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News Items. 7/15/2019.
by John Ellis
1. Peter Thiel, one of President Donald Trump’s top Silicon Valley supporters and donors, took aim at Google Inc. and the high-tech industry over the companies’ focus on global markets while brushing aside U.S. interests. He singled out Google for agreeing to work closely with China, trying to get its search engine back into the Chinese market, while deciding to let lapse a U.S. defense department contract that gave the military access to its artificial intelligence tools. Mr. Thiel suggested the actions were “seemingly treasonous,” as he delivered the opening speech Sunday at the National Conservatism conference in Washington.
2. A proposal to prevent big technology companies from functioning as financial institutions or issuing digital currencies has been circulated for discussion by the Democratic majority that leads the House Financial Services Committee, according to a copy of the draft legislation seen by Reuters. In a sign of widening scrutiny after Facebook Inc’s (FB.O) proposed Libra digital coin aroused widespread objection, the bill proposes a fine of $1 million per day for violation of such rules.
3. The Economist: "The working prototype (of Libra, Facebook's digital currency) has yet to be tested. Facebook must prove that it truly is willing to give up control. Concerns about fair competition between Libra and other crypto-projects will persist. And any success could also bring problems. Were every Western depositor to move a tenth of their bank savings into Libras, its reserve fund would be worth over $2 trillion—nearly twice Apple’s market cap. If all Facebook’s users adopt Libra to shop and transfer money, it could become one of the world’s biggest financial entities, reducing governments’ economic sovereignty. As a result governments, particularly those that print money to finance their budgets, might be tempted to block it. Facebook’s impact on democracy has not been wholly positive. It is not clear whether Libra’s impact on the financial system should be feared or welcomed.
4. Facebook’s proposed digital currency, Libra, may have the largest impact on China in the area of transactions payments — such as paying bills or buying goods and services — where Chinese companies already have well-established mobile payments systems and where Chinese regulators have less oversight power at the moment, Li Yang, chairman of the National Institution for Finance and Development, said Friday at a seminar in Beijing. Mr. Li, who is also a member of the Chinese Academy of Social Sciences, the state-backed research institute, said that Facebook has many problems to solve before it can become a transaction medium. “Libra still has a long way to go to become a currency,” he said. But just as Chinese internet-based third-party payment companies emerged in recent years, Libra’s first major impact would likely be in the area of transaction payments, Li said. “In the past, China built an online wall (against foreign influences on domestic payments), and with this protection we’ve made great progress. In the future, we will face real challenges when working with foreign payment agencies,” he said.
5. China’s economy grew at 6.2 per cent year on year in the second quarter, its slowest pace since the early 1990s, as a trade war with the US hit investor sentiment. The statistics bureau’s release of data on Monday was in line with expectations and slower than the 6.4 per cent reported in the first quarter and the 6.6 per cent for full-year 2018. The value of exports also contracted by 1.3 per cent in dollar terms in June, after inching up in May.
6. U.S. manufacturers are shifting production to countries outside of China as trade tensions between the world’s two biggest economies stretch into a second year. The moves by U.S. companies add up to a reordering of global manufacturing supply chains as they prepare for an extended period of uneven trade relations. Executives at companies that are moving operations outside China said they expect to keep them that way because of the time and money invested in setting up new facilities and shifting shipping arrangements. Companies said the shifts accelerated after the tariff on many Chinese imports rose to 25% from 10% in May.
7. China’s government and Chinese companies will cut business ties with U.S. firms selling arms to Taiwan, China’s Foreign Ministry said on Monday, declining to give details of the sanctions in a move likely to worsen already poor ties with Washington. China claims self-ruled and democratic Taiwan as its own and has never renounced the use of force to bring it under Beijing’s control. China regularly calls Taiwan the most sensitive issue in its relations with the United States.
8. A populist mayor who favors closer ties with China won the opposition party’s nomination to run against President Tsai Ing-wen, who has been sharply critical of Beijing’s attempts to pressure the island into unification. The nomination of Han Kuo-yu, who survived a challenge from Terry Gou, the founder of the world’s largest iPhone assembler, will offer Taiwan’s voters a stark choice in January’s election between governments leaning toward Washington or Beijing.
9. China’s climate-warming greenhouse gas emissions hit 12.3 billion tonnes in 2014, up 53.5 per cent in just a decade, the environment ministry said on Monday, citing the country’s latest carbon “inventory” submitted to the United Nations. China’s carbon emissions data is notoriously opaque, but as a signatory to the United Nations Framework Convention on Climate Change, Beijing is obliged to submit an official inventory to the UN on a regular basis. It has previously released figures for 2005 and 2010.
10. India’s water crisis offers a striking reminder of how climate change is rapidly morphing into a climate emergency. Piped water has run dry in Chennai, the southern state of Tamil Nadu’s capital, and 21 other Indian cities are also facing the specter of “Day Zero,” when municipal water sources are unable to meet demand.
11. The guerrillas of the National Liberation Army, or ELN, have been battling Colombian governments for half a century, but a new advantage is helping them thrive as never before: sanctuary and open support in Venezuela. The government of Venezuelan President Nicolás Maduro, weakened by U.S. sanctions and diplomatically isolated, is deepening its ties with the ELN, which began as a Cuban-inspired rebel group in the 1960s. Caracas has given the group free rein, U.S. and Colombian authorities say, to become a criminal organization that runs wildcat mines and traffics drugs in Venezuela in exchange for providing muscle for Mr. Maduro’s regime.
12. In a little under 8 months, Mexico’s leftist president has achieved the kind of cost-cutting revolution that conservatives in Washington can only dream of. Thousands of federal jobs have been eliminated. Overseas travel has been slashed. President Andrés Manuel López Obrador even refused to shell out the money last month to fly to the Group of 20 summit. “We can’t have a rich government in a poor country,” he says. But what started as a popular attack on official privilege has increasingly generated chaos.
13 Mexico is slipping toward a recession even as the U.S. economy continues to grow, the first time in 25 years that the neighbors’ economic cycles have fallen sharply out of sync. The weakening economy is a new challenge for Mexican President Andrés Manuel López Obrador, following last week’s resignation of his finance minister, Carlos Urzúa, who abruptly quit and blamed the administration for putting political goals above economic considerations.
14. In the latest sign of financial markets going into uncharted territory, more than a dozen junk bonds, which usually carry high yields, now trade in Europe with a negative yield. It is a stark illustration of how ultra-loose monetary policies have turned debt investing into a choice about how to lose the least amount of money.
15. Pilar Gomez-Bravo, a portfolio manager at MFS Investment Management, sees eerie similarities between the current frenzy for risk and the speculative mania that made her cautious in 2007. She’s selling junk bonds in a contrarian bet that the debt rally is on its last legs -- with the potential to trap funds with billions staked in levered and often illiquid assets. “There’s an art to knowing when to leave the party,” said Ms. Gomez-Bravo in an interview with Bloomberg. “In fact it’s over -- people are desperate and they’re hunting down the after-party. We probably only have a few hours left.”
16. House Speaker Nancy Pelosi said Thursday she will attempt to finalize a deal that would raise the debt ceiling in the next few weeks instead of delaying until fall, heeding dire warnings from Treasury Secretary Steven Mnuchin that the government could fall behind on its bills by early September. Pelosi (D-Calif.) told reporters she wants to raise the debt ceiling as part of a deal that would set spending levels for the next two years. Many lawmakers on Capitol Hill had expected that a vote on a spending and debt package wouldn’t occur until September, but Pelosi indicated for the first time Thursday that they needed to act more swiftly.
17. Three of the top Democratic presidential candidates—former Vice President Joe Biden, Sen. Elizabeth Warren and Sen. Bernie Sanders—lead President Trump among voters nationally in test matchups, a new Wall Street Journal/NBC News poll finds. Another top Democratic contender, Sen. Kamala Harris, is essentially tied with Mr. Trump, the survey found.
18. Mike Allen: “Top Democrats are circulating a poll showing that one of the House’s most progressive members — Rep. Alexandria Ocasio-Cortez — has become a definitional face for the party with a crucial group of swing voters.” “These Democrats are sounding the alarm that swing voters know and dislike socialism, warning it could cost them the House and the presidency. The poll is making the rounds of some of the most influential Democrats in America. “
19. Matteo Salvini, the euroskeptic strongman of Italian politics, can’t seem to shut down a scandal over possible illegal financing from Russia. The deputy prime minister has been trying to distance himself from a close ally, Gianluca Savoini, who was recorded apparently soliciting illegal party funding from three Russians, according to a report by Buzzfeed News. The story has dominated Italian media coverage since it broke last week.
20. Happiness can influence politics: a survey of 15 European elections between 1973 and 2014 found that satisfaction was twice as significant as unemployment in determining whether incumbents were re-elected. But today, insurgents are ascendant — despite satisfaction reaching 93 per cent in Germany and Britain.
NFL owners say an 18-game regular season would drastically increase revenues, but players are pushing back. Boeing 737 MAX grounding could stretch into 2020. Huawei plans extensive layoffs in the US. Gilead to boost stake in Belgian biotech Galapagos. Why everything you know about nutrition is wrong. Something is seriously wrong with our understanding of the cosmos. Software saved Apollo 11. We’ve just lived through the greatest period of restaurant growth in U.S. history. Here’s why it’s ending. Amazon’s Prime Day:5 things to know before you shop. A new wave of life insurers think they can do things differently. Sally Jenkins on Serena Williams. Djokovic tops Federer in epic Wimbledon final. The Open Championship website is here.
Political Links: If Britain were an emerging market, the vultures would be circling. The unlikely bond industry powerhouse: Japan’s Post Office. Hong Kong’s Carrie Lam offered to resign over protests. Ursula Von der Leyen faces knife-edge vote for commission presidency. Europe’s centrists should be "wary" of Ms. von der Leyen. Greens are the new hope for Europe's center. For the far right, they're enemy number one. Turnover roils the Trump White House. Trump weighs ousting Commerce Secretary Ross. Mick Mulvaney builds ‘an empire for the right wing’ as President Trump’s chief of staff. Trump stokes racial tensions with attack on Democrat congresswomen. Maureen Dowd schools Alexandria Ocasio-Cortez. Democrats could lose Colorado if Bernie Sanders is nominee, says Colorado Sen. Michael Bennet. Meet the Rush Limbaugh of Brazil. He lives in rural Virginia. Democrats clash over how to defeat Trump on immigration in 2020.
Correction: Saturday's News Items cited a Boston Globe article stating that Harvard Law School Professor Alan Dershowitz was "stepping down." The story was published roughly six years ago. Put another way, the news item wasn't "fake news." It was old news.