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Aug.23 -- Gene Munster, Loup Ventures managing partner, and Bloomberg's Ian King discuss the impact of the escalating China-U.S. trade war on the tech industry. They speak with Bloomberg's Emily Chang on "Bloomberg Technology."
From posting on social media to calling an Uber, mobile devices are becoming the command center for guiding day-to-day activities. Financial institutions want to get in on the action as well according to an industry insider.
(Bloomberg) -- Terms of Trade is a daily newsletter that untangles a world embroiled in trade wars. Sign up here. Haven assets reigned as traders returned to their desks Monday after an action-packed weekend that saw tensions between the U.S. and China ratchet up again.Treasury 10-year yields dropped below 1.5% to their lowest since Aug. 2016, while the yen rallied as investors ramped up their bid for safety amid concerns that a bruising trade war will hamper global growth. The Turkish lira led a decline among emerging-market currencies.With the trade rift growing, investors have lifted bets on three more rate cuts in 2019 by the Federal Reserve. Chairman Jerome Powell’s warning at Jackson Hole Friday that the U.S. economy faces “significant risks” was quickly met with an exchange of more tariffs between the U.S. and China.“Escalation of the trade war could extend the bond rally further, with increased probability that U.S. 10s revisit all-time yield lows set in 2016,” - at 1.318%, wrote a team of strategists at Goldman Sachs Group Inc. including Praveen Korapaty. “Cross-border flows into U.S. dollar fixed income, driven by a surge in negative yielding debt, may not moderate without broad improvement in data.”U.S. equity futures fell as much as 1.6%, while stock markets in Tokyo, Australia and South Korea all opened lower on Monday. The yen advanced against all major currencies, climbing as much as 0.9% to 104.46, while bonds in Australia and New Zealand rallied. Treasury 10-year yields dropped as much as 7 basis points to 1.4695%.“Speculators will continue to push up bids for the yen,” said Yukio Ishizuki, senior currency strategist at Daiwa Securities Co. in Tokyo. “Japan’s authorities are likely to take a wait-and-see stance for now, but a rally above 100 per dollar could see some response”The Kiwi and the Aussie dollars dropped 1% as the Asian trading day got going on Monday. Meanwhile, the Turkish lira suddenly plunged as much as 12% against the yen in a flash crash, spurring speculation that Japanese retail investors were unwinding long positions.“The market now expects the trade tensions to unleash an even bigger deflationary force and growth hit than it did before last week,” said Marc Chandler, chief market strategist at Bannockburn Global Forex. “Haven currencies, like the yen and Swiss franc, will be in demand and those tied to growth -- including the Australian, New Zealand and Canadian dollar -- will be under pressure.”Leave ChinaWhile U.S. President Donald Trump’s additional tariffs fell short of speculation for a stronger response, such as currency intervention, he has threatened to force American companies to leave China.Treasury Secretary Steven Mnuchin, speaking on “Fox News Sunday” from the Group of Seven meeting in Biarritz, France, said Trump would have the ability under the International Emergency Economic Powers Act, if he declared an emergency. White House economic director Larry Kudlow agreed, in an interview on CNN’s “State of the Union,” but said “there’s nothing right now in the cards” to do so.“The trade war between the U.S. and China is now escalating at a bewildering pace, which is likely to trigger further market volatility and expectations of ever more aggressive monetary easing from the Federal Reserve,” said Patrick Wacker, a fund manager for emerging-market fixed income at UOB Asset Management Ltd. in Singapore. “The yuan will keep falling towards the bottom of its new near-term range of 7.05-7.25 against the dollar.”Trump’s piling on more criticism of Powell on Friday, coupled with his call to U.S. companies operating in China to consider leaving, pummeled markets going into the weekend. This backdrop also sent a key slice of the yield curve, which is closely watched as a gauge of an impending recession, further into inversion as traders’ viewed the growth outlook as more dire and ramp up bets the Fed cuts.The gap between three-month rates and yields on 10-year Treasury notes fell Monday to a low of minus 51 basis points, the most inverted since March 2007.“The market expects substantial rate cuts but the Fed isn’t moving along that line,” said Naokazu Koshimizu, senior rates strategist at Nomura Securities Co. in Tokyo. “Short-dated yields are struggling to fall even amid concern over a deterioration in the U.S. economy, leaving the yield curve prone to inversion.”There is roughly a $16 trillion pool of global debt with sub-zero rates. Treasuries have gained 8.4%, leaving them on track for their best annual performance since 2011, according to the Bloomberg Barclays U.S. Treasury Index.A dive in the greenback Friday also sparked renewed speculation the U.S. may intervene to weaken the currency.The Bloomberg Dollar Spot index sank 0.35% on Friday.Adding to the nervousness was a Group of Seven gathering in Biarritz, France, at which French President Emmanuel Macron appeared to anger the U.S. by seeking to put climate change at the top of the agenda.On Sunday, possible signs that Trump may be regretting being aggressive on China at the G-7 gathering soon abated when the White House said media misinterpreted his initial remarks. That confusion will only add more uncertainty to the outlook, some analysts predicted.White House Press Secretary Stephanie Grisham said that Trump doesn’t regret starting a trade war but he does have second thoughts on whether he should have hit the Chinese even harder.Trump’s comment followed by the reversal only “adds more uncertainty to markets, which increases the odds of a U.S. recession,” said Andrew Brenner, the head of international fixed-income at Natalliance Securities in New York.(Updates with Treasuries in second paragraph, analyst comment in 14th paragraph.)\--With assistance from Filipe Pacheco.To contact the reporters on this story: Netty Ismail in Dubai at firstname.lastname@example.org;Liz Capo McCormick in New York at email@example.com;Masaki Kondo in Singapore at firstname.lastname@example.orgTo contact the editors responsible for this story: Jenny Paris at email@example.com, ;Dana El Baltaji at firstname.lastname@example.org, Tan Hwee Ann, Cormac MullenFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
Based on Friday’s price action and the close at 97.530, the direction of the September U.S. Dollar Index on Monday is likely to be determined by trader reaction to the support cluster at 97.545 to 97.510.
(Bloomberg Opinion) -- When snack makers start to lament that Indians can’t afford to spend 5 rupees (7 cents) on biscuits,(1)it’s time to stop arguing over how much of the nation’s slowdown is cyclical and what part is structural.Considering its glaring income, wealth and consumption inequalities, India is a surprisingly calm society. However, when purchasing power dries up to the extent that rural laborers and urban blue-collar workers have to think twice about cheap munchies, then the situation is desperate. The culprit is deep-rooted wage suppression, a long-term issue that needs attention.Britannia Industries Ltd., the No. 1 Indian biscuit maker, recently sounded alarm bells over the sharp deceleration in its domestic sales volumes. Rival Parle Products Pvt. chimed in and said jobs were at risk for as many as 10,000 of its workers.A Parle executive blamed India’s 2017 goods and services tax, or GST. While the consumption tax may indeed have been an additional burden in an economy slowing under a disastrous November 2016 currency ban, the funk has its roots in insufficient wages. In recent years, only about a third of the economy’s income has gone to labor, with providers of debt and equity capital taking the rest, according to India Ratings and Research Pvt., a unit of Fitch Ratings. Raising that 33.2% labor share to the developing-country average of 37.4% would put an extra $100 billion of annual spending power in the hands of Indian households.Only then can India start facing up to the tougher challenge of reaching advanced-economy levels. It has a long way to go. The labor share of income in the U.S. was almost 57% in 2016, even after a near 10-percentage-point drop following World War II that was caused by technological changes and globalization, according to McKinsey & Co.Trouble is, the distribution of the Indian economic pie is more lopsided than the aggregate numbers suggest. As India Ratings’ analysis shows, 80% of the output generated in informal production gets used up in paying for capital, which is scarce; households get only 20% in exchange for toiling on farms and in cottage industries. At the same time, only 32% of the production of a bloated public sector is shared with the taxpayers and banks that provide the capital; as much as 68% goes to a privileged group of state and quasi-state workers who enjoy assured jobs and higher pay than they would in the private sector.The long-overdue privatization of inefficient behemoths like Air India Ltd. would reduce the wastage of capital in the public sector. But it won’t automatically help informal private businesses grow and become productive. In its first term, the government of Prime Minister Narendra Modi thought taxation would provide the required nudge. It set out to formalize entire supply chains by bringing even small firms under the ambit of the GST. The poorly designed, badly implemented plan backfired. Two years later, New Delhi is furious that it can’t meet revenue targets; its frustration is leading to an antagonistic stance toward firms. Meanwhile, industries from autos to biscuits are demanding lower GST rates. There’s no fiscal room to please all. The government hit the brakes on its own investments in the June quarter, amid an extended slump in private capital expenditure.Taxes aren't the solution. Easier hiring-and-firing norms – and not mere consolidation of archaic labor laws – will boost employment in more productive large firms that can pay better. If Amazon.com Inc. can build its largest global center in India, why should factories be afraid to scale up by hiring blue-collar workers? At the other end of the spectrum, small firms need finance.A yearlong liquidity crunch in the shadow banking industry has caused jitters in India’s market for loans-against-property, which is how midsize businesses finance themselves. But even the luxury of a $25,000 loan obtained by mortgaging property worth $350,000 isn’t for everyone, as Pratibha Chhabra, a financial inclusion specialist at the World Bank, notes. Most small firms only have inventory and invoices to pledge, and no lender wants to be left holding half-made chairs, or potatoes rotting in a warehouse.However, if a bank lending to a furniture maker or a potato farmer in India can get repaid directly by Ikea or PepisCo Inc. against certified invoices, it can share the benefit of the final customer’s creditworthiness with the borrowers. This is how Citigroup Inc. greases the global supply chain of 700 multinationals and their 70,000 vendors. Since most tiny businesses run on household labor, only statisticians will worry about whether wages or profits are getting the lift. Spending power in the economy will rise.Such financing is well established in developed markets, though in India “to efficiently finance small firms by locating them in larger supply chains will be the next frontier,” says Gaurav Arora, head of Asia Pacific at Greenwich Associates LLC.India is overdependent on Bangladesh’s model of microfinance, which uses group pressure and social shame to collect on exorbitantly priced – but collateral-free – small loans. The country is barking up the wrong tree. A woman doing embroidery on a sari will never get more than a fraction of what her craft will ultimately sell for. But she can be given access to cheap credit. Then, she’ll also be able to buy more biscuits for her children. (1) Cookies, to Americans.To contact the author of this story: Andy Mukherjee at email@example.comTo contact the editor responsible for this story: Matthew Brooker at firstname.lastname@example.orgThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Andy Mukherjee is a Bloomberg Opinion columnist covering industrial companies and financial services. He previously was a columnist for Reuters Breakingviews. He has also worked for the Straits Times, ET NOW and Bloomberg News.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
The Canadian Dollar rose 0.15% against the U.S. Dollar. Gains were limited by a steep drop in crude oil prices. The Euro posted a 0.46% gain against the dollar, but due to its heavy weighting, it had the biggest influence on the index’s decline.
Does the August share price for Verizon Communications Inc. (NYSE:VZ) reflect what it's really worth? Today, we will...
(Bloomberg) -- VMware Inc. agreed to purchase two software companies on Thursday, expanding its reach in development tools and cybersecurity.The Palo Alto, California-based company said the net cash payout for the two purchases will be $2.7 billion. It’s buying Pivotal Software Inc., which sells cloud software and services, for a blended share price of $11.71, representing an enterprise value of $2.7 billion. VMware also agreed to purchase Carbon Black Inc., a cybersecurity firm, for $26 a share, representing an enterprise value of $2.1 billion.VMware, which makes virtualization and networking tools and is majority-owned by Dell Technologies Inc., said the combined company will provide software to build, run, manage, connect and protect any app on the cloud or any device. Purchasing the two companies will accelerate VMware’s plan to deliver secure, multicloud application development.The two acquisitions “will meaningfully expand our ability to power our customer’s digital transformation,” said Pat Gelsinger, VMware’s chief executive officer.“These acquisitions address two critical technology priorities of all businesses today -- building modern, enterprise-grade applications and protecting enterprise workloads and clients,” he said.Pivotal CEO Rob Mee said, “Together, we will form an organization that combines Pivotal’s expertise modernizing organizations with VMware’s capabilities and experience operating at scale.”Once the deal for Waltham, Massachusetts-based Carbon Black is complete, VMware said it would be positioned to provide “highly differentiated, intrinsic security cloud” through big data, behavioral analytics and artificial intelligence.“We now have the opportunity to seamlessly integrate Carbon Black’s cloud native end point protection platform into all of VMware’s control points,” said Patrick Morley, Carbon Black’s CEO.Both transactions are expected to be completed in the second half of VMware’s fiscal year, which ends Jan. 31.JPMorgan Chase & Co. acted as financial adviser to VMware on the deals, with Morrison & Foerster LLP acting as legal adviser to VMware on the Carbon Black acquisition and Wilson Sonsini Goodrich & Rosati as legal counsel to VMware on the Pivotal purchase.(Corrects overall purchase price in headline, purchase values in story.)\--With assistance from Jim Silver.To contact the reporter on this story: William Turton in New York at email@example.comTo contact the editors responsible for this story: Tom Giles at firstname.lastname@example.org, Andrew Martin, Andrew PollackFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
Apple stock fell 4.6% as the US-China trade war intensified today. China warned of tariffs on more US goods, followed by Trump's tweeted response.
In response to new tariffs from China and President Trump's tweets, the market tanked to session lows on Friday. The DJIA nosedived more than 600 points.
The global economic outlook continues to be a blurry picture with President Trump ordering US companies to search for alternatives to China, and Fed chairman Jerome Powell pledging to act appropriately to sustain the economic expansion.