David Fuller and Eoin Treacy's Comment of the Day
Category - General

    Rates Could Soar or Go Negative as Fed Pause Divides Wall Street

    This article for by Liz Capo McCormick Bloomberg may be of interest to subscribers. Here is a section:

    The message from the Fed, combined with solid U.S. job creation last month and optimism about U.S.-China trade talks, has pushed expectations for the next rate cut well into 2020. Fed fund futures aren’t penciling in a full quarter point cut until about September.

    The yield move London-based Panigirtzoglou envisions would mirror what happened when the Fed engineered a similar three-quarter-point cut in a counter cycle maneuver in 1995. JPMorgan’s U.S.-based rates team is more sanguine, lifting its Treasury yield forecasts to 1.65% for year-end 2019 and 1.85% for mid-2020. That would be little changed from around 1.79% Monday.

    Panigirtzoglou did add some big caveats to his bolder prediction. It assumes that the U.S. macro picture remains consistent with a mid-cycle adjustment, with resilience in employment and consumer confidence, as well as a rebound in manufacturing.

    This section continues in the Subscriber's Area.

    Germany Hopes for Positive Outcome for EU-U.S. Trade Talks

    This note by Birgit Jennen for Bloomberg may be of interest: 

    Germany is hopeful for a positive outcome in trade talks between the U.S. and the EU, Economy Ministry spokeswoman Katharina Grave says Monday in a regular government press briefing.

    “We need less, not more tariffs,” she said
    The government has taken note of comments from U.S. Commerce Secretary Wilbur Ross that tariffs may not be levied on autos imported from the EU
    NOTE, Nov. 3: U.S. May Not Need to Put Tariffs on European Cars, Ross Says

    This section continues in the Subscriber's Area.

    5 Things You Should Know About Trends Investing

    This report from Robeco champions the idea of thematic investing and betting on leaders. Here is a section on intangible assets:

    Among the business models that are gaining in prominence are the ones that rely on intangible assets – such as intellectual property or reputation – and such models are valued the most by the market. This stands in stark contrast to firms than mostly own tangible assets – whether these are machinery, buildings or land. If we look at the S&P 500’s market value, we see that the share of intangible components in company value has grown from 17% in 1975 to 84% in 2015.

    Of the intangible assets, the ones with intellectual capital and consumer trust take center stage as the most valuable. The ability to offer customized and even personalized products and services is becoming a more important way to gain a competitive advantage. Companies that have access to intellectual property such as patents, copyrights and trademarks, as well as software source codes, are well positioned. This is typical for sectors such as biotech, technology and pharmaceuticals.

    Networked businesses such as digital networks and digital marketplaces are well positioned, too. This is because a business model involving value networks – those that facilitate commercial and/or social interaction – has proven to be the most disruptive. Examples are virtual marketplaces and peer-to-peer networks and those that rely on the collaborative use of assets as agents of the ‘sharing economy’. These value networks are found primarily in asset-light, information-heavy industries: information technology, financials, media and retailing. These business models have already been successfully rolled out – Skype in telecommunications, PayPal in financial services, Amazon in retailing, Airbnb in lodging and Uber in transportation. And, they have disrupted the existing industries.

    Networked businesses and other ventures with intangible and digital assets tend to have a winning business model. Industries with physical assets – buildings, machinery or land – that can either be digitized, digitally knit together into a network or both, are vulnerable to disruption.

    This section continues in the Subscriber's Area.

    Gold Dips After Traders Weigh Hiring Resilience, Factories Flub

    This article by Justina Vasquez for Bloomberg may be of interest to subscribers. Here is a section:

    “The jobs data was not really inflationary but very good for the stock market,” George Gero, a managing director at RBC Wealth Management, said by phone Friday. “On the other hand, you don’t see any kind of a sell-off because of all the global worries. So now it’s a waiting game to see what will happen with interest rates and the stock market and all the worries.”

    This section continues in the Subscriber's Area.

    State of AI Report 2019

    Thanks to a subscriber for this report for stateof.ai which may be of interest. Here is a brief section on robotics:

    Certain Chinese industrial companies have automated away 40% of their human workforce over the past 3 years. This could be due in part to China’s annual robot install-base growing 500% since 2012 (vs. 112% in Europe). However, it’s unclear to what extent AI software runs these installed robots or has contributed to their proliferation.

    This section continues in the Subscriber's Area.

    China Bans Anti-Blockchain Sentiment As It Prepares For Launch of State Cryptocurrency

    Thanks to a subscriber for this article from the Independent which may be of interest. Here is a section:

    It is understood that the new law will precede the launch of China's state-backed cryptocurrency, which is expected to be unveiled early next year. No specific dates have been given but in August a senior official at China's central bank said it was "close to being out".

    China's interest in the space appears to have had a positive impact on already established cryptocurrencies like bitcoin, which some say add legitimacy to the cryptocurrency industry.

    China's plans were accredited for bitcoin's recent price surge that saw its value rise from below $7,500 to above $10,000 in the space of just a few hours. 

    “This is a clear signal that the leader of the world’s second-largest economy is moving towards embracing the technology – in which Bitcoin plays a vital part – and therefore taken as a positive boost for the whole digital currencies sector," Nigel Green, CEO of financial advisory firm deVere Group, told The Independent.

    “Perhaps quite sensibly, investors could not ignore the comments and sentiment expressed by President Xi and reacted by increasing exposure to bitcoin. It also comes as China is said to be developing its own national digital currency, which is further proof that in some form or another, digital currency is the future."

    This section continues in the Subscriber's Area.

    Yes Bank Gets Binding Offer for $1.2 Billion Stake Sale

    This article by Suvashree Ghosh for Bloomberg may be of interest to subscribers. Here is a section:

    “If they are able to raise this capital then it will sustain Yes Bank’s growth for next one year,” said Kranthi Bathini, director at Wealthmills Securities Pvt. “But we need to know the name of the investor, timing of the capital infusion and the Reserve Bank of India’s comfort with this proposal.” Gill said in an interview earlier this month that the share sale will happen “much sooner than the market expects.” The company has been in talks with private equity investors,
    technology companies and family offices.

    This section continues in the Subscriber's Area.