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Wednesday. 31 July 2019. By John Ellis
1. Europe’s economy is slowing again as its factories count the cost of increased uncertainty about global trade rules, underpinning worries at the Federal Reserve about the impact of weaker world demand on U.S. growth. The slowdown is a fresh indication that the global economy had a weak second quarter, with the U.S. and China also losing some momentum in the three months through June. The prospect of a global slowdown has prompted a number of central banks, including the Fed, to provide fresh stimulus or consider such a move.
2. Boris Johnson has said that the UK could stay in the customs union and single market for another two years, as he appeared to suggest what a Brexit deal struck by his Government could look like. The Prime Minister described the chance of a no-deal Brexit as “vanishingly small” as he visited farmers in Wales on his tour of the UK.
3. The new U.K. government’s tough line on Brexit negotiations is pummeling the pound, reflecting increased investor fears the country could crash out of the European Union without an exit agreement. Concerns about economic disruption have grown since Boris Johnson became prime minister last week. A top official overseeing no-deal preparations jarred investors over the weekend with a statement saying the British government is “operating on the assumption” of a no-deal Brexit. Ambrose Evans-Pritchard asserts that "We are nowhere near a sterling crisis yet," but adds: "foreign funding is fickle."
4. Chinese and U.S. negotiators resumed trade talks, taking tentative steps to overcome mutual mistrust and limited political appetite for a breakthrough agreement after weeks of recriminations. Apart from small steps, however, expectations are low for significant progress in resolving a trade dispute that has rattled global markets and seen both sides slap punitive tariffs on about half the more than $600 billion in goods they trade.
5. President Trump lashed out at China and the US Federal Reserve yesterday, unsettling investors worried about mounting risks to the global outlook. Typically aggressive outbursts by the US president hit equity markets in both the Europe and the US on a pivotal day for the international economy.
6. A measure of consumer sentiment rebounded in July, suggesting Americans remain confident about the U.S. economy despite persistent trade tensions and slowing global growth. The Conference Board, a private research group, said its index of consumer confidence jumped to 135.7 in July, up from 124.3 in June. Consumer spending, which fuels roughly two-thirds of U.S. economic activity, has been strong in recent months, underpinning economic growth in the second quarter. While outlays slowed in June, low unemployment and strong income growth in recent months suggest consumer fundamentals remain “the best they have been in this expansion,” Mickey Levy, chief economist at Berenberg Capital Markets, said in a note.
7. Senate Republican leaders and President Donald Trump are working to whip up support for their bipartisan, $2.7 trillion budget deal, hoping to stave off embarrassing defections ahead of a vote that’s splitting the party. Senate Majority Leader Mitch McConnell and Majority Whip John Thune are trying to win over undecided rank-and-file senators to avoid a replay of last week’s effort in the House, when roughly two-thirds of House Republicans opposed the deal, according to multiple senators and aides.
8. North Korea fired two missiles today, according to South Korea, in the second provocation since Donald Trump and Kim Jong Un met in the demilitarized zone that splits the Korean peninsula. South Korean defense officials said the short-range ballistic missiles fired from its eastern coast, which travelled about 250km and reached a maximum height of 30km, appeared to be different from weapons used in previous tests.
9. Hundreds of protesters surrounded a police station in Hong Kong on Tuesday, some scuffling with officers, after the authorities said they had charged dozens of people with rioting over clashes with the police days earlier. The rioting charges were a distinct escalation in the government’s response to protests that have shaken Hong Kong for weeks. The rallies began over a proposal, since shelved, that would allow extraditions to mainland China, but have since grown to include a variety of grievances including a lack of direct elections and the police’s use of force with demonstrators.
10. China said it would stop granting individual citizens permission to travel to Taiwan beginning Thursday, citing the current state of cross-strait relations, as Beijing ramps up economic pressure on the self-ruled island and its assertive leader. Tensions between Beijing and Taipei have been mounting from their usual simmer to more of a boil ahead of presidential elections in Taiwan next year. Both sides conducted military drills this week.
11. Australian law-enforcement and intelligence agencies are scrutinizing the activities of one of Chinese President Xi Jinping’s cousins as part of broad probes of organized crime, money laundering and alleged Chinese influence-peddling, according to Australian officials. Among other things, police are looking into the alleged 2017 use by the cousin, Ming Chai, now a 61-year-old Australian citizen, of what they describe as a money-laundering front company that has helped gamblers and suspected mobsters move funds in and out of Australia, some of the officials said.
12. An accounting scandal rocking corporate China is drawing comparisons with the collapse of US firm Arthur Andersen as dozens of Chinese companies are forced to halt public listing work. Ruihua Certified Public Accountants, one of China’s largest accounting firms, was investigated by the country’s securities regulator early this month after a listed company it audited was found to have inflated profits. The probe has caused an unprecedented disruption in fundraising activities for Chinese companies, with more than 50 Ruihua clients halting initial public offerings and private capital raising, according to state media.
13. Water scarcity may soon be as important as supplies of cheap labor in shaping the direction of Asia's next stage of globalization -- and it will do so in ways that damage both India's prospects and those of other, poorer nations around the region. When foreign companies ponder investing in emerging markets, they tend to pay attention to a relatively narrow range of factors and regulations which affect their ability to do business. India's water problems are now sufficiently dire to merit inclusion in that list.
14. Doctors have turned the brain signals for speech into written sentences in a research project that aims to transform how patients with severe disabilities communicate in the future. The breakthrough is the first to demonstrate how the intention to say specific words can be extracted from brain activity and converted into text rapidly enough to keep pace with natural conversation. The research was funded by Facebook.
15. Orange County, Florida, just released a public advisory warning that the Department of Health had found signs of the rare brain-infecting virus, Eastern equine encephalitis virus (EEEV) in the area. EEEV is a particularly rare infection — it tends to spread in remote, swampy areas far from human civilization. But when the disease does strike, it can be grave: Gizmodo reports that a bite from an infected mosquito can cause severe, fatal brain swelling in a matter of days.
16. Health authorities have uncovered an alarming surge in resistance to crucial HIV drugs. Surveys by the World Health Organization (WHO) reveal that, in the past 4 years, 12 countries in Africa, Asia and the Americas have surpassed acceptable levels of drug resistance against two drugs that constitute the backbone of HIV treatment: efavirenz and nevirapine.
Elsewhere in the News:
17. Eurointelligence: "Nigel Farage regards the appointment of Brexit mastermind Dominic Cummings as a clear sign that Johnson does not want to make a deal with the Brexit party, but to crush it. We think this part of his analysis is correct. Johnson’s strategy is clearly to out-Brexit Farage and marginalise him in the polls, and then work towards a Brexit deal before the end-October deadline. If he gets the deal, there would have to be a short extension to make time for ratification - a process that would then be framed as ratification versus no-deal."
18. Investment in Britain’s car industry almost completely evaporated in the first half of the year, with just £90 million dribbling into the sector as manufacturers backed away from committing fresh funding because of Brexit fears. During the same period last year £347 million was pumped in while the figure was £647 million for the first six months of 2017. Even the 2017 figure was less than half the level of investment in new facilities, technology and models the industry had been averaging prior to the 2016 Brexit referendum.
19. Two women who aimed to make their community safer as members of a peacemaking group called Mothers Against Senseless Killings have been shot dead on a street corner in Chicago. Chantell Grant, 26, and Andrea Stoudemire, 35, were killed while keeping watch over their neighborhood, where they and other mothers tried to reduce gun crime by having a presence on the streets, engaging with residents and providing meals, activities and counseling for local youth.
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