message below, click here to view. February 6, 2018 Daily News Brief   TOP OF THE AGENDA Market Turmoil Continues Amid Rate Concerns The Dow Jones industrial average tumbled five hundred points (AP) in early trading Tuesday morning before recovering slightly, following two straight days of severe drops. The Dow on Monday posted its biggest single-day point loss, at 1,175 points; in percentage terms Tuesday’s close was the worst decline since 2011. Global markets in Asia and Europe tumbled in Tuesday trading as well, raising fears of contagion. Markets in Hong Kong and Japan dropped by about 5 percent, while the Stoxx Europe 600 dropped 2.5 percent (WSJ). The VIX index, a measure of Wall Street’s expected volatility, reached its highest level (FT) on Monday since China’s currency devaluation in 2015. Analysts said recent worries about rising bond yields and stronger inflation has hurt market sentiment and led to expectations that central banks will raise interest rates. ANALYSIS "Investors have become concerned that the era of extremely low interest rates that propped up stock prices for years may soon be over. The fear is that the U.S. economy could overheat, forcing the Federal Reserve to aggressively raise interest rates," Matt Egan writes for CNN Money. "Stocks have had a glorious run as low interest rates have chased savings into the markets. But that portfolio shift is probably over, and may well have overshot; witness Monday's fall of more than 4 percent in the S&P 500 index," CFR's Sebastian Mallaby writes for the Washington Post. "The question which is about to be tested is whether the network of financial products that has blossomed this time round turns out to be as precariously constructed as the financial engineering that ended up failing so spectacularly in 2007. History suggests we are about to find out," John Authers writes for the Financial Times. PACIFIC RIM Pence Keeps Open Possibility of Meeting With North Koreans U.S. Vice President Mike Pence has not requested a meeting (NYT) with North Korean envoys during the Winter Olympics beginning in South Korea this week, but, he said, "we'll see what happens." North Korea’s ceremonial head of state, Kim Yong-nam, will lead a twenty-two member delegation to the games. CFR's Patricia Kim writes that the Trump administration is fixated on using pressure alone to denuclearize North Korea.  HONG KONG: An appeals court struck down jail sentences for three activists who had led the pro-democracy "Umbrella movement" protests (BBC) in 2013.  SOUTH AND CENTRAL ASIA Maldives’ Top Judges Arrested Amid Political Turmoil President Abdulla Yameen imposed a state of emergency (FT) and ordered the arrest of the country's top judges, after the Supreme Court last week overturned the conviction of former President Mohamed Nasheed and other opposition figures. Nasheed called on neighboring India to intervene militarily (Al Jazeera). KYRGYZSTAN: Senior U.S. diplomat Henry Ensher began a visit to Bishkek on Monday. Kyrgyz authorities say they will discuss a new bilateral cooperation agreement (RFE/RL); Kyrgyzstan terminated a previous one in 2015 after more than a decade. MIDDLE EAST AND NORTH AFRICA Chlorine Gas Reportedly Used in Syria’s Idlib Medics said nine people were treated for breathing difficulties in Idlib Province caused by what they believed was a bomb carrying chlorine gas. The Syrian opposition attributed that and conventional air and artillery strikes (BBC) elsewhere in Idlib and in the rebel-held town of Eastern Ghouta to government forces and their Russian allies. IRAQ: The United States has begun to transport dozens of troops from Iraq to Afghanistan on daily flights (AP), along with weapons and equipment, according to defense contractors. The rebalancing follows Iraq's declaration of victory over the self-proclaimed Islamic State late last year. SUB-SAHARAN AFRICA Two Blocked Kenyan Stations Back On Air The NTV and KTV channels, which the government had blocked (Al Jazeera) for their plans to broadcast a mock presidential swearing-in by opposition leader Raila Odinga last week, returned to the air on Monday. Two others, Citizen and Inooro, continue to be blocked, according to a local newspaper. CFR's John Campbell discusses the government's reaction to Odinga’s stunt.  SOUTH SUDAN: Juba recalled its ambassador to the United States after Washington announced arms restrictions on the government (VOA) last week.  EUROPE Russia, U.S. Declare Compliance With Arms Treaty Ahead of a deadline Monday, Moscow and Washington both declared that they are in compliance with a 2010 treaty that limits each to 1,550 deployed strategic nuclear warheads (RFE/RL) and some 700 deployed intercontinental ballistic missiles, submarine-launched ballistic missiles, and strategic bombers. This CFR Backgrounder looks at the uncertain future of the Intermediate-Range Nuclear Forces Treaty. GERMANY: North Korea has used its Berlin embassy (VOA) to procure material for its nuclear weapons program, German intelligence chief Han-Georg Maassen said in a TV interview on Monday. AMERICAS Canada, Philippines Sign Combat Helicopter Deal The Philippines will buy sixteen combat helicopters (Reuters) from the Canadian Commercial Corporation for $233 million. The deal comes as President Rodrigo Duterte is seeking to modernize the military to fight Maoist rebels and Islamist militants. CHILE: A victim of church sex abuse made public a letter he wrote to the Vatican in 2015 (BBC) accusing Bishop Juan Barros of witnessing and covering up abuse by another priest. After facing protests during his trip to Chile last month for defending Barros, Pope Francis dispatched an investigator. UNITED STATES Audit Warns of Lax Bookkeeping at Pentagon The Pentagon's Defense Logistics Agency is unable to account for more than $800 million spent on construction projects (Politico), according to an internal audit by the accounting firm Ernst & Young that found weak financial management across the agency. The DLA commands a budget of $40 billion annually for procurement across the military and other federal agencies.         Council on Foreign Relations — 58 East 68th Street — New York, NY 10065 CFR does not share email addresses with third parties. Forward This Email | Subscribe to CFR Newsletters | Unsubscribe - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -  

From: dailybrief@e.cfr.org

Date: February 07, 2018 at 12:01AM