Showing posts with label Bloomberg. Show all posts
Showing posts with label Bloomberg. Show all posts

Mar 4, 2020

Markets: Coronavirus Spread in China Slows Drastically But Doubt Remains

5-6 minutes - Source: Bloomberg

Virus China GETTY Sub

Photographer: Kevin Frayer/Getty Images

While infections in the rest of the world accelerate, the coronavirus epidemic is showing signs of easing at its center -- China -- with new cases slowing dramatically and recoveries gathering pace. Still, doubt remains over whether the government’s statistics show the full picture.
On Tuesday, China reported 119 new confirmed cases of the coronavirus, the lowest number in almost six weeks and the fewest since the national government started releasing data on Jan. 21. Of those, 115 cases were in Hubei province, where the virus first emerged in December and which still accounts for the majority of infections and deaths worldwide.

Plateauing Outbreak

Coronavirus statistics in China show steady improvement
Source: Health commissions of China, Hubei and Wuhan
Eighty-four percent of cases, 97% of critical cases and more than 96% of deaths are within the province, which was placed under mass quarantine by the government on Jan. 23 to slow the virus’ spread to the rest of the country. The ongoing lockdown of the region of 60 million people has led to widespread suffering and scores of preventable deaths as the local medical system collapsed under the strain.
The lockdown also meant that China’s fatalities from the pathogen have been confined almost entirely to the province. As of Tuesday, 4.3% of people who were confirmed to have the virus in Hubei have died, while that rate is 0.9% in China outside Hubei.

Tragedy in Hubei

China has almost totally contained the deaths from coronavirus to Hubei
Source: National and Hubei health commissions
Over the past three weeks, China’s number of recovered patients has surged both in Hubei and the rest of the country, with the government sending in thousands of health-care workers to help in Hubei. Sixty-two percent of those who’ve been officially diagnosed with the disease are now better and out of hospital, according to the data from the National Health Commission on Wednesday.

Getting Better

More than 20 times as many people recover each day as get sick
Source: National Health Commission
Still, mistrust lingers over China’s official statistics, which have been repeatedly revised through the course of the outbreak, including an extraordinary addition of nearly 15,000 cases of infection on Feb. 13. It’s also changed the definition of what is a confirmed case of infection multiple times.
What’s Going On With China’s Coronavirus Case and Death Numbers?
One area of confusion has been over how to account for people who don’t have symptoms but test positive for the disease in a phenomenon known as asymptomatic infection.
At a World Health Organization briefing on Tuesday, infectious disease expert Maria Van Kerkhove said that about 1% of cases in China are asymptomatic at first, but 75% of those patients eventually develop symptoms.

relates to Coronavirus Spread in China Slows Drastically But Doubt Remains
This means that provinces not counting asymptomatic cases in their official tally are likely under-reporting their numbers. There’s some evidence of that: Chinese media outlet Caixin reported that Heilongjiang province in northern China had 104 asymptomatic infections which it did not add to its total of 480 confirmed cases on Feb. 25.
China does not release the number of asymptomatic infections in its daily nationwide tally, underscoring the uncertainty which remains over whether the outbreak is truly contained at its heart.
— With assistance by James Mayger

Mar 2, 2020

Mapping the Coronavirus Outbreak Across the World

By Cedric Sam, Chloe Whiteaker, Hannah Recht and Demetrios Pogkas

Mainland ChinaCases: 80,026
Deaths: 2,912
South KoreaCases: 4,212
Deaths: 22
ItalyCases: 1,694
Deaths: 34
IranCases: 1,501
Deaths: 66
JapanCases: 244
Deaths: 6

Health authorities around the world are on high alert as an outbreak of Covid-19, a pneumonia-like illness, has spread from the Chinese city of Wuhan to 68 countries and territories—affecting every continent— in the course of a month. It has shuttered cities as far away as in Italy, shaken financial markets and caused airlines to cancel flights globally. On Feb. 27, the head of the World Health Organization said the outbreak has the potential to become a pandemic.
The new coronavirus that causes Covid-19—renamed SARS-CoV-2—is thought to have spread from a food market in the central China metropolis that’s home to more than 11 million people. The large majority of cases and deaths have been in mainland China, but that trend is changing as new hot spots pop up in South Korea, Italy and Iran. So far, there have been 144 deaths linked to the virus outside mainland China: in Iran, Italy, South Korea, Japan, France, Hong Kong, the U.S., Australia, the Philippines, Thailand and Taiwan.
Confirmed cases worldwide
Deaths worldwide
Jurisdictions with cases confirmed as of
  • 1–9
  • 10–99
  • 100–999
  • 1,000–9,999
  • 10,000 or more

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China first reported the outbreak on Dec. 30, and by Jan. 23 authorities had locked down Hubei province, where Wuhan is the capital, and restricted travel in other regions just before the country’s largest holiday, Lunar New Year. Usually the busiest travel period in Asia, tens of millions of people were forced to stay home as offices, schools and factories stayed shuttered.

Confirmed Cases in Mainland China by Province

As of
  • 1–9
  • 10–99
  • 100–999
  • 1,000–9,999
  • 10,000 or more
While the virus is deadly for some, many who have it experience mild symptoms or no symptoms at all, making it much harder to detect and contain. More than 70 governments have responded by banning entry to travelers who have been to affected regions, barring flights to certain countries and changing visa requirements, according to data compiled by the International Air Transport Association. The restrictions and virus fears have hit the airline industry particularly hard, with many suspending multiple routes and thousands of employees being laid off or placed on unpaid leave.

These Are the Places Restricting Travel Because of the Outbreak

As of
Bans travel from:
  • Various places with confirmed cases
  • Mainland China, Hong Kong or Macau, and Taiwan
  • Mainland China and Hong Kong or Macau
  • Mainland China only
  • Select provinces
Sources: IATA; Bloomberg News reporting
Much is still unknown about the virus, but about 2% of Chinese patients with confirmed cases have died. Some researchers estimate the mortality rate will be closer to 1% once all cases are counted. Covid-19 appears to be deadlier than seasonal influenza, but far less deadly than SARS, MERS or Ebola.

Rise in Confirmed Cases in Mainland China Since Jan. 20

Data as of
On Feb. 12, Hubei officials began including patients who were diagnosed with CT lung scans absent a nucleic acid test, resulting in a jump of nearly 15,000 more cases. According to the WHO, most of those cases were days or weeks old. The methodology has been revised several times since then.
While the worst may be over for China, the rest of the world is trying to prepare. New cases in other countries surpassed those reported in China for the first time on Feb. 27. Shortages of face masks, hand sanitizer and cleaning supplies are now spreading as far as New York City, where there’s yet to be a single confirmed case, as residents prepare for the worst.

Feb 25, 2020

Businessweek: China’s Surveillance State Pushed to the Limits in Virus Fight

Shelly Banjo 

A poster featuring people wearing protective masks is displayed near surveillance cameras in Shanghai.
A poster featuring people wearing protective masks is displayed near surveillance cameras in Shanghai.
Photographer: Qilai Shen/Bloomberg

For decades, China has been building and refining the ability to track its citizens’ whereabouts and interactions to contain dissent and protest. The state’s effort to try to contain the rapid spread of the new coronavirus is now testing the limits of that surveillance system.
To slow down any virus, it’s important to interrupt person-to-person transmission. Officials in China have used a mix of high- and low-tech methods to find and monitor people who may have been exposed to the virus, which has infected more than 77,600 and killed upwards of 2,600 in the country as of Feb. 24. Authorities have sourced data from phone carriers and called on private tech companies to set up virtual health hotlines in order to trace everyone who’s been in or near Hubei province, home to Wuhan, the epicenter of the outbreak. They’ve also activated an extensive network of Communist Party members and community groups, encouraging citizens to monitor neighbors’ vital signs and whereabouts.
A 25-year-old who studies in Wuhan told Bloomberg News he was surprised when officials found him about 300 miles (482 kilometers) north in his hometown of Henan. The postgraduate student, who asked not to be named because he feared police retaliation, left Wuhan in early January. Two weeks later, a Henan police officer called, saying he suspected the student had visited the seafood market where the virus is thought to have originated and asked if the student was feeling all right. Soon, the student was overwhelmed by calls and visits from health officials, police officers, and other authorities; doctors came to take his temperature daily for two weeks. He hadn’t contracted the virus. Overwhelmed, the student turned off his phone.
The neighborhood committee visits residents in Beijing’s Xicheng district.
Photographer: Peter Martin/Bloomberg
Mobile phones—which, like social media accounts, are linked to Chinese citizens’ national identity numbers—are an integral part of China’s surveillance. Now they’re a key part of its virus-containment efforts. China’s big three state-owned phone carriers have responded to the call last month by the Ministry of Industry and Information Technology to contribute data to fight the outbreak. As of Feb. 12, China Mobile Ltd.’s 300-strong big-data team had fulfilled more than 400 government requests for data on people’s movement. China Telecom Corp. has helped 24 provinces install a system that lets officials and medical staff record and monitor people’s personal, health, and travel information. It’s also adding systems at office buildings that track people’s identities and health through facial recognition and automatic temperature gauges.
Tencent Holdings Ltd.’s WeChat and Alibaba Group Holding Ltd.’s Alipay have helped the government develop a new, color-coded health-rating system to identify people as high-, medium-, or low-risk and monitor their movements.
The system, in use at offices, malls, and subways, scans people seeking to enter and allows or denies them access based on their ratings. Provinces including Hubei are requiring anyone selling cough or fever treatments to report the buyers’ identities to the government, and plan to use purchase data to find people who might be ill.
A pedestrian wearing a protective mask walks past shuttered stores in Shanghai.
Photographer: Qilai Shen/Bloomberg
Some of the new tools are intensifying the paranoia that’s setting in as some of China’s 1.4 billion people isolate themselves at home, with little to do but search the internet. Baidu Inc.’s map function now shows how crowded a neighborhood is so people can avoid congested areas, while WeChat has added functionality so users of its social network can see if they’re in the proximity of confirmed virus cases. WeChat and microblogging site Weibo have set up virtual hotlines on which people can report friends, family members, and neighbors who might be sick or who aren’t taking proper quarantine precautions.
Since late January, spreadsheets and lists identifying people living in or returning home from Wuhan have been circulating around social media, including Weibo. A Wuhan resident included in one of the lists says he recently received an influx of strange calls. The resident, who asks to remain anonymous to prevent further harassment, says he quarantined himself alone at home for 14 days because his parents both tested positive for the virus. His mother recovered after spending four days in the hospital, while his father remained at a local hospital.
A security guard looks at a monitor showing a thermographic image of passengers walking through a temperature screening point at an entrance to a subway station in Shanghai.
Photographer: Qilai Shen/Bloomberg
In recent weeks, China has turned to low-tech tactics. Across the country, scores of neighborhood committee members have been deployed to take people’s temperatures each day and record their whereabouts. Earlier this month, a group of young women in red down jackets and flimsy surgical masks went door-to-door in Beijing’s Shichahai neighborhood with clipboards to record residents’ temperatures, ID numbers, and recent travel. One, a party member who said she oversees 500 households, told a Bloomberg reporter that as a disease prevention measure, the community would now restrict outsiders from entering—including grocery deliverymen—on orders “from above.”
The panic and fear that blanket surveillance creates could actually undermine efforts to contain the epidemic. China had come under criticism for silencing doctors in Wuhan who suspected the virus was serious early on, and the suspicion facing people thought to be potentially ill could discourage the transparency needed to engender trust and fight an epidemic, says Stuart Hargreaves, a law professor at Chinese University of Hong Kong who researches surveillance and privacy issues. “If you had an approach that encouraged the reporting of ‘negative’ information, rather than punishing it, then this outbreak might have been limited at a much earlier point,” he says.
The Baidu Inc. map application displays the locations visited by patients who have been confirmed to have the coronavirus infection and crowded neighborhoods on a smartphone in an arranged photograph taken in Shanghai on Feb. 21.
Photographer: Qilai Shen/Bloomberg
It’s also not clear that the use of mass surveillance will be effective. While it might seem useful to have full oversight of citizens’ movements and vital signs, making use of data of that scale requires manpower and training that China’s police force lacks, says Suzanne Scoggins, an assistant professor at Clark University. Scoggins, who researches policing and authoritarian control in China, says tracing the spread of a virus is different from tracking the movements of dissidents or criminals. “This is still relatively new technology that is likely being used in a way that is different from its original design,” Scoggins says. “It may help some, but we shouldn’t expect it to contain an outbreak.”
Blanket surveillance is different from so-called contact tracing, a practice that goes back centuries to map a disease’s spread, most famously when Dr. John Snow used it to find the source of the 1854 cholera outbreak in London—a water pump. The usefulness of high-tech surveillance tools will be limited until officials identify the incubation period of the new coronavirus and develop rapid diagnostic tests and effective treatment, says Jessica Justman, associate professor of medicine in epidemiology at Columbia University and senior technical director of its global public health center, ICAP. Without a better understanding, “it’s going to make it much harder to effectively use the kind of cellphone and other data people are imagining,” says Justman, who has gone door-to-door across Africa, testing people for HIV to map its spread and provide them with treatment options.
A sign that says registration is required for everyone is displayed as a volunteer takes the temperature of a resident at a checkpoint at the entrance to a neighborhood in Shanghai.
Photographer: Qilai Shen/Bloomberg
Person-to-person transmission of this coronavirus may be particularly difficult to stop because it may be highly infectious before symptoms are apparent, says Keiji Fukuda, the director of University of Hong Kong’s School of Public Health and a former adviser to the World Health Organization on pandemic influenza. If patients don’t realize they’re sick, they’re less likely to stay home or take other precautions.
Residents pick up parcels from delivery workers at the entrance to a neighborhood in Shanghai.
Photographer: Qilai Shen/Bloomberg
China’s surveillance system has long alarmed human rights advocates, who point to the detention of about 1 million Uighur and other Muslims in the western region of Xinjiang, restrictions on the open web, and tightening social control. That’s led to concerns about how this new flood of tracking and data collection might be used by the government, even after the outbreak has passed. “We need to make it very clear what health authorities are doing and why they are doing it,” says Fukuda, who is advising Hong Kong's government on the coronavirus outbreak. “I think people are inherently suspicious and distrustful. So it’s really important—if you’re dealing with an outbreak—to explain there are good reasons to conduct disease surveillance.” —With Sharon Chen and Peter Martin
(Updates with number of infections and deaths from virus in China as of Feb. 24, in second paragraph)

Jan 21, 2020

Davos: Trump Acclaims His Own Economic Achievements:

By Iain Rogers and Chris Reiter

The world’s rich and powerful are in Davos, Switzerland, for the World Economic Forum’s 50th annual meeting, and the gathering will be closely watched to see how the global elite aims to tackle issues they helped create, above all climate change.
President Donald Trump’s appearance, which comes on the same day his impeachment trial starts in Washington, began with him calling the trial a “hoax” and “disgraceful.” In his speech, he lauded his economic achievements and said the U.S. is “thriving” and “winning again like never before.”

U.S. President Trump At The World Economic Forum (WEF)
Donald Trump delivers a speech on the opening day of the World Economic Forum in Davos, on Jan. 21.
Photographer: Jason Alden/Bloomberg
Meanwhile, Swedish activist Greta Thunberg, who was in the audience for Trump’s speech, stepped up her criticism of governments and companies for not doing enough to tackle climate change.
For in-depth coverage and analysis of Trump’s speech, check out our TOPLive blog on the Bloomberg Terminal. To get all the daily highlights delivered to your inbox, sign up for the Davos Diary newsletter.
Here’s the latest (time-stamps are local time in Davos):

Blackstone’s Schwarzman Reacts to Trump Speech (12:30 p.m.)

“It was for several different constituencies,” Blackstone Group Inc. Chairman Steve Schwarzman said in an interview with Bloomberg TV. “This was a speech to basically say ‘I think we need some perspective and let’s look at what’s happened under this administration.’ That is not just for domestic consumption, it’s meant to be heard in the broader context.”
The billionaire co-founder of the New York-based private equity firm has previously advised Trump and was present in the White House when he announced the first part of the China-U.S. trade deal.

Trump Urges Nations to Join Together (12.15 p.m.)

Trump concluded his speech by calling on world leaders to join together to “make our nations stronger, our countries safer, our culture richer, our people freer, and the world more beautiful than ever before.”
“Above all else, we will forever be loyal to our workers, our citizens and our families, the men and women who are the backbone of our economies, the heart of our communities and the soul of our countries,” Trump said. “Let us bring light to their lives one by one and empower them to light up the world.”

Trump Hails ‘Blue-Collar Boom’ (12 p.m.)

Trump said the economic strength of the U.S. is benefiting ordinary people and “the workers come first” under his administration.
“The U.S. celebrating the dignity of work is a fundamental pillar of our agenda,” he said. “This is a blue-collar boom. The American dream is back, bigger better and stronger than ever before.”

Trump Attacks Fed for Interest-Rates Policy (11:55 a.m.)

Trump renewed his feud with the Federal Reserve, saying the central bank raised interest rates too quickly.

These great numbers are “despite the fact the the Fed has raised rates too fast and lowered them too slowly,” Trump said. “I see such tremendous potential for the future. We have not even started, because the numbers we’re talking about are massive. The time for skepticism is over.”

Trump Trumpets His Economic Achievements (11:50 a.m.)

In his speech, Trump said that the U.S. “is in the midst of economic boom the likes of which the world has never seen before.”
“We’ve regained our stride; we discovered our spirit and reawakened the powerful machinery of American enterprise,” Trump said. “America’s thriving; America is flourishing and, yes, America is winning again like never before.”

Trump Says Impeachment is ‘Just a Hoax’ (11:40 a.m.)

Trump told reporters on the way into his speech that the impeachment trial is “just a hoax” and a “witchhunt that’s been going on for years.”

U.S. President Trump At The World Economic Forum (WEF)
Donald Trump speaks to the media as he arrives to deliver a special address at the World Economic Forum in Davos, on Jan. 21.
Photographer: Simon Dawson/Bloomberg
“Frankly it’s disgraceful,” he added. “We look forward to being here. We’re meeting with the biggest companies in the world, the biggest businesses in the world and world leaders, all for the benefit of the United States.”

Immigrants Key to Growth, Microsoft CEO Says (11:40 a.m.)

Microsoft Corp’s chief executive officer warned that countries that fail to attract immigrants will lose out as the global tech industry continues to grow.
“Every country is rethinking what is in their national interest,” Microsoft’s CEO Satya Nadella said in an interview with Bloomberg Editor-in-Chief John Micklethwait.
Governments need to “maintain that modicum of enlightenment and not think about it very narrowly,” Nadella added. “People will only come when people know you’re an immigrant-friendly country.”

Nokia’s Suri Predicts Productivity Boom (11:35 a.m.)

The next industrial revolution will bring about “massive productivity growth” the likes of which hasn’t been seen in decades, according to Nokia Oyj Chief Executive Officer Rajeev Suri.
Speaking on a panel about manufacturing, Suri estimated that productivity should increase by as much as 35% starting in about 2028. The gains will be seen first in the U.S. and a few years later in China, India and the European Union, he predicted.

Naspers CEO Sees Growth in Second-Hand Clothes (11:30 a.m.)

Naspers Ltd., Africa’s biggest company by market value, expects second-hand clothing sales online to pick up as companies around the world look to cut production of new goods to help address climate change.
“We are big investors in trading in second-hand clothes -- we think the world will need more recycling over time,” Chief Executive Officer Bob van Dijk told Bloomberg TV. “In classifieds, we are helping to reduce the production of new goods.”

Bremmer Says Delegates Like Trump’s Policies (11 a.m.)

Ian Bremmer, president of consulting firm Eurasia Group, said Davos delegates may not like Trump but “they like his policies.”
“They like the regulatory rollback, they like his cabinet, they like his tax policy,” Bremmer told Bloomberg TV, adding that an informal poll of about 40 to 50 delegates he conducted showed there is “zero panic” about Trump winning a second term.
“You can have Greta here, you can have a bunch of people talking about climate and sustainability, but the reality is that Trump doesn’t drive people crazy at Davos the way he does in the United States,” Bremmer said.
Trump is likely to show his “triumphalist, unilateralist” side in his speech. “This is going to be Trump saying victory lap, I’m the greatest ever, my economy is doing well, my markets are taking off, look how much money I’m making you guys.”

Huawei CEO Dismisses Threat of U.S. Escalation (10:50 a.m.)

Huawei Technologies Co. founder Ren Zhengfei played down the threat that the U.S. will impose even stricter sanctions against his company, saying he is confident China’s largest tech company can survive further attacks.

WATCH: Huawei Founder and CEO Ren Zhengfei discusses the U.S. ban on the company from buying vital American components.
Source: Bloomberg
“This year, the U.S. might further escalate its campaign against Huawei but I feel the impact on Huawei’s business would not be very significant,” he said during a panel discussion.

Chile’s Palacios Keen to Hear Trump on Trade (10:50 a.m.)

Lucas Palacios, Chile’s economy minister, said he is eagerly awaiting Trump’s speech for any clues on trade relationships. “We’re a big copper exporter to China so the truce between the U.S. and China is very important for us,” Palacios told Bloomberg.

Lajcak Expects ‘Global Message’ From Trump (10:35 a.m.)

Miroslav Lajcak, foreign affairs minister of Slovakia, told Bloomberg: “I expect to hear a global message from the president,” especially on his strategy for the Middle East. “We will see whether he will use this opportunity.”
On impeachment, Lajcak said: “It’s not an easy thing. Whatever one thinks of him, he must be under tremendous pressure.”

IBM Proposes Rules to Counter AI Bias (10 a.m.)

IBM called for rules aimed at eliminating bias in artificial intelligence to ease concerns that the technology relies on data that bakes in discriminatory practices and could harm women, minorities, the disabled and others.
“It seems pretty clear to us that government regulation of artificial intelligence is the next frontier in tech policy regulation,” Chris Padilla, vice president of government and regulatory affairs at International Business Machines Corp., said ahead of a Wednesday panel on AI to be led by Chief Executive Officer Ginni Rometty.

Bjorgolfsson Expects Trump to Address China, Iran (10 a.m.)

Icelandic investor Bjorgolfur Thor Bjorgolfsson has spoken about his expectations for Trump’s speech.
“He’s going to come and talk about the deal with China, and how Iran is on the back foot, the stock market at an all time high and present himself as a statesman,” Bjorgolfsson told Bloomberg on the sidelines of the forum. “All this while the impeachment stuff is going on. This is a PR special.”

Mnuchin Says EU Car Tariffs Not Curently Planned (9:10 a.m.)

Car tariffs on producers in the European Union are not currently planned to enforce Iran sanctions, but they remain in President Trump’s toolbox, U.S. Treasury Secretary Steven Mnuchin said in an interview with the Wall Street Journal.
The U.S. will likely have $1 trillion deficits for a couple more years and the next phase of the China trade deal may not be a “big bang,” Mnuchin told the newspaper.

HKEX CEO Li Shrugs Off Virus Concerns (8:50 a.m.)

Opening Day Of The World Economic Forum (WEF) 2020
Charles Li gestures during an interview at World Economic Forum in Davos on Jan. 21.
Photographer: Simon Dawson/Bloomberg
Charles Li, chief executive officer of Hong Kong Exchanges & Clearing Ltd., shrugged off concerns about the outbreak of a deadly virus originating in central China.
“There are a lot of things that impact investor sentiment but you have to think that structurally the market is very resilient,” Li said in an interview with Bloomberg TV.

Thunberg Says ‘Nothing Been Done’ on Climate (8:45 a.m.)

Speaking on a panel about sustainability, Thunberg said people are more aware about environmental issues now but that “pretty much nothing has been done” to tackle climate change as emissions of carbon dioxide have not declined.

“Without treating this as a real crisis we cannot solve it,” Thunberg said. “It will require much more than this, this is just the very beginning.”
The panel didn’t attract leaders of the fossil fuels companies attending the forum, with most senior oil and gas executives absent.

Trump Wants ‘Hundreds of Billions’ for U.S. (8:30 a.m.)

Trump arrived in Switzerland with ongoing impeachment proceedings on his mind. He tweeted throughout much of the flight, largely about a Senate trial due to get underway there Tuesday. But he said his Davos appearance is all about the economy.
His aim is to “bring Good Policy and additional Hundreds of Billions of Dollars back to the United States of America,” he wrote on Twitter.
“We are now NUMBER ONE in the Universe, by FAR!!,” Trump tweeted ahead of his arrival in Davos just after 9:30 a.m. local time. He also took a swipe at what he called “Fake News Media,” accusing it of hating to talk about the economy and “how incredible it is.”

IEA’s Birol Worried About Situation in Iraq (8:15 a.m.)

Fatih Birol, executive director at the International Energy Agency, told Bloomberg TV’s Francine Lacqua that the situation in Iraq is currently his main concern in the oil markets.

“Recent developments in Iraq are not very comforting,” Birol said. “I see Iraq as a major issue, which is very important for the oil markets but also for the world economy, which is already very fragile. I really hope we all see an Iraq that has some stability and production can go ahead.”

Guggenheim Predicts Collapse to Central Bank-Driven ‘Ponzi Scheme’ (7:49 a.m.)

Scott Minerd has a message for his fellows at Davos who are applauding rallying markets: Things aren’t as good as they seem. The Guggenheim Partners investment chief likened the inflation of asset prices caused by the loose money policies of central banks to a “ponzi scheme” that eventually must collapse.
“We will reach a tipping point when investors will awake to the rising tide of defaults and downgrades,” he wrote in a letter from the World Economic Forum meeting.

German Greens Leader Sides With Trump on Spending Critique (7:40 a.m.)

Robert Habeck, co-leader of Germany’s opposition Greens party, told Bloomberg TV’s Francine Lacqua that the government needs to rethink its balanced-budget policy and spend more in areas like climate-friendly infrastructure.

WATCH: Habeck discusses climate awareness, Germany’s balanced budget policy and the need to increase government spending.
(Source: Bloomberg)
Habeck attacked Chancellor Angela Merkel’s “fetishism” about balancing the budget and said that although he’s not a fan of U.S. President Donald Trump, the criticism in the U.S. about Germany not spending enough is valid.
The Greens, who are currently Germany’s second-most popular party behind Merkel’s bloc, have been out of government for too long and are ready to take on the responsibility of running Europe’s biggest economy, Habeck added.

Natixis Sees Funds Returning to H2O (7:39 a.m.)

Natixis SA is seeing money returning to its H2O Asset Management affiliate after concern over some of the boutique’s thinly traded bonds sent investors fleeing. “There have been flows that have been coming back to H20 and performance has been good,” Jean Raby, chief executive officer of Natixis Investment Managers International SA, said in an interview in Davos.

What’s Happening on Tuesday (7:30 a.m.)

Aside from Trump’s set piece, here’s some other highlights on Tuesday:
  • 1 p.m. - Swedish teen Thunberg, who told Davos attendees last year that “our house is on fire,” is scheduled to speak on a panel.
  • 2:15 p.m. - With the next phase of trade talks with the U.S. pending, China’s Zheng takes center stage with a special address
  • 4 p.m. - Bank of England Governor Mark Carney, Saudi Aramco board member Andrew Liveris and others discuss how economies can grow without compromising the environment
  • 6 p.m. - Bank of America Corp. CEO Brian Moynihan, IBM Corp. CEO Ginni Rometty, Siemens AG Chairman Jim Snabe and others discuss stakeholder capitalism

Tuesday Kickoff

Greta Thunberg’s call in Davos last year that it’s time to panic about climate change might be finally starting to hit home as attendees show more alarm at the Swedish activist’s message. With the usual parade of government chiefs, billionaires and corporate executives attending, global warming is dominating the agenda more than ever. In the WEF’s annual risk survey, environmental dangers elbowed out items such as cyber attacks or terrorism.
And it’s not just teenagers, this 100-year old Briton is urging the global elite to stop burning carbon.

Monday Catchup

— With assistance by Eyk Henning, Sridhar Natarajan, Andrea Dudik, Simon Kennedy, and Shelley Smith

Sep 12, 2019

News: China, U.S. Are Showing a Little Goodwill as Trade Talks Near

Bloomberg News

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The U.S. and China are taking baby steps to ease tensions in their trade war, as negotiators prepare for the resumption of face-to-face talks in Washington in the coming weeks.
On Wednesday, U.S. President Donald Trump said he was postponing the imposition of 5% extra tariffs on Chinese goods by two weeks, meaning Chinese officials can celebrate their Oct. 1 national day without a fresh escalation.
Meanwhile, China is considering whether to permit renewed imports of American farm goods including soybeans and pork, according to people familiar with the situation, potentially taking some pressure off U.S. states with large numbers of Trump supporters. The Ministry of Commerce said Thursday Chinese companies have started inquiring about prices for U.S. agricultural products including soybeans and pork.
At the request of the Vice Premier of China, Liu He, and due to the fact that the People's Republic of China will be celebrating their 70th Anniversary....
— Donald J. Trump (@realDonaldTrump) September 11, 2019
....on October 1st, we have agreed, as a gesture of good will, to move the increased Tariffs on 250 Billion Dollars worth of goods (25% to 30%), from October 1st to October 15th.
— Donald J. Trump (@realDonaldTrump) September 11, 2019
Taken together, the measures pale in comparison to the oncoming hit from U.S. tariff increases still in the pipeline for October and December, the fruit of a rapid escalation in tensions between the two sides last month. At the same time, as evidence mounts in both nations of the economic damage that the trade war is doing, there’s more urgency for a deal.
Trump escalated the U.S.-China trade war in August when he announced an increase in levies on Chinese goods. That was in response to higher Chinese tariffs which were a reaction to a previous increase by the U.S.
China welcomes the postponement of U.S. tariffs as a goodwill gesture, Ministry of Commerce spokesman Gao Feng said at Thursday’s regular briefing. Mid-level teams will meet soon to prepare for higher level talks, he said, reiterating that both sides are communicating without giving a date for the meeting between the top negotiators.
Any further agricultural purchases are yet to be made and the volumes are still undecided, the people said. China had halted U.S. farm-product imports in August after negotiations deteriorated.
U.S. soy exports to China had tumbled amid the trade war
Earlier on Wednesday, China announced a range of U.S. goods would be exempted from 25% tariffs put in place last year, as the government seeks to ease the impact from the trade war. While that move may create some good will in Washington, China didn’t exempt agricultural goods produced in key Trump-supporting states.
Welcome this decision. It should be seen as a goodwill gesture the US side made for creating good vibes for the trade talks scheduled in early October. Yesterday China announced to remove 16 categories of US products from tariff list. Hope reciprocity of goodwill can continue.
— Hu Xijin 胡锡进 (@HuXijin_GT) September 12, 2019
At home, China is facing factory-price deflation, falling exports and an uncertain path for government stimulus policy given the nation’s debt load and fragile property sector. In the U.S., factory activity unexpectedly contracted in August for the first time in three years, underscoring how slowing global growth and an escalating U.S. trade war with China are taking an even bigger toll on domestic producers.
“Trump’s goodwill gesture suggests that the trade war is starting to bite and the U.S. may be more eager to close a deal,” said Chua Hak Bin, an economist at Maybank Kim Eng Research Pte. in Singapore. “The clock is ticking and Trump’s approval ratings are sliding, with manufacturing now in recession.”
Despite the goodwill gestures, the two sides remain far apart on fundamental issues, and officials continue to trade barbs. China wants the U.S. to remove all extra tariffs, and the U.S. has long sought concessions on intellectual property and state-subsidies for industry that Beijing has been unwilling to give.
“The negotiators have had a year to come to an agreement, and they remain structurally at odds on key issues,” said Andrew Polk, co-founder of research firm Trivium China in Beijing. “Another two-week reprieve doesn’t change those fundamentals.”
— With assistance by Shuping Niu, Steven Yang, Isis Almeida, Kevin Hamlin, John Harney, Yinan Zhao, and Miao Han

Aug 5, 2019

Trade War: China Hits Back at Trump by Weakening Yuan, Halting Crop Imports

Malcolm Scott, Kevin Hamlin and Tian Chen

China responded to Donald Trump’s tariff threat with another escalation of the trade war on Monday, letting the yuan tumble to the weakest level in more than a decade and asking state-owned companies to suspend imports of U.S. agricultural products.
The moves are likely to further antagonize Trump, who has criticized Beijing for managing its currency unfairly and failing to keep promises to buy more U.S. crops.
Stocks and emerging-market currencies sank on concern a prolonged conflict between the superpowers will weigh on global economic growth, while haven assets including the Japanese yen, U.S. Treasuries and gold climbed. Investors increased bets on Federal Reserve interest-rate cuts.
"It’s among the worst-case scenarios," said Michael Every, head of Asia financial markets research at Rabobank in Hong Kong. "First markets sell off, then Trump wakes up and this all gets far, far worse."
The White House didn’t immediately respond to a request for comment.
Trump last week proposed adding 10% tariffs on another $300 billion in Chinese imports from Sept. 1, abruptly ramping up the trade war between the world’s largest economies shortly after the two sides had restarted talks. Chinese bureaucrats were stunned by Trump’s announcement, according to officials who’ve been involved in the negotiations.
The threat of more tariffs came just as Chinese President Xi Jinping and other senior members of the Communist Party gathered for a secretive summer getaway in Beidaihe, a seaside town about a three-hour drive from Beijing. Xi had already faced pressure for weeks to take a harder stance on trade -- particularly after the U.S. blacklisted telecom equipment giant Huawei Technologies Co.
Editorials in state-run newspapers suggested Xi will reject any deal that either retains punitive tariffs or forces China to make concessions on issues like state-run enterprises that could weaken the party’s grip on power.
The harder line underlines a growing feeling in Beijing that Trump can’t be trusted to cut a deal, and that China would be better off waiting to see if a Democratic presidential candidate -- many of whom have criticized the use of tariffs -- takes office. The halt in agricultural purchases could hurt Trump in politically sensitive states ahead of the 2020 election.
The MSCI Asia Pacific Index headed for its biggest decline since March on Monday, with shares slumping more than 2% in markets from Tokyo to Hong Kong and Seoul. Equities in Shanghai saw a more modest drop amid speculation that state-linked funds may act to prop up the market, while U.S. equity-index futures dropped 1.1%.
The yuan tumbled 1.3% to 7.0324 a dollar at 2:42 p.m. Hong Kong time, after the People’s Bank of China set its daily reference rate at a weaker level than 6.9 for the first time since December. The offshore yuan sank as much as 1.9% to a record low.
China's yuan weakens past 7 per U.S. dollar for first time since 2008
"Breaking seven is due to a mix of factors: an escalation of trade war, the softening of China’s economy and a willingness for the PBOC to tolerate higher volatility for the yuan," said Larry Hu, head of China economics at Macquarie Securities Ltd. in Hong Kong. "The PBOC has entered uncharted waters, so it has to manage expectations carefully."
The central bank attributed the yuan move to protectionism and expectations of additional tariffs on Chinese goods, while saying it can still maintain a steady currency.
By linking today’s devaluation with the renewed tariff threat, the PBOC "has effectively weaponized the exchange rate," said Julian Evans-Pritchard at Capital Economics in Singapore. "The fact that they have now stopped defending 7 against the dollar suggests that they have all but abandoned hopes for a trade deal."

What Bloomberg’s Economists Say...

"China appears to be posturing for worse to come in the trade war. Letting the yuan weaken past 7 against the dollar suggests it’s looking to buffer the economy from a more severe trade shock."
-- David Qu, Qian Wan and Ye Xie
Allowing the yuan to weaken is not without risk for China. A mid-2015 devaluation spurred capital outflows and destabilized global markets, though tighter capital controls this time around should help prevent another exodus.
A cheaper currency also risks triggering yet more reprisals from the U.S. president, who has frequently warned that tariffs could go much higher. At a rally in Cincinnati last week he boasted of "taxing the hell out of China" until there’s a deal.

Tariff Man Returns

President Donald Trump announced tariffs on additional $300 billion in Chinese imports
Source: Bloomberg
The biggest damage from the trade war is the hit to business activity and confidence that comes from increased uncertainty, rather than the tariffs themselves, according to Wang Tao, China economist at UBS Group AG. For that reason, the weaker yuan may do little to offset the blow, she said.
China’s crop imports from the U.S. are another weapon at Beijing’s disposal. The country’s state-run agricultural firms have now stopped buying American farm goods, and are waiting to see how trade talks progress, people familiar with the situation said, declining to be identified as they’re not authorized to speak to the media. Corn and soybean futures fell on the news.
When he announced the trade truce last month, Trump spoke at length about how China would be buying more farm goods from “great patriots” in the Midwest -- even though no details of any purchases have been announced by either side. Officials in Beijing privately said afterward that China made no promises to buy more agriculture goods before a final deal is struck.
China’s commerce ministry didn’t respond to a fax seeking comment.
"China is giving up on its softer diplomatic strategy and is no longer willing to be Trump’s punching bag," said Chua Hak Bin, an economist at Maybank Kim Eng Research Pte. "Trump’s tariffs threats are backfiring and triggering a full-scale trade war."
— With assistance by Steven Yang, Isis Almeida, Shuping Niu, Yinan Zhao, Miao Han, and Daniel Ten Kate

Source: Bloomberg

Aug 1, 2019

Politics I Argentina Can’t Escape Its Economic Curse

 by Patrick Gillespie

When it was commissioned in the 1870s, the Renaissance-style building chosen to house a water treatment plant in Buenos Aires was meant to project Argentina’s emergence on the world stage.
By the time it finally opened two decades later, the Palace of Running Water was a symbol of spent ambition. With its imported European terracotta tiles and stained glass windows, the waterworks illustrated the excesses that had wrecked the Argentine economy and almost brought down the global financial system.
The story of what came to be known as the Barings Crisis of 1890 is studied by economic historians as the biggest sovereign debt meltdown of the century. But for Argentines, the fallout reverberates outside the pages of textbooks; for the same elements of boom and egregious bust lie at the root of the country’s economic and political upheaval to the present day.
Argentina has spent 33% of the time since 1950 in recession, according to a World Bank report released in May. In global terms, that is second only to the Democratic Republic of Congo, which endured two major wars, three military coups and numerous regional conflicts over the same period. By comparison, Argentina’s larger neighbor Brazil has seen recession for 12% of that time.

Bust and Boom

Argentina has spent more time in recession than almost every other nation
Source: The Conference Board; World Bank
Argentina’s perennial volatility is once more front and center as President Mauricio Macri bids for re-election in the wake of a currency rout and a massive $56 billion bailout from the International Monetary Fund. With presidential primaries due on Aug. 11, the vote is shaping up to be a dramatic contest over the country’s economic future.
While polls suggest the race is too close to call, investors clearly favor Macri to enact the reforms they see as needed to steer the economy out of recession. They have concerns that Macri’s main opponent, Alberto Fernandez, wouldn’t be the moderate president he contends, fears magnified by his choice of running mate, the populist former president, Cristina Fernandez de Kirchner. For his part, Fernandez, 60, lambasts Macri’s economic stewardship and says he’s happy to not be “Wall Street’s candidate.”
relates to Argentina Can’t Escape Its Economic Curse
Julian Diaz at his restaurant Los Galgos in Buenos Aires.
Photographer: Sarah Pabst/Bloomberg
Fernandez has Julian Diaz’s vote. Diaz, 37, the owner of three restaurants in Buenos Aires, says he’s backing “Fernandez-Fernandez,” not so much out of political conviction as what he sees as economic and social necessity.
Custom is down and Diaz says inflation means his prices have risen “exponentially”: a cafe con leche costs 80 pesos ($1.80); a year ago it was 55 pesos. He’s reduced the number of staff on the payroll through attrition and put on hold plans to expand, waiting for the election outcome.
“We can’t think about developing the country with poverty rising, violence rising, where the social gap is widening, where there’s no consumer spending,” Diaz said at his Los Galgos restaurant three blocks from the palace. Argentina’s crisis is cyclical, making it “unbearable,” he said. “There’s always another crisis coming.”
The turbulence can be traced back to the last decade of the 19th century. At the time, Argentina was cashing in on farming of its abundant plains, the Pampas, and a wave of European migrants relayed home the opportunities to be had. Opulent mansions, Parisian boulevards and Utopian plazas were sprouting up in the capital. As work was about to begin on the Palace of Running Water, plans were drawn up for the Teatro Colon, still one of the world’s best opera houses.
English bank Baring Brothers and Co. was only too happy to join the rush, and bet big on Argentina. But something had to give, and as the economy slowed in 1889, Argentines sniffed a crisis and rapidly exchanged their pesos for gold, causing the currency to tumble. Drought, a failed coup, rising inflation and strikes drove foreign investors away, and by early 1890 government leaders couldn’t stop the tailspin.
Buenos Aires Tango Star Wins Fight to Bring Back Cobblestones
The Plaza de Mayo district of Buenos Aires.
Photographer: Sarah Pabst/Bloomberg
The tipping point came when Barings failed to float a bond in the London market for the Buenos Aires Water Supply and Drainage Company—contracted to build the Palace of Running Water. Soon after, Barings notified the Bank of England that it was on the verge of collapse due to its exposure in Argentina, and it had to be bailed out. The following year, 1891, Argentina’s economy shrank 11%.
Barings “simply lent too much money, they went too far,” said Eugene White, a professor at Rutgers University and author on the crisis. “The party got too raucous—they didn’t take the punch bowl away.”
Many of the elements of the Barings Crisis—mounting debt, a currency rout, bailout and even drought—have echoes in Argentina’s current recession. Its economic woes follow a well-worn path: It spends more than it earns, relying on dollars from grain sales and forcing the government to rack up debts to cover the purchase of imports, and once investors sour on fronting more money, a vicious domino effect ends in misery. Little wonder it’s had 61 central bank chiefs in the 84 years of the institution’s existence.
relates to Argentina Can’t Escape Its Economic Curse
Natalia Perrotta stands in front of the Water Palace.
Photographer: Sarah Pabst/Bloomberg
Yet that cyclical nature of Argentine life means some voters are willing to give Macri more time. Natalia Perrotta, 32, a doctor at a public hospital, has cut back on spending and vacations, but she doesn’t blame the president for her belt-tightening. “In Argentina we’ve always had ups and downs in the economy,” she said. “And because of that I don’t consider what’s happening now as new.”
The warning signs are again flashing red: The IMF sees a 1.3% contraction for 2019, with inflation ending the year at some 40%, and “significant downside risks” to its outlook, notably political uncertainty.
The upshot is that many Argentines have little faith in politics, policy or the peso. The proof? They have some $350 billion in savings stashed abroad, more than at home, according to Miguel Kiguel, head of consulting firm EconViews and author of a book on Argentina’s economic crises.
“The lack of confidence comes from the fact that every few years there’s a major devaluation or high inflation, and the way to protect yourself is to go into dollars,” said Kiguel, a former chief of advisers in the Economy Ministry in the 1990s.

Flight to Safety

Whether it’s the 1880s or 2010s, Argentines don’t save in pesos before a crisis
Source: BCRA; della Paolera, Alan Taylor
When governments change, the policy whiplash is often dramatic. Argentina went from seven presidencies in the early 1970s to a bloody, right-wing military dictatorship that ruled for almost eight years until 1983 and sent the country into a war with the U.K. Then came a pro-business government in the 1990s, populist administrations from 2003 to 2015, and finally Macri’s market-friendly presidency.
Macri, 60, a former civil engineer, put Argentina’s global comeback at the heart of his program after his predecessor Kirchner presided over currency and capital controls, tampered with official statistics and refused to pay back debt holders. But lately Macri’s been fighting populism with populism, freezing prices on food items, mobile phone bills, electricity, gas and public transport. Fernandez, an adherent of the populist Peronist movement founded in 1946 by then-President Juan Peron and his wife, Eva, accuses Macri of mismanagement, and advocates for generous welfare spending. The first round vote is on Oct. 27, with a runoff planned for the end of November if necessary.
Argentina's Hot Summer Of Packed Subways, More Theft And Floods
The Plaza Miserere subway station in Buenos Aires.
Photographer: Erica Canepa/Bloomberg
Gerardo della Paolera, 60, an economic historian who co-wrote a book about the Barings Crisis, believes more turmoil is inevitable regardless of who wins: Argentina will need to restructure its debt once the IMF cash dries up in 2021, he says. Like many Argentines, he’s trying to prepare his family, knowing how this story ends. His adult children love Argentina and don’t want to leave, but he doesn’t see a future for them in their own country. “I push them to go abroad,” he said.
Diaz, the restaurant owner, is left to lament his country’s lost opportunity.
“Always when I pass the Palace or Teatro Colon, it symbolizes to me what Argentina could have been,” he said, sipping a coffee. Argentina has “so many wonderful things, but at the same time it has instability and a lack of predictability,” he said. “Here, we don’t even know what’s going to happen tomorrow.”

Source: Bloomberg

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