Saturday, 27 July 2019. By John Ellis.
1. Molly Wood: "What is the functional difference between a company and a country? It’s not a crazy question: We’re already at a point where huge multinational tech monopsonies have so much power over the global economy that central bankers and regulators are starting to wonder if they even have the tools to set economic policy, like they used to in the old days. And the reason these big tech companies are different from other giant multinational corporations like Exxon Mobile or ConAgra or even, strangely, Microsoft is that their ambition really is to own all your interactions, not just your driving or your eating or your typing. Amazon’s algorithms are setting prices for the rest of the world and there’s no business it doesn’t want to be in. Apple is less interested in being a big messy country that’s open to everyone, but would be happy to build an increasingly elite country club on the hill. Much like the NSA, Google would prefer that you forget they exist while they’re watching every single thing you do." Read the whole thing.
2. Walter Isaacson on evolving ourselves: “Our world is already suffering from widening gaps in wealth and opportunity, and a free market for genetic enhancements could produce a quantum leap in these inequalities and also, literally, encode them permanently. ‘In a world in which there are people who don’t get access to eyeglasses,’ says MIT professor (and internationally renowned biochemist) Feng Zhang, ‘it’s hard to imagine how we will find a way to have equal access to gene enhancements. Think of what that will do to our species.’”
3. Scientists at a government laboratory in northern China say they have edited the DNA of a germ, creating a super bacterium that can use electrons as an energy source, perhaps opening the door to superpowers in humans. The gene-edited germ uses electricity as “food”, increasing its physical performance by as much as 70 per cent, according to a team at the Chinese Academy of Sciences’ Tianjin Institute of Industrial Biotechnology. In theory, that would be like a human athlete running 100 metres (330ft) in five seconds or jumping over a bar more than four meters off the ground.
4. China’s economic growth slowed to its weakest pace since 1992 in the second quarter, underlining the importance of trade talks due to resume in Shanghai next week. These will be the first in-person talks since the G-20 summit last in June. Factories are under stress from slowing global demand, and the hurdle of higher tariffs as well as the pressure on profitability from the resurgence of deflationary risks in producer prices. China’s official manufacturing purchasing managers’ index, a gauge of activity in the sector, stayed at 49.4 in June, missing the 49.5 forecast in a Bloomberg survey of economists. Separately, the Caixin manufacturing PMI, which better reflects the private sector, fell to 49.4 from 50.2 in May. A reading below 50 signals contraction.
5. President Trump has warned that China may not strike an agreement to end the more than year-long trade war between the two economic powers until after the US presidential election in November 2020. “I think that China will probably say, ‘let’s wait’,” Mr Trump said on Friday, as his negotiators prepared to fly to China for the first trade talks since he reached a truce with Xi Jinping, Chinese president, at last month’s G20 in Osaka. “When I win, like almost immediately, they’re all going to sign deals,” Mr Trump said in the Oval Office.
6. The U.S. economy slowed but still grew at a solid clip in the second quarter as strong consumer spending offset a drop in business investment, keeping the decade-long expansion on track amid trade tensions and cooling global activity. Gross domestic product, a broad measure of goods and services produced across the economy, rose at a 2.1% annual rate in the second quarter, adjusted for seasonality and inflation, the Commerce Department said Friday. That is down sharply from a 3.1% pace in the first quarter.
7. The number of Americans applying for first-time unemployment benefits fell last week for the third time in four weeks, a sign of a firm labor market. Estimates of claims are volatile week to week and often revised. A separate measure—the four-week moving average, which shows the trend over the past month—fell by 5,750 to 213,000.
8. The Trump administration opened a new front in its quest to reform the global trade system on Friday by demanding that the World Trade Organization update its definitions of “developing country” status and remove the favorable treatment that ranking brings to nations like China, its main trade rival. If it doesn’t get the change it wants, the administration said, it is willing to go it alone and will not apply that status to countries within the WTO it believes no longer qualify for special treatment.
9. President Trump and his economic advisers discussed a proposal to intervene in foreign currency markets to weaken the U.S. dollar but ultimately decided against such an action, a top White House adviser said Friday. Such intervention would be highly unusual in an environment of relatively stable economic and orderly market conditions.
10. Despite nearly a decade of consistent economic growth, there’s growing fatigue with Germany's Chancellor Angela Merkel and the ruling parties, particularly in the former communist East, which has undergone decades of social and economic change. The region that saw massive right-wing protests last year is now back in focus as voters in three states go to the polls this fall. In two of them – Saxony and Brandenburg – Merkel’s Christian Democrats and their junior partner, the Social Democrats, may lose for the first time since reunification in 1990 – to the upstart Alternative for Germany, or AfD. That could not only implode her fragile coalition but upend a political landscape dominated by two parties since World War II.
11. President Trump has vowed swift retaliation against France for imposing a tax on digital transactions that would hurt US technology companies, in a new sign of souring transatlantic economic relations. In a tweet on Friday, Mr Trump said the US should be the only country taxing “our great American technology companies”. He then attacked Emmanuel Macron, the French president, and warned that punitive measures were on their way. The US president said: “We will announce a substantial reciprocal action on Macron’s foolishness shortly. I’ve always said American wine is better than French wine!”
12. The Nasdaq Composite and the S&P 500 hit record highs as strong earnings and healthy growth in gross domestic product buoyed stocks across the board. Analysts said the strength of the U.S. consumer, evident in some of the latest financial results and economic data, as well as expectations that the Federal Reserve will soon cut interest rates, has helped nudge stocks higher. Cooling trade tensions also helped lift stocks this week after news that U.S. negotiators would travel to Shanghai to resume formal negotiations on trade.
13. The London Stock Exchange Group has confirmed that it is in advanced talks to buy Refinitiv in a $27 billion deal that would turn it into a global exchanges and data powerhouse. A deal for Refinitiv, carved out of Thomson Reuters only last year in a deal with Blackstone, would transform the LSE into the main rival to billionaire Michael Bloomberg’s financial news and data empire with annual combined revenues of more than £6 billion.
14. Tens of thousands of protesters converged Saturday on the satellite town in Hong Kong where an armed mob attacked some of them last weekend, defying a police order and confronting riot police officers, who fired tear gas to disperse the crowds. The protest in the district, Yuen Long, is in response to an assault there by more than 100 men on demonstrators and others in a train station there on Sunday night. The attackers, who were wearing white T-shirts and carrying sticks and metal bars, injured at least 45 people.
15. One of the world’s most secure email services has been caught up in a sophisticated cyber attack aimed at investigative journalists and other experts who are probing Russian intelligence activities. Those targeted have used Swiss-based ProtonMail to share sensitive information related to their probes of Moscow’s military intelligence directorate, the GRU. “The campaign that came in [on Wednesday] was really in the top 1 or 2 per cent in terms of sophistication,” ProtonMail chief executive, Andy Yen, told the Financial Times. “They knew in advance exactly who they wanted to go after. Our research shows that this was a highly targeted operation.”
16. High-price luxury items like sports cars, fine art and even rare first-edition books are generally beyond the reach of average collectors. Now, several technology companies are packaging rare cars, paintings, and books as offerings in which any collector can buy shares. Some offerings start with prices as low as $25 or $50 a share. In return, these retail investors can, the pitch goes, participate in the appreciation of a famous painting in the same way billionaire art collectors do.
Quick Links: Scientists stunned by ‘city-killer’ asteroid that just missed Earth. Europe’s heat wave is about to bake the Arctic. Wildfires are ravaging the Arctic. Tuna may benefit from ocean sanctuaries. China will be the world’s used car salesman. China's Pony.ai races Google to bring driverless cars to masses. Huawei dangles $300,000 starting pay to draw 'young geniuses.' First Japanese company reveals bid to join Facebook's Libra. India might ban cryptocurrency and give its users jail time. US to deny tariff relief for Apple Mac Pro parts from China. The Justice Department approved T-Mobile US’s merger with Sprint. The latest news on Boeing's 737 Max airplane is alarming, to say the least. Ebola outbreak fails to trigger World Bank pandemic bonds. Scientists find clue to 'maternal instinct.' Trump administration releases details on fetal tissue restrictions. A new tool uses AI to spot text written by AI. Graydon Carter is back. Emma Freud tests a brain-enhancement device. Three books Michael Lewis feels deserve more attention than they’ve received.
Political Links: Partnership is much better for China than it is for Russia. How Putin's embrace of China weakens Russia. ECB purchases of equity would be "a dangerous step." Cometh the hour, cometh the man: A profile of Boris Johnson. The election in October will be a test of Canada’s liberal values. Trump plan to spend military funds for wall can proceed, high court says. Trump says he has deal with Guatemala to help stem flow of migrants. Jared Kushner's outsized role in President Trump's re-election campaign. Why did a company part-owned by Jared Kushner receive $90 million in overseas funding? House seeks Mueller’s grand jury secrets. Private equity chiefs boost Elizabeth Warren's campaign. 'The Squad' is the new villain for the right. Jeffrey Epstein’s pilots are subpoenaed in sex-trafficking investigation. James Patterson on Jeffrey Epstein’s “unbelievable” crimes.