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

    How to Keep Thieves From Stealing Your PIN at the ATM

    This article from the Wall Street Journal may be of interest to subscribers. Here is a section: 

    What’s more, no-name ATMs are often free-standing and not built into the wall, like those at banks. That means they’re easier to get inside of and thus more susceptible to skimming and other crimes, says Brian Krebs, who covers computer security and cyber crime at krebsonsecurity.com. (In fact, if you can see the top of an ATM, that’s a big warning sign, he says.)

    That said, third-party ATMs are hardly the only machines to look out for. Says Mr. Rosenberg: “I’m pretty sure every type of ATM has had skimmers on them.”

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    On Target June 11th 2019

    Thanks to Martin Spring for this edition of his ever-interesting report. Here is a section on China’s tech ambitions:

    The FT reports that the US ban on infotech trade with China could be a problem for Google as its Android system is “central to the smartphone market in China, which is bigger than Europe and the US combined, due to its use by Huawei and other [Chinese] phonemakers include Oppo and Xiaomi.”

    Chinese president Xi Jinping has spoken openly about his plans for China to gain global dominance in future high technologies in just SIX years’ time. Their foundation will be China’s capacity to design and manufacture cutting-edge semiconductor chips. $150 billion is being poured into achieving that. However, so far subsidies and tax breaks have only lifted China’s self-reliance in low-value chips.

    The Americans are clearly using the current “trade war” to hinder Xi’s ambitious plans by demanding that the Chinese cease their theft of intellectual property, and of using their negotiating power to force technology transfers as part of the price of allowing joint ventures to operate in their huge domestic market. 20 per cent of European companies doing business in China, for example, say they are compelled to hand over technology to Chinese partners.

    It’s unlikely the Americans will succeed in getting the Chinese to play fair. Agreeing to trade-balancing deals would be one thing. Agreeing to stop their massive co-ordinated attack on the heights of leading-edge industries would be something else. It’s certain they’ll renege on any promises about that they have to give.

    Ironically, cutting Chinese access to American components and technology, or merely threatening to do so, is the strongest incentive of all to stimulate Chinese development of high-tech sectors.

    Investors have generally taken the view that the ugly contest between Trump and Xi will be resolved in a “deal” that the American president can claim to be a victory, but Xi can present as a fair agreement. That still seems to be the likely outcome.

    As for the arms race… that still has much further to run. It will be a key part of the long-term strategic contest between the hegemon and its fast-growing global challenger.

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    China Sets Yuan Fixing Stronger Than Expected in Sign of Defense

    This article by Tian Chen and Ran Li for Bloomberg may be of interest to subscribers. Here is a section:

    "Forget about the psychological 7 level," said Khoon Goh, head of research at Australia & New Zealand Banking Group Ltd., adding that the fixing will stay stronger than 6.9 before the Group of 20 summit. "Today’s fixing sends a clear message that the authorities are still intent on keeping the yuan stable, and
    have no desire to see it weaken further."

    Trump Says He’ll Raise China Tariffs If Xi Won’t Meet at G-20 U.S. President Donald Trump and his Chinese counterpart Xi Jinping may meet at the G-20 summit in Osaka this month. Traders will be closely watching the gathering to gauge the outlook for trade negotiations and the yuan.

    "We expect the Chinese authorities to continue defend 7 in the foreseeable future," said Becky Liu, head of China macro strategy at Standard Chartered Plc, adding that a negative outcome at the G-20 summit wouldn’t warrant a change in this stance. "The PBOC may step up the size and frequency of bill issuance should the yuan come under greater depreciation pressures."

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    BOE Hike Warnings Go Unheeded as Rate Cuts Seen as More Likely

    This article by David Goodman for Bloomberg may be of interest to subscribers. Here is a section

    Bank of England policy makers and investors are taking contrasting views of the U.K. economy as official warnings of potential interest rate hikes clash with market predictions for a cut.

    The market moves are partly based on a belief that the U.S. Federal Reserve is on course to reverse its recent hiking path, forcing central banks around the world to follow suit, but also reflect the drastically different Brexit outcome built into investors’ outlook.

    While the BOE’s forecasts -- including its hawkish view of longer-term inflation -- are based on the assumption of a smooth Brexit process, investors have the luxury of being more nimble, and so have increasingly priced in the risk of a no-deal departure in October. That’s not without reason, since no deal is a policy advanced by a number of potential candidates to replace Theresa May as prime minister this summer. There are also nascent signs that BOE officials are ending their year of unanimity, with some edging closer to the market’s view.

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    Email of the day on South African governance:

    In your recent big picture video, you outlined the possible trajectory of some of the emerging market currencies in a declining dollar environment. Some time ago I emailed in to state my reasons why I thought the ZAR might be one of the worst in the immediate future. Events since the recent election have only served to confirm that view. At the moment there is a struggle going on in the ANC regarding the mandate of the Central Bank The powerful ANC secretary general wants the mandate changed from the focus on inflation to include growth and jobs considerations. In a public statement this week, Mr Ace Magashule wants the bank to embark on a policy of "Quantity Easing" whatever that might mean!! This would inevitably send South Africa in the direction of Zimbabwe. This country could end up worse than Zim for the following reason.

    Recently, there have been a series of xenophobic attacks involving firebombing of trucks on some of the main motorways. Local companies have been employing drivers from Zimbabwe who are intelligent and highly motivated at the expense of local South Africans. The history of primary and secondary education could not be more different in these adjacent countries. Even under Mugabe the colonial legacy of education was left in charge of the churches who maintained a strong culture of teaching and learning rooted in Christian values. Zimbabwe still uses the Cambridge University exams for both "O" and "A" levels set in 1954. In South Africa, the Apartheid government passed the Bantu education act into law which took away the control of the churches and gave it to the state. This has proved to be an unmitigated disaster by any measure. The last thing South Africa needs right now is a huge population of poorly educated young people currently around 30% many of whom embrace a culture of entitlement

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    Email of the day - on silver miners:

    With the silver/gold ratio at multi-year lows, coupled with the adage that silver is high beta gold, I’ve been evaluating from a contrarian perspective whether to increase my exposure to silver whilst the market is in the depths of despair and await a possible turnaround. 

    The problem is where to venture as the fundamentals of virtually every silver producer are pretty scary, including CDE, which has been mentioned from time to time in your Comment of the Day.

    I came across this informative article which analyses in some detail the current state of the market and its various producers, the declining percentage of their production which is silver related, and their prospects of outperformance should the silver price recover. 

    I would appreciate your insight into this analysis and which companies, or ETF’s, you feel might be worth considering for investment.

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