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

    Powell Signals Openness to Cut If Needed Over Trade Tensions

    This article by Matthew Boesler and Christopher Condon for Bloomberg may be of interest to subscribers. Here is a section:

    Federal Reserve Chairman Jerome Powell signaled an openness to cut interest rates if necessary, pledging to keep a close watch on fallout from a deepening set of disputes between the U.S. and its largest trading partners.

    Referring to “trade negotiations and other matters,” Powell said Tuesday in Chicago that “we do not know how or when these issues will be resolved.”

    “We are closely monitoring the implications of these developments for the U.S. economic outlook and, as always, we will act as appropriate to sustain the expansion, with a strong labor market and inflation near our symmetric 2% objective,” Powell said in opening remarks at a conference at the Chicago Fed.

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    Woodford Confronts Career Crisis After Freezing Fund Withdrawals

    This article by Suzy Waite and Nishant Kumar for Bloomberg may be of interest to subscribers. Here is a section:

    The decision to freeze withdrawals gives Woodford time to position illiquid holdings, the company said in a statement late Monday. While investments in unlisted securities are unusual for a mutual fund, Woodford hasn’t shied away from them.

    Two of the top 10 holdings in Woodford’s main fund, accounting for about 7% of assets, were in private companies. A significant drop in size could undermine Woodford’s ability to run the fund effectively, Hargreaves Lansdown said in a statement explaining its decision to remove that fund and the Income Focus Fund from its list.

    Freezing withdrawals "is a difficult to decision to make," said Emma Wall, Hargreaves’s head of investment. "It’s disturbing for investors. Any negative news like this is worrying. But it gives him the breathing space to get on being an investor rather than constantly worrying about redemptions. He can use these 28 days to offload illiquid assets, which he’s doing anyway.”

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    One Month, 500,000 Face Scans: How China Is Using A.I. to Profile a Minority

    This article by Paul Mazur from New York Times, dated April 14th may be of interest to subscribers. Here is a section:

    Chinese authorities already maintain a vast surveillance net, including tracking people’s DNA, in the western region of Xinjiang, which many Uighurs call home. But the scope of the new systems, previously unreported, extends that monitoring into many other corners of the country.

    The police are now using facial recognition technology to target Uighurs in wealthy eastern cities like Hangzhou and Wenzhou and across the coastal province of Fujian, said two of the people. Law enforcement in the central Chinese city of Sanmenxia, along the Yellow River, ran a system that over the course of a month this year screened whether residents were Uighurs 500,000 times.

    Police documents show demand for such capabilities is spreading. Almost two dozen police departments in 16 different provinces and regions across China sought such technology beginning in 2018, according to procurement documents. Law enforcement from the central province of Shaanxi, for example, aimed to acquire a smart camera system last year that “should support facial recognition to identify Uighur/non-Uighur attributes.”

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    As China's Debt Balloons, Emerging Markets Fail to Take Off

    This article by John Authers and Lauren Leatherby for Bloomberg may be of interest to subscribers. Here is a section:

    Within China, all forms of debt have risen, reflecting a shift in the dynamics of its economy. Before the crisis, China had largely managed to finance its growth without recourse to much debt. The inflows from exports had done the job. The population, fast reaching middle-class living standards, still tended to fund itself conservatively. But household debt has almost tripled from 18.8% of China’s GDP before the crisis to 51.2%. All this debt has successively less impact in stimulating economic growth.

    There are reasons why China’s debt is not creating greater fears. If countries want to avoid crisis, issuing a greater share of debt in their own currency is key. This avoids the risk that a devaluation can force them into default, and it leaves them with the option—not necessarily a good one—of printing money to escape difficulties.

    China does more than 90% of its borrowing in local currency, which limits the risks somewhat. Meanwhile, almost all large emerging markets now do more than half of their borrowing in their own currency. But not all emerging markets have made uniform progress in converting to local market debt. The two biggest exceptions are Argentina and Turkey—and it is no coincidence that these two countries both slipped into crisis during 2018 as a strong dollar put pressure on their currencies.

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    Google, Facebook Tumble Amid Heightened Antitrust Scrutiny

    This article by Gerrit De Vynck and David McLaughlin for Bloomberg may be of interest to subscribers. Here is a section:

    American antitrust officials are under increasing pressure from both Democratic and Republican lawmakers to step up scrutiny of technology giants, and several presidential candidates have already weighed in. Massachusetts Senator Elizabeth Warren laid out a detailed plan for breaking up the
    tech giants in March.

    European officials have already been aggressively pursuing antitrust cases against American tech firms, including Google, while so far the U.S. has been mostly hands-off.  That may be changing amid continuing criticism that lax enforcement in the U.S. has allowed tech platforms to dominate their markets. The FTC earlier this year set up a task force to examine the conduct of tech companies and their past mergers.

    President Donald Trump and many Republicans have complained that Facebook, Google and Twitter Inc. suppress conservative views.

    Google, with a sprawling empire of businesses that could feasibly be targets, is in the dark about the focus of the investigation and hopes to learn more this week, according to another person familiar with the situation.

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    What Trade War? Africa Sidesteps Tariffs, Starts Free-Trade Pact

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

    Africa, largely ignored in a U.S.-China trade war that could roil economies worldwide, is quietly piecing together the world’s largest free-trade zone.

    The African Continental Free Trade Area comes into force on paper on Thursday after the required 22 countries ratified the deal a month ago. Once it’s passed by all 55 nations recognized as part of the African Union, it would cover a market of 1.2 billion people, with a combined gross domestic product of $2.5 trillion. The potential benefits are obvious, if the usual hurdles of nationalism and protectionism don’t yet stand in the way.

    The deal would help the continent move away from mainly exporting commodities to build manufacturing capacity and industrialize, said Jakkie Cilliers, head of African Futures and Innovation at the Pretoria-based Institute for Security Studies. Boosting intra-regional trade would spur the construction of roads and railways, reducing the infrastructure gap in Africa, he said.

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