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Aug 20, 2019

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Politics: Italian Prime Minister Conte announces resignation, bringing Rome closer to a snap election

Matt Clinch, Silvia Amaro

Italian Prime Minister Giuseppe Conte announced his intention to resign on Tuesday, as a political crisis rumbles on in Rome that could eventually lead to new elections.
Conte has been under pressure since one of the country's deputy prime ministers — Matteo Salvini, who leads the right-wing Lega party — called for a snap election earlier this month. Salvini declared the populist coalition government unworkable and called for a no-confidence vote in Conte.
Conte told the Senate that the surprise move for the no-confidence vote against the coalition was forcing him to "interrupt" what he contended was a productive government. He said he would go to the president to formally resign as leader.
He also accused Salvini of showing "grave contempt for Parliament" and putting Italy at risk for a "dizzying spiral of political and financial instability" in the months ahead by creating an unnecessary crisis.
Conte said Salvini had violated the coalition's commitment and he had acted with political opportunism, according to a Reuters translation.
"(Salvini) has shown that he is following his own interests and those of his party," Conte told the packed Senate, according to the news agency. "His decisions pose serious risks for this country."
Salvini, who sat next to Conte, smirked at times as the premier spoke. He began the Senate debate by saying, defiantly, "I'd do it all again."
Conte, a law professor who was appointed by both parties in the government coalition but is not affiliated with either — added that the political crisis probably meant the end of this current government. Italian bond yields slipped on Tuesday as Conte spoke and the Italian banking index was down 2.1% as he announced his intention to resign.

Rocky coalition

Italy — the third largest euro zone economy — has been governed by a two-party coalition since elections in March 2018 yielded no outright winner in Rome. The Lega party favors tax cuts and aims to stop illegal immigration while the Five Star Movement (M5S) promotes initiatives that would extend benefits for citizens.
This coalition has been on a rocky road since it came to power. Some of the tension has been caused by government appointments, the country's relationship with the European Union, and, more recently, a high-speed rail link.
Salvini's Lega is leading current opinion polls with a rating of around 37%. Lega came to power as the junior coalition partner, but Salvini's tough rhetoric has helped to boost the party's popularity in a country where immigration is a key issue. M5S has, meanwhile, seen its support drop and is polling third at 18%.

What next?

The country's future is now in the hands of the Italian president, Sergio Mattarella. He will first receive Conte who will formally resign and then it will be up to him to hold consultations to see whether any parties can form a majority.
If not, he will call a fresh election and decide whether a technocratic and caretaker government should be put in place. Meanwhile, Italy's opposition Democratic Party has reportedly discussed forming a coalition with M5S.

The 2020 budget

The instability has caused uncertainty in a country that has been plagued by political turmoil. The Italian government, just like other euro zone nations, has to put together its spending plans for the new year by mid-October. The prospect of an early election has led investors to contemplate what sort of economic targets Italy will present to officials in Brussels.
The country has one the highest public debt piles globally, above 130% of its debt-to-GDP, and any increase in spending could increase public debt even further — an issue which has strained relationships between Brussels and Rome.
On Tuesday, Conte claimed that Salvini's actions would mean it's unlikely the budget would be passed on time. He also said the country risks financial instability and spoke of a possible VAT increase.
_ The Associated Press and Reuters contributed to this report.

EU FX I Currencies I Dollar: Dollar slips as US yields slide again

3-4 minutes - Source: CNBC

Reusable dollar euro forex
Dan Kitwood | Getty Images
The dollar traded lower on Tuesday, in line with the drop in Treasury yields, as investors braced for a potentially dovish Federal Reserve at a Jackson Hole, Wyoming, gathering later this week, with many expecting an announcement of some measure that would ease U.S. recession concerns.
“Market expectations for Jackson Hole and the central banking community in aggregate are extremely dovish,” said Brad Bechtel, managing director at Jefferies in New York. “The U.S. market is pricing a tremendous amount of easing now, along with many other markets around the world.”
Risk aversion crept into the market, a day after investors cheered the prospect of new stimulus measures from global central banks to shore up their struggling economies.
Markets also cautiously awaited Fed Chairman Jerome Powell’s speech on Friday in Jackson Hole.
“We think a long yen exposure makes sense ahead of the Fed’s Jackson Hole event,” said Scotiabank in a research note. “If Fed Chairman Powell sounds dovish, U.S. yields and the U.S. dollar should fall; if he sounds more hawkish, safe havens should rally.”
That said, market sentiment was not as distressing as that of last week, when the U.S. bond yield curve inverted, a sign that many investors say presages a recession. The curve of 2-year and 10-year Treasury yields, however, remained steeper on Tuesday, but could invert again based on past cycles.
In midday trading, the dollar fell 0.3% against the yen to 106.34 yen and was down 0.3% versus the Swiss franc at 0.9792 franc.
The dollar index was down 0.1% at 98.255 after earlier rising to a 2-1/2-week high of 98.40. It reached its 2019 high of 98.932 at the beginning of the month. The euro rose 0.2% against the dollar to $1.1093 after Italy’s prime minister announced his resignation on Tuesday even as he made a blistering attack on his own interior minister, Matteo Salvini, accusing him of sinking the ruling coalition and endangering the economy for personal and political gain.
George Vessey, market analyst, at Western Union Business Solutions, said growing economic and political risk in the euro zone have added to the euro’s downside risks, leaving it vulnerable to hitting new lows for the year.
In early August, the euro had fallen to nearly two-year troughs. Elsewhere, the pound was down 0.1% both against the dollar and the euro, last at $1.2088 and at 91.25 pence against the euro.
British Prime Minister Boris Johnson made new waves by writing to European Council President Donald Tusk on Monday to propose replacing the Irish border backstop with a commitment to put in place alternative arrangements by the end of a post-Brexit transition period.

Bonds I U.S. Treasury Yield Report: US Treasury yields tick lower on hopes of stimulus

Thomas Franck, Sam Meredith

U.S. government debt yields fell Tuesday as hopes for stimulus in major economies appeared to soothe investor concerns about a possible global recession.

U.S. Markets Overview: Treasurys chart

US 3-MOU.S. 3 Month Treasury1.9510.0230.00
US 1-YRU.S. 1 Year Treasury1.73-0.0150.00
US 2-YRU.S. 2 Year Treasury1.506-0.0310.00
US 5-YRU.S. 5 Year Treasury1.423-0.0410.00
US 10-YRU.S. 10 Year Treasury1.549-0.0490.00
US 30-YRU.S. 30 Year Treasury2.035-0.050.00
The yield on the benchmark 10-year Treasury note, which moves inversely to price, was lower at around 1.559%, while the yield on the 30-year Treasury bond was also lower at around 2.045%.
Market participants were cheered by signs policymakers appeared willing to do more to support their economies amid international trade frictions, led by a protracted dispute between the U.S. and China.
Investors are bracing for a potentially dovish Federal Reserve at a Jackson Hole, Wyoming meeting later this week, as they will be looking for clues of monetary policy settings.
It comes at a time when reports suggest that Germany is preparing to increase fiscal spending, and after China’s central bank took steps to lower borrowing costs.
Last week, the U.S. bond yield curve inverted, a sign that many investors say presages a recession. The curve of 2-year and 10-year Treasury yields, however, remained steeper on Tuesday, but could invert again based on past cycles.
There are no major Treasury bond auctions scheduled on Tuesday.

Markets I Dow I Wall Street Closing Report: Dow falls 170 points, snaps 3-day winning streak

Fred Imbert

The Dow Jones Industrial Average fell for the first time in four sessions on Tuesday, paring some of the strong gains from the previous session.
The 30-stock index traded 167 points lower, or 0.6%. The S&P 500 and Nasdaq Composite pulled back 0.7% and 0.6%, respectively.
Home Depot helped keep losses in check. Shares of the home improvement retailer rose 4.4% on better-than-expected earnings. However, Home Depot warned tariffs could hit consumer spending and cut its full-year revenue outlook.
The Dow has recovered most of its 800-point drop from Wednesday while the S&P 500 and Nasdaq have also regained most of their losses from that day.
“When you’re on a roller coaster, the only thing you can be sure of is you’ll end up back where you started,” said Brian Nick, chief investment strategist at Nuveen, noting the market is back where it was a year ago. “We haven’t gone much of anywhere because the economy is moving ahead, but the trade war is setting up these intermittent potholes and the global economy keeps slowing in the background.”
Chip stocks, which are sensitive to trade news, contributed to the decline. Micron Technology and Advanced Micro Devices dipped 1.4% and 1.6%, respectively. Netflix shares pulled back 3.2%.
Bank shares such as Citigroup, Bank of America and J.P. Morgan Chase all traded lower as Treasury yields pulled back.
“I think yields moving down, just kind of got them going. For the past two weeks whenever yields move down, stocks move down,” said Art Cashin, director of NYSE floor operations at UBS.
Equities rose sharply on Monday as bond yields paused their recent and sizable decline, temporarily easing ongoing recession fears. The benchmark 10-year yield fell about 4 basis points, or 0.04 percentage points, to 1.55%.
The White House also stepped in the ongoing debate over whether the U.S. economy will soon enter into recession mode, highlighting the strength in the U.S. economy.
Traders and financial professionals work ahead of the closing bell on the floor of the New York Stock Exchange.
Drew Angerer | Getty Images
Nonetheless, The Washington Post and New York Times both reported the Trump administration was discussing a cut to payroll taxes as a way to mitigate slower economic growth. A White House official pushed back on the reports, saying cutting payroll taxes “is not something under consideration at this time. ” Trump later said on Tuesday that payroll taxes are a matter he had been thinking about.
Traders have been worried about the global economy as the U.S. and China remain engaged in a trade war. Wall Street got a reprieve on that front on Monday after U.S. Commerce Secretary Wilbur Ross announced that it was extending by another 90 days a temporary reprieve for Huawei to do business with American firms.
Jim Paulsen, chief investment strategist at The Leuthold Group, said worries over the economy are also arising because of fears that “overused economic policies have become futile.”
“However, maybe the prowess of economic authorities is not nearly as compromised as advertised,” Paulsen said in a note. “Economic policies do not work immediately. They have varied lags before impacting the character of the economy. On average, many economic policies take about one year before their impact is obvious.”
Traders also looked ahead to the release of the Federal Reserve’s minutes from its July meeting. The central bank cut rates by 25 basis points last month, citing “global developments ” and “muted inflation.” The Fed minutes are scheduled for release Wednesday at 2 p.m. ET.
—CNBC’s Patti Domm and Silvia Amaro contributed to this report.

Energy | Oil | Oil Price Report: Oil falls but losses capped by hopes of easing trade tensions

2-3 minutes - Source: CNBC

Reusable: Oil worker 130728
Andrew Burton | Getty Images
Oil prices fell on Tuesday on persistent concerns over future demand, but losses were capped by optimism U.S.-China trade tensions will ease and hopes major economies will take stimulus measures to ward off a possible economic slowdown.
Brent crude was down 51 cents at $59.23 a barrel by 1339 GMT, while U.S. crude was down 73 cents at $55.48 a barrel. Both contracts had traded in positive territory earlier in the session.
The United States said it would extend a reprieve that permits China’s Huawei Technologies to buy components from U.S. companies, signalling a slight softening of the trade conflict between the world’s two largest economies.
“The U.S.-China trade spat has been at the centre of the oil market demise, which has sent the global economy to the brink of recession and negatively impacted oil demand forecasts,” Stephen Innes, managing partner at VM Markets, said in a note.
Concerns over the overall level of demand for oil continue to weigh on crude prices. The Organization of the Petroleum Exporting Countries cut its forecast for global oil demand growth in 2019 by 40,000 barrels per day (bpd) to 1.10 million bpd and indicated the market would be in slight surplus in 2020.
A rally in equity markets around the world on growing expectations that global economies will take action against slowing growth also gave oil prices a floor.
China’s new lending reference rate was set slightly lower on Tuesday after the central bank announced interest rate reforms designed to reduce corporate borrowing costs, while in Germany there were also positive moves.
Germany’s coalition government said it would be prepared to ditch its balanced budget rule and take on new debt to counter a possible recession.
“China’s announcement of key interest rate reforms over the weekend has driven expectations of an imminent reduction in corporate borrowing costs,” Cantor Fitzgerald said in a note.
Traders were also watching for signs of tension in the Middle East after the United States described as unfortunate the release of an Iranian tanker at the centre of a confrontation between Iran and Washington, warning Greece and Mediterranean ports against helping the vessel.

Futures & Commodities | Gold | Gold Price Report: Gold firms above $1,500 as bond yields dip on stimulus hopes

3 minutes - Source: CNBC

Reusable: Gold coins 001
Gold rose on Tuesday to above $1,500, recovering from a more than 1% slide in the previous session, as U.S. yields fell on increasing expectations for looser monetary policy to address fears of a global downturn.
Spot gold was up 0.5% at $1,502.41 per ounce, after falling to a near one-week low of $1,492.10 on Monday. U.S. gold futures rose 0.1% to $1,512.50.
Monday’s correction followed a sharp price rally earlier this month that took gold to six-year highs, largely on the back of U.S.-China trade war concerns, expectations for further cuts in U.S. interest rates and as the U.S. yield curve inverted for the first time since 2007.
“The yield curve inverting has spooked investors in the U.S.,” said Bob Haberkorn, senior market strategist at RJO Futures, adding “People are kind of looking to buy dips ahead of the Federal Reserve’s minutes coming out and what news will come out at Jackson Hole.”
Investors will closely scan the minutes from the U.S. Fed’s July policy meeting due on Wednesday, with focus on the central bank’s Jackson Hole seminar and the Group of Seven summit this week.
“If they (the Fed) talk about more interest rate cuts for the rest of the year, gold will continue higher, but if they say ‘wait-and-see’, gold will probably sell off,” Haberkorn said.
Lower U.S. interest rates put pressure on the dollar and bond yields, increasing the appeal of non-yielding bullion.
U.S. stocks opened slightly lower after a three-day run, while U.S. Treasury yields fell as the prospect of more central bank easing boosted demand for government debt.
“Participants will be eager to hear what Fed Chairman Jerome Powell has to say about the future of interest rates, especially now that the bond market has already driven yields sharply lower on the long end,” INTL FCStone analyst Edward Meir said in a note.
The shift in sentiment towards riskier assets contributed to a more than 1.2% drop in gold prices on Monday, its biggest daily percentage decline in a month. But prices have risen nearly 17% this year and more than $80 so far this month.
Meanwhile, palladium climbed 1% to a more than two-week high of $1,487.97 per ounce.
Russia’s Norilsk Nickel (Nornickel), the world’s largest producer of the autocatalyst metal, said the global palladium market will remain in structural deficit this year due to growing demand from the auto sector amid tighter emission regulations.
Elsewhere, silver rose above the $17 per ounce mark, gaining 1.5% to $17.11, while platinum fell 0.6% to $844.70.

Europe | Europe Markets Closing Report: European stocks close lower as Italian PM resigns; FTSE MIB slides 1%

Elliot Smith

European stocks closed lower on Tuesday as worries heightened over Italy's mounting political crisis.
FTSE FTSE 100 7125.00 -64.65 -0.90% 766069944
DAX DAX 11651.18 -64.19 -0.55% 68833315
CAC CAC 5344.64 -26.92 -0.50% 65790345
The pan-European Stoxx 600 closed provisionally down around 0.7%, with the majority of sectors and major bourses in negative territory.
Stocks had earlier made tentative gains, but momentum soon swung to the downside as Italian Prime Minister Giuseppe Conte announced he would resign from the government. It comes after Lega party leader Matteo Salvini pulled the plug on his coalition with the anti-establishment Five Star Movement (M5S).
Conte spent a large portion of a speech to the Senate on Tuesday slamming Salvini for pushing for a vote of no confidence in the government. Italy's FTSE MIB tumbled 1%, hitting the day's low as Conte spoke. Shares of Italian banks Ubi Banca and Banco BPM fell over 2%.

Stimulus hopes

Hopes of stimulus from major world economies had previously buoyed equities. Investors are awaiting minutes from the Fed's meeting on Wednesday, along with any hints from Chairman Jerome Powell ahead of the central bank's economic symposium in Jackson Hole, Wyoming, which begins Friday.
Finnish central bank governor Olli Rehn said on Monday that the European Central Bank (ECB) was determined to act if the medium-term inflation outlook continues to miss its target of below but close to 2%. This followed the German finance minster indicating over the weekend that the government is prepared to deploy fiscal stimulus to boost its ailing economy,
Meanwhile, the People's Bank of Chinapublished new loan prime rates intended to lower borrowing costs for companies and stimulate the economy.
On Wall Street, stocks slipped following a sharp rebound in the previous session. The Dow Jones Industrial Average fell 30 points while the Nasdaq and S&P 500 indexes were also negative.
The U.S. extended a reprieve permitting Chinese telecommunications giant Huawei to purchase components from U.S. companies to supply existing companies for 90 days. However, Washington's Bureau of Industry and Security (BIS) also added another 46 Huawei affiliates to its blacklist, a move the tech company called "unjust" and "politically motivated."
Back in Europe, U.K. Prime Minister Boris Johnson will be in Paris Thursday to meet with French President Emmanuel Macron as he seeks resolution to Britain's current impasse with the European Union over Brexit.
Johnson faced a rebuke from European Council President Donald Tusk regarding the Irish backstop on Tuesday. Tusk responded to a letter from Johnson urging alternative arrangements in a tweet, reiterating the EU's position that the backstop is an insurance policy to avoid a hard border "unless and until an alternative is found."
"Those against the backstop and not proposing realistic alternatives in fact support reestablishing a border. Even if they do not admit it," he added.
Prior to that meeting, Johnson will meet with German Chancellor Angela Merkel on Wednesday. Merkel caused a brief spike in the pound on Tuesday when she told reporters that she would think about options to prevent Britain crashing out of Europe with no deal.

Stocks on the move

Shares of Danish jeweler Pandora climbed 10% to top the Stoxx 600 after it confirmed full-year guidance following its second-quarter results. Meanwhile French retailer Casino climbed almost 6% after it announced the pursuit of a further 2 billion euros ($2.22 billion) in asset sales.
Belgium's largest telecoms company Proximus was among the worst performers, sliding 6% after Goldman Sachs cut its stock to "sell."
British postal service Royal Mail saw its shares slide 5% after a union accused the company of reneging on an agreement with workers which ended a strike last year.

Market Insider: Stocks making the biggest moves premarket: Home Depot, Kohl's, Medtronic, US Steel & more

Peter Schacknow

Check out the companies making headlines before the bell:
Home Depot – The home improvement retailer reported quarterly earnings of $3.17 per share, 9 cents a share above estimates. Revenue came in below forecasts, however, and a comparable-store sales increase of 3% was below the 3.5% consensus estimate of analysts surveyed by Refinitiv. Home Depot said its sales were impacted by declining lumber prices, and it cut its full-year sales forecast noting that tariffs could impact spending by U.S. consumers.
Elanco Animal Health – Elanco is buying the animal health unit of Germany’s Bayer for $7.6 billion in cash and stock. Elanco will pay $5.3 billion in cash and $2.3 billion in stock, with Bayer saying it would sell the Elanco shares over time.
Kohl’s – Kohl’s beat estimates by 2 cents a share, with adjusted quarterly profit of $1.55 per share. The retailer’s revenue was below forecasts, however, and a comparable-store sales decline of 2.9% was larger than the expected drop of 2.5%.
Medtronic – The medical device maker reported adjusted quarterly profit of $1.26 per share, 8 cents a share above estimates. Revenue also topped forecasts and Medtronic raised its full-year guidance.
Baidu – Baidu reported better-than-expected profit and for its latest quarter, with the search engine operator’s results getting a boost from growth in video streaming platform Iqiyi. Baidu warned, however, that advertising revenue will remain under pressure.
Sarepta Therapeutics – Sarepta said the U.S. Food and Drug Administration did not approve its new treatment for Duchenne muscular dystrophy, pointing to safety concerns. Analysts had been projecting eventual annual sales for the treatment of nearly $400 million.
BHP Billiton — BHP reported its largest yearly profit in five years, but the mining company also said global economic concerns may impact demand for iron ore and copper.
Facebook – Facebook’s plan to more closely integrate its Instagram and WhatsApp services could hinder attempts to break up the company, according to an interview with Federal Trade Commission Chairman Joseph Simons in the Financial Times.
Viacom – Viacom CEO Bob Bakish signed a new four-year contract to run the combined ViacomCBS when the companies complete their planned merger, according to a Securities and Exchange Commission (SEC) filing. Bakish will receive annual compensation of about $31 million, about 55% higher than he received in the most recent fiscal year.
Apple – Apple is planning to spend more than $6 billion on content for its Apple TV+ service, according to the Financial Times, according to an originally planned budget of $1 billion.
U.S. Steel – U.S. Steel plans to temporarily lay off hundreds of workers in Michigan in the coming weeks, according to a filing with the state. The company said the layoffs could last more than six months.
J.C. Penney – J.C. Penney chairman Ronald Tysoe bought 1 million of the retailer’s shares last week at 59 cents per share, according to an SEC filing. That comes just a few days after the stock set a record low at 53 cents per share.
Hilton Grand Vacation – The company may the target of a takeover bid by private-equity firm Apollo Global, according to a report in the New York Post. The paper said Apollo could bid up to $36 per share for the timeshare company.
Endo International, Allergan – The drugmakers are both near deals that would settle opioid-related charges and let both companies avoid going to trial in October, according to The Wall Street Journal.
Beyond Meat – Beyond Meat was upgraded to “overweight” from “neutral” at J.P. Morgan Chase, which sees potential for the plant-based burger maker to acquire new customers as well as valuation following a secondary stock offering.

Analysis | The Cybersecurity 202: How Huawei helped extend China's repressive view of Internet freedom to African nations

By Joseph Marks

Pop star-turned-opposition Ugandan lawmaker Bobi Wine, whose real name is Kyagulanyi Ssentamu. (Ronald Kabuubi/AP)
U.S. officials who argue Huawei can’t be trusted to play a major role in building global 5G telecommunications networks got another boost Wednesday when the Wall Street Journal reported that the Chinese telecom company helped two African governments spy on dissidents.
Huawei workers who were providing telecommunications services in those nations and a "safe city" program, a network of cameras and sensors Huawei sells to city nominally aimed at improving public safety, also helped intelligence agencies crack into perceived adversaries' encrypted communications -- an opposition politician in Uganda and dissident bloggers in Zambia, the Journal’s Joe Parkinson, Nicholas Bariyo and Josh Chin report.
 “The Huawei technicians worked for two days and helped us puncture through,” a senior officer at Uganda’s surveillance unit told the Journal, describing how the Chinese telecom’s workers helped the unit hack the WhatsApp and Skype communications of opposition politician and pop star Bobi Wine. They used that information to arrest Wine and dozens of his supporters, the Journal reports.
The company also helped Zambian officials shut down opposition news sites, the Journal reports. “Whenever we want to track down perpetrators of fake news, we … work with Huawei to ensure that people don’t use our telecommunications space to spread fake news,” a Zambian official said.
The story marks the latest in a string of revelations about Huawei doing business with repressive governments, including Iran and North Korea. And Huawei's willingness to help authoritarian regimes spy on their citizens suggests the company would also be willing to help Chinese government digital spying operations in other nations, say the Trump administration officials who have effectively banned Huawei from playing any role in building next-generation 5G networks in the U.S. and are lobbying allies to follow suit.
Taken together, this is yet another data point in their argument that the West and China are in a big-picture battle over the future of the Internet – and a Chinese victory will mean far more government control over communications and far less freedom and privacy for everyone else. 
“A country that uses data in the way China has — to surveil its citizens, to set up credit scores and to imprison more than 1 million people for their ethnic and religious background — should give us pause about the way that country might use data in the future,” Robert Strayer, the State Department’s top official for cybersecurity issues, said during an address at a think tank earlier this year. “It would be naive to think that country, [given] the influence it has over its companies, would act in ways that would treat our citizens better than it treats its own citizens.”
Huawei said numerous details in the Journal story were incorrect. The company has steadfastly denied spying on behalf of the Chinese government and said it would not spy if Beijing asked it to — though U.S. officials argue Chinese companies have little power to ignore such requests.
Chin described the situation in stark terms on Twitter, noting that two former “models of web freedom in Africa have embraced China’s vision of the internet.”
Here’s the shape of the world to come: Two countries that used to be models of web freedom in Africa have embraced China’s vision of the internet. And Huawei is in both places, hand-holding local police as they learn to shackle dissidents with digital surveillance
— Josh Chin (@joshchin) August 14, 2019
Kenneth Weinstein, president of the conservative Hudson Institute, called the story “further proof that Huawei is part and parcel of the [Chinese] hi-tech surveillance state governance model being sold abroad.”
Further proof that Huawei is part and parcel of the PRC hi-tech surveillance state governance model being sold abroad: @wsi investigative report on embedded Huawei technicians helped cyber-surveillance units in Africa snoop on political opponents.
— Kenneth Weinstein (@KenWeinstein) August 14, 2019
The Journal report isn’t smoking-gun evidence that Huawei will help Beijing spy in nations where it has business, as the Journal reporters note.
“The Journal investigation didn’t turn up evidence of spying by or on behalf of Beijing in Africa,” the authors write. “Nor did it find that Huawei executives in China knew of, directed or approved the activities described. It also didn’t find that there was something particular about the technology in Huawei’s network that made such activities possible.”
It does, however, raise a question about whether the company’s assistance to repressive regimes represents a broader effort to export the Chinese Internet model.
“The big question has been whether Chinese companies are just doing this for the money, or whether they’re pushing a specific kind of surveillance agenda,” Steven Feldstein, a digital surveillance expert and a former Africa specialist at the State Department, told the Journal. “This would suggest it’s the latter.”
The situation is even more dangerous because 5G networks will transmit hundreds of times more data than earlier generations of wireless infrastructure. 5G will also support a vast expansion of Internet-connected devices such as smart cameras and autonomous vehicles, raising the risk of mass surveillance or even digital attacks that endanger people’s lives — say, if a digital attacker ran an autonomous car off the road.
The U.S. government has a spotty record in convincing allies to eschew Huawei, however. Only a handful of nations, including Australia and Japan have announced they'll totally bar the company from their 5G builds and several European nations say they're considering letting the company play at least a limited role.
To readers: The Cybersecurity 202 will publish on Tuesdays, Wednesdays and Thursdays this week and next and will take a break the week of Aug. 26 before returning full-time in September.
You are reading The Cybersecurity 202, our must-read newsletter on cybersecurity policy news.
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Sen. Ron Wyden (D-Ore.). (Susan Walsh/AP)
PINGED: Sen. Ron Wyden (D-Ore.) wants Democratic and Republican Party campaign committees to tell Congress what they're doing to protect themselves from the kinds of Russian and Chinese-backed cyberattacks witnessed by both parties in recent years.
“Unfortunately, there are currently no federal laws or regulations that require political parties and campaign[s] to take even the most basic of steps to implement good cyber hygiene,” Wyden wrote in a letter yesterday shared with me. “This approach is obviously not working.” 
Wyden’s top questions for both parties' national committees and House and Senate campaign committees include how much they're spending on cybersecurity, whether they employ a full-time chief information security officer, and whether they have accepted voluntarily cybersecurity assistance from the Department of Homeland Security. Answers will help lawmakers “assess the magnitude of the parties' continued vulnerability to cyberattacks” and possibly inform legislative fixes, Wyden writes.
The DNC has doubled down on cybersecurity since it was hacked in 2016, offering updated checklists and trainings to candidates. The National Republican Congressional Committee pledged last month to offer candidates free cybersecurity assistance. But both parties are still vulnerable to attacks, according to researchers.

Sen. Elizabeth Warren (D-Mass.). (Carolyn Kaster/AP)
PATCHED: Sen. Elizabeth Warren (D-Mass.) is asking the Federal Trade Commission's internal watchdog to look into whether the agency misled consumers about how much money they could receive from a $700 million settlement with Equifax, my colleague Tony Romm reports. The agency warned consumers last month that they were likely to get a lot less than the “up to $125" first advertised as a settlement offer.
“The FTC has the authority to investigate and protect the public from unfair or deceptive acts or practices, including deceptive advertising,” Warren wrote in a letter to the FTC’s inspector general. “Unfortunately, it appears the agency itself may have misled the public about the terms of the Equifax settlement and their ability to obtain the full reimbursement to which they are entitled.”
Warren claims the FTC had conflicting information on its website that did not make it clear that the cash payment would likely be much less than the maximum $125. After high demand for the cash payout, the FTC released a blog post encouraging consumers to choose free credit monitoring services instead. 
Warren previously introduced a bill that would have required Equifax to pay at least $1.5 billion in penalties, with at least 50 percent going to consumers. The bill would have also established an Office of Cybersecurity at the FTC to better hold credit reporting agencies accountable for breaches.

The logo for Capital One Financial. (Richard Drew/AP)
PWNED: The hacker accused of breaching the data of 106 million Capital One users may have also stolen data from more than 30 other companies, my colleague Renae Merle reports, citing court documents filed yesterday. Files seized from alleged hacker Paige Thompson’s computer servers had “multiple terabytes of data … from more than 30 other companies, educational institutions, and other entities,” prosecutors say. Thompson probably will face additional charges based on the additional alleged data thefts, Renae reports.
Prosecutors have not disclosed the names of the other targets but said the newly confirmed breached data does not appear to contain any personal information. Unicredit, Italy's largest bank, and the Ohio Department of Transportation both confirmed earlier this month that they were investigating hacks likely committed by Thompson. Meanwhile, Vodafone, Ford and Michigan State University were identified as potential targets by both Israeli security firm CyberInt and cybersecurity blogger Brian Krebs.
The Global Cyber Alliance, a nonprofit organization that has launched initiatives to improve the cybersecurity of small businesses and people in developing nations, is launching a program today to help small businesses and individuals find and prevent digital bugs in their Internet-connected devices such as cameras, home assistants and smart thermostats. The organization is also offering another free tool that can help researchers find bugs in connected devices by effectively mimicking the devices in locations around the world and watching how hackers try to attack them. Check out details here.
— Cybersecurity news from the public sector:

Democratic 2020 presidential campaigns say they are working to boost their cybersecurity, but experts worry those efforts may not be enough.
The Hill

The Senate majority leader has chafed at the use of the term, which was coined after he blocked votes on House-passed election-security measures.
John Wagner

A coalition of 37 activist groups is pushing the leaders of the House Judiciary Committee to end the government's mass phone data collection program, arguing it poses insurmountable threats to the privacy and civil liberties of millions of people.
The Hill

The Philadelphia Board of Elections will meet Thursday to consider voiding a contract for new election machines after it was learned that the company, Election Systems and Software (ES&S), did not disclose their use of lobbyists to get the contract.
The Hill

A New York City government pilot program is bringing technologists and domestic abuse victims together for good.
Technology Review

The F.B.I. should follow the example of European law enforcement and help victims of ransomware decrypt their data.
The New York Times
— Cybersecurity news from the private sector:

A team of computer scientists has built a new app that can wirelessly detect credit card skimmers, often found discreetly placed on gas pumps and bank ATMs.

Fake devices look real but are rife with unpatched operated systems, outdated kernels, and a universe of dodgy backdoors and malware, researchers have found.

Scammers are directing people to Snapchat.

Users of credit monitoring site Credit Karma have complained that they were served other people’s account information when they logged in.
— Cybersecurity news from abroad:

Whoever was responsible, experts say, the episode raised serious concerns about the state of Bulgaria’s cybersecurity.
The New York Times

Fingerprints, facial recognition and other personal information from Biostar 2 discovered on publicly accessible database
The Guardian
  • The U.S. Election Assistance Commission will convene Secretaries of State, along with representatives from government and voting system manufacturers and testing laboratories for EAC Election Security Forum from 12:30-3:30 p.m. 

Premarket Update: The stock market's comeback is set to pause with futures flat

Fred Imbert, Silvia Amaro

U.S. stock index futures were little changed on Tuesday as Wall Street’s rebound from last week’s sell-off was set to pause.
Around 7 a.m. ET, Dow Jones Industrial Average futures indicated a drop of less than 20 points at the open. Futures on the S&P and Nasdaq were both nearly flat.
Home Depot kept losses in check before the bell. The home improvement retailer reported better-than-expected earnings on Tuesday, sending its stock up 1% in the premarket. However, Home Depot warned tariffs could hit consumer spending and cut its full-year revenue outlook.
Wall Street rose sharply on Monday as a rebound in bond yields continued, easing ongoing recession fears. The White House has also stepped in the ongoing debate over whether the U.S. economy will soon enter into recession mode.
Nonetheless, The Washington Post and New York Times both reported the Trump administration was discussing a cut to payroll taxes as a way to mitigate slower economic growth. A White House official pushed back on the reports, saying cutting payroll taxes “is not something under consideration at this time. ”
Traders remain focused on U.S.-China trade relations, after the U.S. Commerce Secretary Wilbur Ross announced Monday that it was extending by another 90 days a temporary reprieve for Huawei to do business with American firms. The U.S. added another 46 Huawei affiliates onto the blacklist.
Meanwhile, traders will also be keeping an eye on the broader economy. On Wednesday, the Federal Reserve is scheduled to publish its latest meeting minutes. Investors are also likely to closely monitor the Fed’s Jackson Hole seminar and a G7 summit later in the week for clues on monetary policy settings.
On the data front, the Philly Fed non-manufacturing numbers will be out at 08:30 a.m. ET.

PreMarket | U.S. Index Futures Indicator: Dow futures point to a flat open after Monday's rally

Silvia Amaro

U.S. stock index futures were little changed on Tuesday morning.
Around 5:30 a.m. ET, Dow futures indicated a drop of less than 20 points at the open. Futures on the S&P and Nasdaq were both nearly flat.
Wall Street rose sharply on Monday as a rebound in bond yields continued, easing ongoing recession fears. The White House has also stepped in the ongoing debate over whether the U.S. economy will soon enter into recession mode, with President Trump saying that: “We’re doing tremendously well. Our consumers are rich. I gave a tremendous tax cut and they’re loaded up with money.”
Nonetheless, traders remain focused on U.S.-China trade relations, after the U.S. Commerce Secretary Wilbur Ross announced Monday that it was extending by another 90 days a temporary reprieve for Huawei to do business with American firms. The U.S. added another 46 Huawei affiliates onto the blacklist.
Meanwhile, traders will also be keeping an eye on the broader economy. On Wednesday, the Federal Reserve is scheduled to publish its latest meeting minutes. Investors are also likely to closely monitor the Fed’s Jackson Hole seminar and a G7 summit later in the week for clues on monetary policy settings.
On the data front, the Philly Fed non-manufacturing numbers will be out at 08:30 a.m. ET.
In terms of corporate earnings, Home Depot, Medtronic and Toll Brothers will be updating investors.

Asia I Asia Markets Closing Report: Asia stocks mixed as China debuts new loan prime rates

Eustance Huang

Stocks in Asia were mixed on Tuesday, as the People’s Bank of China published its new loan prime rates which would result in cheaper borrowing costs for companies.
Mainland Chinese stocks were mixed on the day, with the Shanghai composite shedding earlier as it slipped 0.11% to about 2,880.00. The Shenzhen component was flat at 9,328.73, while the Shenzhen composite added 0.137% to approximately 1,574.12.
In Japan, the Nikkei 225 rose 0.55% to close at 20,677.22, while the Topix index added 0.83% to finish its trading day at 1,506.77. Australia’s S&P/ASX 200 closed 1.2% higher at 6,545.00 as most of the sectors advanced. Over in South Korea, the Kospi gained 1.05% to end its trading day at 1,960.25.
In Hong Kong, the Hang Seng index returned to negative territory, slipping about 0.3% as of its final hour of trading. Hong Kong-listed shares of HSBC fell 1.21%..
Overall, the MSCI Asia ex-Japan index traded 0.35% higher.
The Reserve Bank of Australia’s (RBA) July meeting minutes, released on Tuesday, showed the central bank would consider further easing if evidence suggested “this was needed to support sustainable growth in the economy and the achievement of the inflation target over time.”
The RBA kept interest rates at all-time lows earlier in the month after easing by a quarter point in both June and July.

China’s new loan prime rates

The People’s Bank of China (PBOC) debuted its new loan prime rates (LPR) under a new mechanism that was unveiled over the weekend. Some analysts have said the reform can be seen as a guided rate cut.
The new 1-year LPR was set at 4.25%, as compared to 4.31% previously. The 5-year LPR was at 4.85%.
“The new fluctuating LPR replaces their existing fixed benchmark lending rate,” Kathy Lien, managing director of foreign exchange strategy at BK Asset Management, wrote in a Monday note. “By allowing the rate to float, they are basically allowing interest rates to fall.”
“The lower the rate, the more positive the reaction in the market,” Lien said. “Aside from this rate cut, investors are also waiting for fiscal stimulus from China.”
“There’s a number of levers here that the Chinese authorities are starting to move on around stimulating the economy,” Martin Lakos, division director at Macquarie Wealth Management, told CNBC’s “Street Signs” on Tuesday.
“There’s a number of areas here that the authorities are going to be, we think, focusing in on and, quite clearly ... they’re wanting to be providing the opportunity or ... the environment for improved lending ... in the economy,” Lakos said.

Asia-Pacific Market Indexes Chart

Currencies and oil

The U.S. dollar index, which tracks the greenback against a basket of its peers, was at 98.385 after seeing lows below 97.5 last week.
The Japanese yen traded at 106.46 against the dollar after touching an earlier low of 106.68. The Australian dollar was at $0.6779 after seeing an earlier low of $0.6751.
Oil prices were mixed in the afternoon of Asian trading hours. The international benchmark Brent crude futures contract was 0.15% lower at $59.65 per barrel, while U.S. crude futures were just above the flatline at $56.22 per barrel.
— Reuters and CNBC’s Fred Imbert contributed to this report.