Below are my top twelve news stories for the day with added commentary.
Representing the six-month outlook of 104 firms, the Thomson Reuters/INSEAD Asian Business Sentiment Index fell to 58 for the July-September quarter, its lowest since the fourth quarter of 2015, from 74 three months before.
It was a second straight quarter-on-quarter decline for the index and the pace of the fall was the steepest recorded since the survey began in 2009. A reading above 50 indicates a positive outlook.
If you are looking for a reason behind policy divergence, here is a big one. Asia business sentiment is very poor. And the fall in this index is precipitous, suggesting that an economic slowdown in Asia is on the horizon. This is even though Asian countries have avoided the biggest hits in the emerging markets crisis because of perceived good macro governance.
The big risk: a trade war. That was cited as the main business risk by respondents, with a slowdown in China next on the list. The two are definitely related because of supply chains that run through China.
Survey subindices showed companies in Thailand, Indonesia and India were the most optimistic. Businesses in metals and chemicals were the most upbeat along industry lines.
Oxfam said inequality had reached crisis levels, with the richest 1 per cent of the global population laying claim to four-fifths of wealth created between mid-2016 and mid-2017, while the poorest half saw no increase in wealth.
The index of 157 countries is being released as finance ministers and central bank chiefs gather in Bali for the World Bank and International Monetary Fund annual meetings…
It said tackling inequality did not depend on a country’s wealth, but on political will.
Singapore, one of the world’s richest countries, came in the bottom 10, partly because of practices which facilitate tax dodging, Oxfam said. The city state, which has no universal minimum wage, also did poorly on labour rights.
Clearly this is an agenda-led study by Oxfam because they point to redistribution as a positive outcome, citing “Denmark’s track record on progressive taxation, social spending and worker protections”. Nevertheless, think about this from the point of view of middle class angst, currently highest in developed Western economies. A lot of this is driven by the evisceration of the policies Oxfam is championing.
The question for Asia, given the impending economic slowdown identified there in the first story above, is whether those who scored poorly will see any social unrest as a result of having poor marks. I am thinking about India more than Singapore. Still, we should be asking that question across the board
The official gold reserves in mainland China have grown from 1,054 tonnes in the first quarter of 2015 to 1,839 tonnes in the third quarter of 2016, to 1,843 tonnes in the second quarter of 2018. The demand for gold among Chinese consumers also rose by 5 per cent in the second quarter from a year ago to 144.9 tonnes. Demand by Indian consumers declined in the same period by 8 per cent to 147.9 tonnes.
The market for gold bars and coins has also been boosted by China and Iran, as they seek to hedge against geopolitical tensions with the United States.
The US dollar will remain indispensable as a reserve currency. But this story points out why gold still has enormous value as a politically-neutral store of wealth. And as the US flexes its muscles, we can expect countries like China, Russia, and Iran to continue bulking up on their gold holdings.
“The media attention on this bond yield move is out of all proportion to the economic and financial implications of the bond yield move of course. This is hardly 1994,” Donovan told clients in Monday update.
Explaining further in an email to MarketWatch, he says the size of the bond-yield move last week is “too small to have any meaningful economic impact. Indeed, the real yield this year (deflating by CPI) has barely moved at all – a 20bp increase in real yields (approx.) is hardly cause for panic.”
What’s more, there’s no big shift in economic data, which has come in just as economist have expected, backing up that bond move, nor any big move in expectations about the Fed. “The Fed debate has resolved into the rather academic argument about the position of the neutral interest rate, not about the pace of tightening accelerating or decelerating,” he says.
“Compare this to 1994. There was a rise in yields of approx. 250bp. This was entirely a real yield increase. There are economic consequences from that sort of a move in nominal and real yields, and thus that was a bond market move that mattered,” says Donovan.
Let’s also remember that 1994 was a mid-cycle pause i.e. there was no recession. As I’ve ben saying, the modest rise in rates is actually bullish because it says markets no longer believe Fed hikes will have to be withdrawn over the medium term due to a flagging economy. Instead, the higher rates are a signal that bond markets believe that the economy can withstand rising rates without collapsing.
There may be investment strategies that never, ever, ever have bad periods. A fair amount of those turn out to be scams.. Real-world investment strategies that are relatively uncorrelated to markets and have positive long-term average returns and are scalable are hard to create. But they don’t generate win-every-day, win-every-month, win-every-year risk-adjusted returns. We absolutely expect to win long term, or we wouldn’t do it. I think the evidence bears out that we do.
Isn’t that what hedge funds are supposed to be about – “investment strategies that are relatively uncorrelated to markets and have positive long-term average returns”?
When the market’s up, it’s hard to generate outsized returns without increasing risk. So that’s when you would expect hedge funds to underperform. Moreover, if they reach for the fences to differentiate themselves in an up market, that could lead to catastrophic losses that can’t be recouped – not what you want in an alternative investment.
Portal and Portal Plus, which have a 12-megapixel camera with high-definition video and artificial intelligence software, can be used to do video chats. The A.I.-powered camera follows users as they move, letting them converse without sitting stiffly. The devices also include Amazon’s Alexa, which people can command to play music or check the weather…
Yet Facebook’s timing could not be worse. After two years of scandals, it will be marketing Portal and Portal Plus to a skeptical public. Last month, the company also announced a security breach that put the accounts of at least 50 million users at risk, while endangering the accounts of numerous third-party apps.
I think Facebook has run out of runway. People are now much more aware of privacy as an important security issue. I don’t anticipate these products will be successful. And it makes clear that Facebook is now at a loss on how to spark future revenue growth. They are not well-positioned for the Internet of the future, in my opinion.
Google is following Facebook and Amazon by launching a new smart speaker with a screen, allowing users to see responses from their virtual assistants as well as hear them.
But unlike its rivals, Google’s new Home Hub, revealed at an event in New York on Tuesday, comes without a camera. Google is hoping to avoid the kinds of privacy concerns that have already cropped up around Facebook’s new Portal device, which was unveiled on Monday.
Google has many of the same privacy problems that Facebook has. But it is better positioned for revenue growth because it’s not as dependent on advertising for revenue. And this is especially true now, at the top of the cycle, given that ad revenue is heavily pro-cyclical.
All of these companies are competing to get into the home. This includes Amazon, Apple, Google and now Facebook. Right now, Amazon and Google are best positioned via Alexa and Nest. Facebook is in the worst position.
Europe’s General Data Protection Regulation, which went into effect in May of this year, requires companies to notify regulators of breaches within 72 hours, under threat of a maximum fine of 2% of world-wide revenue. The information potentially leaked via Google’s API would constitute personal information under GDPR, but because the problem was discovered in March, it wouldn’t have been covered under the European regulation, Mr. Saikali said.
Google could also face class-action lawsuits over its decision not to disclose the incident, Mr. Saikali said. “The story here that the plaintiffs will tell is that Google knew something here and hid it. That by itself is enough to make the lawyers salivate,” he said.
I am in the process of trying to reduce the amount of data I have stored with big tech companies that have a suite of products. It’s clear to me that having too much data in one place is a security risk. And as these companies grow into 100 different verticals, the potential for a catastrophic leak of your data grows too. Personally, given the choice, I would rather go with a smaller vendor, with a concentration in a single vertical rather than one of the US tech behemoths.
Mrs May would face an almost impossible task of getting her deal through the House of Commons if such a large number of Tories rebelled against the Government.
Mrs May is already reliant on the support of 10 DUP MPs to command a majority in the Commons, with Labour having said it will likely vote against any deal brought forward by the PM.
It’s still not clear to me that Brexit will happen. In the meantime, the lack of certainty will dampen growth in the UK, impacting asset markets, lowering interest rates and the currency.
Viktoria Marinova has become the third journalist to be killed in an EU member state in the past year. The body of the Bulgarian television presenter was found in a park in the Danube town of Ruse on Saturday.
Marinova’s violent death follows that of Slovakian journalist Jan Kuciak in February and the assassination of Maltese investigative reporter Daphne Caruana Galizia in a car-bomb attack in October 2017.
Notice that these violent deaths are occurring in the newer EU countries. I would argue that the EU’s desire to expand the EU has come at a great cost to cohesion. Moreover, as we see in these examples, the new EU states often operate with a much lower set of standards regarding democracy, freedom and corruption.
The knock against the southern European states that joined the EU over 35 years ago was mainly around corruption. Remarkably, since that time, we have never seen assassinations of the press or threats of authoritarian government as far as I can remember. Please correct me if I’m wrong regarding Spain, Portugal and Greece.
Media companies are doubling down on even more politics, to generate even higher ratings and more clicks, as audiences seems to crave all politics, all the time. This is your life on politics.
Over the past two years, media companies have enjoyed high ratings and engagement from Trump coverage, and for the networks, at a relatively low cost…
Fox News scored its highest Saturday primetime viewership since the 2003 Iraq War during Saturday’s Kavanaugh confirmation.
MSNBC has also surged: “It was in the top 25-30 in terms of Nielsen ratings for total audience. [E]ver since the advent of Trump — it’s now become the top two or three basic cable network in terms of total audience,” TV Newser editor A.J. Katz tells Axios.
This is shameful, frankly. Trump is right when he says the media companies need him, because he drives their ratings. They are literally hyping the political frenzy in order to make more money off of it. And you wonder why we live in a hyper-partisan atmosphere!