News Items.
3 September 2019. By John Ellis.
1. The escalating trade war between the U.S. and China is rippling through the global economy, hurting confidence among U.S. small businesses, crimping trade among industrial giants in Asia and hitting export-oriented factories in Europe. On Sunday the U.S. imposed fresh tariffs of 15% on Chinese goods including clothing, tools and electronics. A round of retaliatory Chinese tariffs also took effect, targeting imports of U.S. soybeans, crude oil and pharmaceuticals.
2. China yesterday announced a complaint with the World Trade Organization the day after the U.S. imposed a 15% tariff on $110 billion in Chinese goods, adding to uncertainty over plans for high-level trade talks this month. "The tariffs imposed by the United States severely violated the consensus reached by the two heads of state in Osaka," the Commerce Ministry said in a statement reported by the official Xinhua News Agency. China is "extremely dissatisfied with and resolutely opposes" the tariffs, the ministry said.
3. China’s yuan weakened further earlier today, at one point nearing 7.2 to the dollar, less than a month after Beijing let the currency pass a threshold it had previously defended. The yuan has been dropping in recent weeks. It crossed 7 per dollar on August 5th, days after President Trump announced tariffs on a wider range of Chinese goods, and has since slid further, as both China and the U.S. have detailed fresh tariff plans.
4. As North Korea fired off a series of missiles in recent months — at least 18 since May — President Trump has repeatedly dismissed their importance as short-range and “very standard” tests. And although he has conceded “there may be a United Nations violation,” the president says any concerns are overblown. Now, American intelligence officials and outside experts have come to a far different conclusion: that the launchings downplayed by Mr. Trump, including two late last month, have allowed Mr. Kim to test missiles with greater range and maneuverability that could overwhelm American defenses in the region.
5. A senior Iranian delegation arrived in Paris on Monday to work out the details of a financial bailout package that France’s president, Emmanuel Macron, intends to use to compensate Iran for oil sales lost to American sanctions. In return for the money, Iran would agree to return to compliance with a 2015 nuclear accord. Iranian press reports and a senior American official say that the core of the package is a $15 billion letter of credit that would allow Iran to receive hard currency, at a time when most of the cash it makes from selling oil is frozen in banks around the world. That would account for about half the revenue Iran normally would expect to earn from oil exports in a year.
6. At least 16 people have been killed and more than 100 wounded, after a massive explosion from a suicide car bomb attack rocked central Kabul, the third attack claimed by the Taliban in as many days in the country. The attack took place on Monday night in a residential area near Green Village, a large compound that houses aid agencies and international organizations, interior ministry spokesman Nasrat Rahimi said. Taliban spokesperson Zabihullah Mujahid said a coordinated attack with a suicide bomber and gunmen was under way.
7. A draft peace agreement between the United States and the Taliban would withdraw 5,400 U.S. troops from five bases in Afghanistan within five months of the deal being signed, the top U.S. negotiator said Monday after briefing Afghan officials. In an interview with Afghan news outlet ToloNews, U.S. envoy Zalmay Khalilzad described the proposed plan as “an agreement with the Taliban in principle” but cautioned that “it is not final until the president of the United States also agrees to it."
8. A pair of business professors have devised an ingenious method for measuring the probability of a financial crisis by examining an entire economy as if it were a failing bank. Their analysis relies on SRISK (pdf) an analytical tool designed to evaluate the soundness of financial institutions during a prolonged market downturn. By aggregating SRISK across a country’s economy, Robert Engle, a Nobel Prize winner at NYU, and Tianyue Ruan of National University of Singapore, believe they can estimate the relationship between projected capital shortfalls and the likelihood of a financial crisis. Their work shines a spotlight on the interconnected nature of the economy, reminding investors that potential danger is rarely isolated in a single country. Indeed, the risk of a domestic financial crisis depends, in large part, on the financial position of the rest of the world.
9. When Argentina's President Mauricio Macri took office in 2015, he quickly eliminated his leftist predecessor’s interventionist policies that economists had blamed for stifling business in Latin America’s third-biggest economy. Now Mr. Macri has reversed course, implementing policies similar to those he once railed against as he confronts financial-market turmoil sparked by a crisis of confidence in the final months of his embattled administration. On Monday, the government implemented capital controls, in an unexpected move that comes more than three years after Mr. Macri lifted similar restrictions. His administration already has frozen prices for gasoline and some basic food products to help Argentines hurting from economic stagnation and annual inflation running at about 55%, one of the world’s highest rates.
10. Britain is heading for its third general election in less than five years after Boris Johnson said yesterday that he would go to the polls rather than accept another Brexit delay. The prime minister said that he did not want to send voters back to the ballot box but told MPs that he would seek an election on October 14 if they moved to block a no-deal exit today.
11. Boris Johnson has been buoyed by polls giving the Conservatives a double-digit lead over Labour since he became leader. However, with different parts of Britain in the grip of four, five or even six-party politics, it is as risky as ever to make predictions about how headline surveys might transfer into seats. The latest YouGov poll for The Times, carried out on Wednesday and Thursday in Britain, put the Conservatives on 33 per cent, Labour 22 per cent, the Lib Dems 21 per cent, Brexit Party 12 per cent and Greens 7 per cent.
12. Members of Itay’s anti-establishment Five Star Movement (M5S) party are voting online on whether they want their party to attempt to form a coalition government with the Democratic party (PD). Last week, the prime minister, Giuseppe Conte, was tasked with securing a pact between the two parties and staving off early elections after Matteo Salvini, the leader of the far-right League, collapsed its coalition with M5S.
13. The frontrunner to succeed Angela Merkel as chancellor has admitted making “not so elegant” mistakes after her party lost substantial ground to the far right in east German state elections. Rivals for the highest office in Germany are beginning to circle Annegret Kramp-Karrenbauer, leader of the ruling Christian Democrats (CDU), amid growing criticism of her tenure and a series of poor results at the ballot box. While the centre-right CDU clung on to its position as the largest party in Saxony, its lead over the AfD was cut from nearly 30 points to less than five. It will now try to assemble an awkward three-way coalition in the state parliament with the Social Democrats and the Greens.
14. Acting Prime Minister Pedro Sanchez’s Socialists believe repeat elections are likely, but will on Tuesday publish over 300 policy proposals in a last-ditch effort to secure allies to form a government, a senior party source said. Spanish politics have been in limbo since a national election in April that the Socialists won, failing however to get enough lawmakers to govern without the support of other parties. Tuesday’s proposals, aimed at getting Unidas Podemos to support a Socialist government, include labor, pension and real estate reforms that could please the far-left party, the source said.
15. Investor demand for higher yields will help fuel about 30 billion euros-equivalent ($32.9 billion) of speculative-grade debt sales over the next two months, estimates by JPMorgan Chase & Co. show. That would help salvage what’s been a lackluster year for high-yield bond and leveraged loan sales in Europe, which are collectively down 23.6 billion euros compared with the same period of 2018, according to data compiled by Bloomberg. So that'll be fine.
16. The National Basketball Association, seeing the valuation of its franchises soar, is mulling the creation of an investment vehicle that would buy minority shares of individual teams. In a memo sent to owners, a copy of which was reviewed by Bloomberg News, the league says it’s exploring the potential formation of “a new capital vehicle that could purchase passive, minority ownership interests across multiple NBA teams.” This is not a new idea.
17. Subscription-based businesses are gaining momentum in China, with the country's extensive delivery networks and artificial-intelligence technology driving a shift toward sharing more things. Subscriptions are spreading from music and video streaming to tangible consumer goods like clothing, bicycles, cosmetics and flowers. These services show how the Chinese online shopping market -- the world's largest -- is evolving in unique ways as data collected from the country's vast consumer population is fed back into the digital economy.
18. A personalized immune treatment for cancer, developed at University College London, has given “very promising results” in its first clinical trial on children with previously incurable leukemia. The therapy is a “living medicine” in a new class known as Car-T. It involves extracting immune cells from the patient, genetically engineering them in the lab to recognize the cancer cells, and then infusing them back into the bloodstream.
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