News Items.
by John Ellis. 7/19/2019.
1. The Federal Reserve is widely expected to reduce interest rates this month. That probably means its campaign to shrink its balance sheet is over, leaving the central bank hoarding trillions of dollars more than before the 2008 financial crisis. Beginning a decade ago in a bid to fight the calamity, the Fed by 2015 accumulated as much as $4.5 trillion of debt, including Treasuries and mortgage-backed securities.
2. Two senior Federal Reserve officials stressed the need to act quickly if the U.S. economy looked likely to stumble, reinforcing bets the central bank could cut interest rates by as much as half a percentage point later this month. Fed Vice Chairman Richard Clarida and New York Fed chief John Williams buoyed stocks with their dovish remarks Thursday afternoon, in some of the final comments from central bankers before they enter their blackout period ahead of a July 30-31 policy meeting.
3. Everyone's doing it. Central banks in Asia and South Africa lowered their interest rates Thursday, joining a global easing bandwagon that started earlier this year in the Asia-Pacific region and is expected to include the U.S. and Europe within weeks. The latest moves, by central banks in South Korea, Indonesia and South Africa, underscore the global nature of the brewing rate-cutting cycle, as policy makers attempt to ward off signs of weaker economic growth. With economies and financial markets interconnected, expectations of lower interest rates by the Federal Reserve and European Central Bank have given central banks in emerging markets scope to lower rates and prop up their economies.
4. Cryptocurrencies such as Facebook’s Libra will need to be tightly regulated or they could destabilize the global economy, according to a working group set up by the G7 group of major western economies and Japan. The financial innovations risk being used for money-laundering and the financing of terrorism, said a preliminary report from the group led by Benoît Cœuré of the European Central Bank, which was published on Thursday.
5. Congress and the Trump administration have agreed on overall spending levels and raising the U.S. government’s borrowing limit for two years, though negotiators are still working on how to offset the cost of the spending agreement, Treasury Secretary Steven Mnuchin said Thursday. Mr. Mnuchin’s comments came a day after a senior administration official sought to play down expectations for a speedy resolution, saying “we have a way to go.”
6. China's total debt burden rose strongly in the first quarter of 2019 as Beijing allowed more loans and local government bond issuance to help shore up the slowing economy, according to estimates by the Institute of International Finance. The figure stood at nearly 304 per cent of its gross domestic product (GDP) in the first three months of the year, up from 297 per cent a year earlier, the US-based trade association said.
7. France has squeaked past Italy to become the country with the biggest debt load in the euro area in absolute terms, according to quarterly data from Eurostat. It’s debt-to-GDP ratio is still just below 100%, compared with Italy’s 134%, and the nation’s borrowing costs are far, far lower, but the dubious honor may undermine its moral high ground when it comes to lecturing Italy’s government about its controversial budget plans.
8. Iran has offered a deal with the US in which it would formally and permanently accept enhanced inspections of its nuclear program, in return for the permanent lifting of US sanctions. The offer was made by the Iranian foreign minister, Mohammad Javad Zarif, on a visit to New York. But it is unlikely to be warmly received by the Trump administration, which is currently demanding Iran make a range of sweeping concessions, including cessation of uranium enrichment and support for proxies and allies in the region. Mr. Zarif insisted, however, that his offer was “a substantial move”.
9. A U.S. naval ship downed an Iranian drone that flew too close and ignored multiple calls to turn away, President Trump said Thursday, as tensions between the United States and Iran appeared to be rising once again in the Persian Gulf region. Speaking at the White House, Trump said the drone came within 1,000 yards of the USS Boxer in the Strait of Hormuz before the crew “took defensive action” and “immediately destroyed” it.
10. The Trump administration has quietly dismantled or cut back multiple programs that were created after the Sept. 11, 2001, attacks to help detect and prevent terrorism involving weapons of mass destruction, a Times investigation has found. The retreat has taken place over the last two years at the Department of Homeland Security, which has primary domestic responsibility for helping authorities identify and block potential chemical, biological, radiological and nuclear threats. The changes, not previously reported, were made without rigorous review of potential security vulnerabilities, The Times found, undermining government-wide efforts aimed at countering terrorist attacks involving unconventional weapons, known as WMD.
11. The Israeli company whose spyware hacked WhatsApp has told buyers its technology can surreptitiously scrape all of an individual’s data from the servers of Apple, Google, Facebook, Amazon and Microsoft, according to people familiar with its sales pitch. NSO Group’s flagship smartphone malware, nicknamed Pegasus, has for years been used by spy agencies and governments to harvest data from targeted individuals’ smartphones.
12. Microsoft said strength in its cloud-computing business drove record revenue in the latest quarter, extending the strong performance under Chief Executive Satya Nadella that has made it the world’s most valuable public company. Revenue rose 12% to $33.72 billion from the year-earlier period, the company said Thursday, beating Wall Street estimates. Profit also topped expectations. The results for Microsoft’s fiscal fourth quarter ended in June reflected continued strength in corporate spending on the cloud services that have revolutionized business computing over the past decade. Companies increasingly are paying subscriptions for software and renting computer power, rather than buying applications that run on their own servers.
13. Private equity firms are this year set for their highest number of deals as record-low interest rates spur debt-fueled company buyouts. A report by Bain & Company forecasts an all-time high of 212 “take-private” transactions this year, compared to the previous high of 192 in 2007.
14. Elizabeth Warren is teaming up with a slate of fellow congressional Democrats calling for greater federal regulation of private-equity firms, which the presidential candidate likened to vampires in a policy proposal that would alter the way the funds acquire other companies. Ms. Warren, a senator from Massachusetts, unveiled on Thursday legislation that would require private-equity funds to assume responsibility for the liabilities of companies under their control, including debt and pension-related obligations. Ms. Warren has been surging in recent polls of Democratic voters in early primary and caucus states.
15. USA Today publisher Gannett Co. is nearing a deal to combine with rival GateHouse Media, people familiar with the matter said, a move that would join the nation’s two largest newspaper groups by circulation at a time local media is in a battle for survival. The companies are grappling with a brutal environment for local newspapers around the country. Private-equity-backed GateHouse has a reputation for aggressively slashing expenses at titles it acquires.
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