Weekend News Items.
* September 2019. By John Ellis.
1. China’s leader, Xi Jinping, warned a gathering of senior Communist Party officials in January that the country faced a raft of urgent economic and political risks, and told them to be on guard especially for “indolence, incompetence and becoming divorced from the public.” Now, after months of political tumult in Hong Kong, the warning seems prescient. Only it is Mr. Xi himself and his government facing criticism that they are mishandling China’s biggest political crisis in years, one that he did not mention in his catalog of looming risks at the start of the year. And although few in Beijing would dare blame Mr. Xi openly for the government’s handling of the turmoil, there is quiet grumbling that his imperious style and authoritarian concentration of power contributed to the government’s misreading of the scope of discontent in Hong Kong, which is only growing.
2. Thousands of Hong Kong protesters on Sunday chanted the U.S. national anthem and called on President Trump to "liberate" the Chinese-ruled city, the latest in a series of demonstrations that have gripped the territory for months. Police stood by as protesters, under a sea of umbrellas against the sub-tropical sun, waved the Stars and Stripes and placards appealing for democracy after another night of violence in the 14th week of unrest. "Fight for freedom, stand with Hong Kong," they shouted. "Resist Beijing, liberate Hong Kong."
3. China's exports unexpectedly fell in August while imports shrank for a fourth month, pointing to further weakness in the world's second-largest economy and underlining a pressing need for more stimulus as the Sino-U.S. trade war escalates. Beijing is widely expected to announce more support measures in coming weeks to avert the risk of a sharper economic slowdown as the United States ratchets up trade pressure, including the first cuts in some key lending rates in four years.
4. U.S. manufacturers are investing less in their factories and workforces as the trade dispute with China makes it more difficult for executives to anticipate costs and demand. The shifting contours of the tariffs that the U.S. and China have applied to each other’s goods are prompting some companies to put business plans on hold. Others are cutting back investments as trade volumes and economic growth slow around the world. These companies are buying fewer machines for their factory floors and shortening shifts. The knock-on effect means lower sales for those suppliers and less pay for workers, contributing to slower U.S. economic growth.
5. Global interest rates are low and may head lower, driven by slowing economies and the U.S.-China trade war. A less appreciated reason for lower rates is a mountain of debt built up during the past decade. Debt owed by governments, businesses and households around the globe is up nearly 50% since before the financial crisis to $246.6 trillion at the beginning of March, according to the Institute of International Finance. The borrowing helped pull economies out of the nasty recession, but left them with high debt burdens that make it harder for policy makers to raise rates. It also makes consumers and businesses more likely to pull back from spending money on new goods if economic conditions weaken.
6. China's foreign exchange reserves rose unexpectedly in August, even as the yuan posted its biggest monthly drop in 25 years amid escalating trade tensions with the United States. The country's foreign exchange reserves - the world's largest - rose by $3.5 billion in August to $3.1072 trillion, central bank data showed on Saturday. Economists polled by Reuters had expected reserves would fall $4 billion from July to $3.100 trillion, likely due to fluctuations in global exchange rates and the prices of foreign bonds that China holds.
7. Companies across the world, from iPhone maker Apple to German financial technology group Wirecard, sold more bonds this week than ever before, abruptly waking the market from its summer slumber to take advantage of historically low borrowing costs. Investors lapped up more than $140 billion of new corporate bonds, marking the biggest weekly volume to hit global markets on record, according to data from Dealogic. The debt binge was fueled by investment-grade companies in the US where $72 billion was raised across 45 deals in a single week, roughly equalling the total issued in the whole of August.
8. Russians today are voting in local elections after weeks of opposition protests that led to the biggest police crackdown on dissent in nearly a decade. The elections take place a day after Moscow and Kiev carried out a long-awaited swap of 70 prisoners, a deal hailed as a first step towards ending five years of conflict after Moscow’s annexation of Crimea. Municipal and regional polls are being held across the vast country, but most attention is focused on the Moscow parliament vote following the arrests and incarcerations of independent would-be candidates and their supporters. In St. Petersburg, Russia's political rot is on full display.
9. President Trump said on Saturday that he had canceled a secret meeting at Camp David with Taliban leaders and the president of Afghanistan and was calling off monthslong negotiations that had appeared to be nearing a peace agreement. “Unbeknownst to almost everyone,” Mr. Trump wrote in a series of tweets, Taliban leaders and the Afghan president, Ashraf Ghani, were headed to the United States on Saturday for what would have been a politically fraught meeting at the president’s official Camp David retreat in Maryland. But Mr. Trump said that “in order to build false leverage,” the Taliban had admitted to a suicide car bomb attack on Thursday that had killed an American soldier and 11 others in the capital of Kabul. “I immediately cancelled the meeting and called off peace negotiations,” he wrote.
10. Iran said it was no longer abiding by limits imposed on its uranium enrichment and centrifuge research by the nuclear accord, throwing down a new challenge to European leaders struggling to sustain their diplomatic push to calm the Gulf. The Islamic Republic will forge ahead with plans to develop its advanced centrifuges and has started injecting them with gas, Behrouz Kamalvandi, spokesman for the Atomic Energy Organization of Iran, said on Saturday in a press conference -- a breach of a time-frame agreed within the 2015 deal.
11. Amber Rudd is resigning from the cabinet and quitting the Conservative Party in disgust at Boris Johnson’s “purge” of the party and his “failure” to pursue a deal with the EU. In a bombshell move that will rock the government, the work and pensions secretary says she is quitting because there is “no evidence” Johnson is seeking a deal with the European Union — despite claims that it is his priority. In an explosive interview with The Sunday Times, Rudd also attacked the prime minister’s decision to kick out 21 senior Tories last week — including the former chancellors Ken Clarke and Philip Hammond and Churchill’s grandson Sir Nicholas Soames — as an “assault on decency and democracy.”
12. Boris Johnson was under pressure from cabinet ministers last night to abandon his Brexit strategy and “come up with a plan B” after opposition parties pledged to veto any bid for a general election before he asks the EU for an extension. In a blow to Downing Street’s strategy, Jeremy Corbyn told other rebel leaders that Labour would refuse to support an election date if it fell before Brussels had agreed a delay to Brexit. It came as the House of Lords passed into law a bill that would force Mr Johnson to seek a three-month Brexit extension if he has not reached a deal with the EU by October 19.
13. Days after announcing his intent to stay at the MIT Media Lab and begin a process of “restorative healing,” Joichi Ito, its director, has resigned over his ties to financier and alleged sex trafficker Jeffrey Epstein. The announcement comes less than a day after damning new allegations from The New Yorker and The New York Times that Ito’s ties to Epstein were more extensive and secretive than he’d previously admitted. The president of MIT called for an independent investigation, saying that The New Yorker report about the Media Lab’s ties to Epstein contained “deeply disturbing allegations.”
14. In the ongoing war for control of the digital space that is the modern car, Google just conquered a major swath of territory. This week, it and General Motors announced that the tech giant’s Android operating system will underpin the infotainment systems in GM’s cars, starting with some model year 2022 vehicles. For future Chevy, Cadillac, Buick, and GMC drivers, that means built-in access to Google Maps and the ability to use Google Assistant to make calls, send texts, tune the radio, and more, without plugging in their phones. For GM, it’s an admission that people don’t want its house-made infotainment tech, and to give them what they do want. For Google, it’s more direct access to more consumers—GM accounts for 17 percent of new car sales in the US—in the rare place where they’re not supposed to have their phone in their hand.
Quick Links: Isis’s latest weapon? Cows in suicide vests. Netanyahu braces for a warming of ties between Trump and Tehran. Saudi king names son Abdulaziz to key post of energy minister. The world's oil glut is much worse than it looks. Squeezed by debt and the US, Pakistan slows Belt and Road projects. As China ponders 'financial belt and road,' US stays cool to Facebook e-money. Sub-zero interest rate trend sends shivers through Asia. Berkshire taps Japan's hunger for yields with $4 billion bond debut. A tiny Pacific island nation is about to issue its own cryptocurrency. Andrew Ng talks Artificial Intelligence. A mini revolution in brain science. Google is banning ads for quack cures after years of profiting from them. The NFL's best receiver, Antonio Brown, works for Bill Belichick now. Great writing on a tight deadline looks like this: Sally Jenkins on Serena Williams. NFL scrambles for attention from Chinese sports fans. The NFL will stream games once it's good and ready, just not yet. It's never too late, apparently.
Political Links: Stan Greenberg: "The year 2020 will produce a second blue wave on at least the scale of the first in 2018." Trump campaign manager: "The Trumps will be a dynasty that lasts for decades." Ex-Starbucks CEO Howard Schultz says he won’t run for president. Washington Post/ABC News (national) poll: Three front-runners emerge. Biden, Warren tied in Massachusetts poll. It's a three-way race in New Hampshire. Warren stands out as NH Democratic Party convention. Maine to allow ranked-choice voting in presidential election. Republicans to scrap primaries and caucuses as Trump challengers cry foul. Dominic Cummings is the new Steve Bannon. David Cameron is a "girly swot." The coming boom in political incorrectness. Turns out, you do need a weatherman to know which way the wind blows.