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EU official dismisses earlier report, says “no bold new offer is coming”

  
  Analysis
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Reuters reports, citing an EU official on the matter

Adds that EU diplomats have said that the report is “not true” and have dismissed it as “spin” amid ongoing Brexit negotiations. The Guardian’s Brussels correspondent, Jennifer Rankin, adds to the above claim with a tweet earlier:

“The EU is *not* about to make a big bold offer to allow Stormont to exit part of the Brexit withdrawal agreement, in order to break the Brexit deadlock I hear from EU sources.”

Not like it matters all too much now after we have heard from the DUP on the matter

China’s gold reserves data shows the country bought more again in September – up for the 10th month in a row

  
Analysis, Gold / Silver
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Data from the People’s Bank of China for the month of September 2019

  • China’s gold holdings 62.64 mln ounces compared with 62.45 at the end of August
This is the 10th month in succession gold holdings have increased in China.

Big Tech wins US talent war as Trump visa policy hurts Indian IT

  
  Analysis
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While the immigration policies of U.S. President Donald Trump give the impression of slamming the door on foreign talent, a closer look at visa data shows that the big four American tech companies are accelerating their drive to attract and retain highly skilled professionals.

In contrast, the biggest losers are Indian information technology companies, such as Cognizant Technology Solutions, Infosys and Tata Consultancy Services, who had long been the biggest employers of foreign IT talent in the U.S.

At issue is the H-1B visa, the permit that allows foreign talent with specialized skills to reside and work in the U.S. for up to six years. People from India, especially with computer skills, account for the biggest percentage — 74% — of H-1B visa applicants, followed by those from China at 11%.

Workers who enter the U.S. under the H-1B have the opportunity to apply for permanent residency and start their own business. The prospect of the American dream has enabled the U.S. to attract some of the best minds in the world and has been the engine of innovation in the country.

(more…)

Brazil’s central bank cuts benchmark rate by 50bps

  
  Analysis
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Banco Central do Brasil: “That’s not a rate cut, THIS is a rate cut!”

50bps cut from Brazil’s central bank.
  • decision was unanimous
  • consolidation of benign inflation outlook should give room for additional policy stimulus
  • says economic data since last meeting consistent with gradual recovery
  • global economic outlook uncertain, risks of greater slowdown persist
  • underlying inflation at comfortable levels
  • sees inflation moving back to target over the relevant time horizon, which includes 2020 calendar yearbut sees inflation risk in both directions

Headlines via Reuters

Cut to 5.5%, which I think is the lowest seen in Brazil?

The 3 reasons EUR has bottomed against the USD and yen

  
Analysis, Forex
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A quick snippet from Mizuho in Japan on the euro. Citing three reasons it has bottomed out:

  • European Central Bank’s easing options are limited
  • Brexit uncertainties a negative for GBP against EUR
  • Chatter of fiscal stimulus
On the ECB:
  • to hold back from restarting asset purchases on Thursday
  • likely to cut negative policy rate further, to -0.5%, but room for further cuts is limited
Forecast:
  • 1.15 possible by year-end
A quick snippet from Mizuho in Japan on the euro. Citing three reasons it has bottomed out:Last one for Dr. D

Huawei: US launched cyber-attacks against its systems

  
  Analysis
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Huawei remarks in an emailed statement

Huawei
  • US government is trying to disrupt its normal operations
  • US instructed law enforcement to threaten its workers
This once again shows that any dispute between the two nations extends beyond the realms of trade. It also highlights why China is adamant to involve Huawei operations with any “trade deal” that may come about between both parties.
The headlines above certainly won’t go down well with sentiment as it risks a further divide between the US and Chinese camps, who are still trying to sort out a meeting this month.

Here are the rate cut steps expected from the PBOC, perhaps as soon as next month

  
Analysis, Economy
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A report from Reuters outlines the likely path for People’s Bank of China interest rate cuts, maybe as early as September.

  • expected to first reduce their funding costs by lowering the rate on its medium-term lending facility (MLF)
  • That will open the door for a cut in the PBOC’s new benchmark lending rate, the loan prime rate (LPR), the next time it is set on September 20
  • he MLF forms the basis for the new LPR rate, but banks can add a premium to reflect funding costs and credit risks
  • In what was seen as a symbolic move, the revamped one-year LPR was set at 4.25% last week, down 6 basis points (bps) from 4.31% previously and 10 bps lower than the existing benchmark one-year lending rate, which will still apply to older loans
Article was overnight, so an ICYMI, link here for more.
PBOC Gov Yi Gang:
A report from Reuters outlines the likely path for People's Bank of China interest rate cuts, maybe as early as September. 

Huawei founder expects no relief from US sanctions

  
  Analysis
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Huawei founder, Ren Zhengfei, spoke to the Associated Press

Huawei

He also adds that he doesn’t want relief from US sanctions if it would require China to make concessions in a tariffs war, even if that means his daughter – who is under house arrest in Canada – faces a more prolonged legal battle.

With regards to yesterday’s announcement by the US on adding more of Huawei’s subsidiaries to the entity list, he says that:

“Whether the entity list is extended or not, that will not have a substantial impact on Huawei’s business. We can do well without relying on American companies.”

If there’s any takeaway from the message here is that China isn’t going to let up on fighting back against the US even if the sanctions and tariffs continue.
It goes without saying that the next plausible form of retaliation by China would be to limit US business opportunities in the country.
Anyway, the full interview above can be found here.

Asset Managers With $74 Trillion on Brink of Historic Shakeout

  
  Analysis
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This is quite amazing via Bloomberg:

“The industry that gave rise to investing titans Peter Lynch, Bill Miller and Bill Gross is facing an existential crisis.

For years, mom-and-pop investors frustrated by high fees and subpar returns from big-name money managers have been shifting their savings into ultra-cheap funds that simply mimic the returns generated by benchmark stock and bond indexes. Passive investing, as it is known, was in. Active was out.

At first, few noticed the trickle of money out of funds run by star money managers into cheaper index products. But now, no one can ignore the flood. The exodus from active funds has sent fees inexorably lower, led to the loss of thousands of jobs and forced large-scale consolidation among firms. That’s pushing the industry, with $74 trillion in assets as measured by Boston Consulting Group, towards a shakeout where only the strongest will survive.”

 

The graphic tells the story:

Whistleblowers accuse Standard Chartered of $57bn in Iran deals

  
Analysis, Politics
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 Standard Chartered has been accused of handling $56.8bn of dollars in allegedly illegal transactions with Iran-connected entities in a civil suit brought by whistleblowers against the bank.

The whistleblowers allege StanChart cleared far more transactions in violation of Iran sanctions between 2009 and 2014 than the U.S. government used as the basis for fines paid by the bank in April.

The new claim filed on Thursday piles further legal woes on the emerging markets bank which has been hit with a series of penalties by U.S. law enforcement and regulators in the past seven years for lax financial controls and for handling transactions for companies in Iran and other sanctioned countries.

In April StanChart agreed to pay $1.1bn to settle charges that it violated sanctions and ignored red flags about its customers, after a multiyear investigation that followed settlements with U.S. authorities in 2012.

The settlement included a guilty plea by a former bank employee and a criminal indictment against a StanChart customer. It came shortly after the Trump administration began stepping up its pressure on Iran through additional sanctions. (more…)

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