Tag: news

Some 1.7 million protesters gathered in Hong Kong’s Victoria Park Sunday afternoon to mark the 11th consecutive weekend of pro-democracy protests in a city-state that, for decades, functioned as a quasi-independent city state and financial gateway to the world’s second largest economy.

But as the backlash to the extradition bill has shown, Hong Kongers aren’t simply going to sit back and passively allow Beijing to impose China’s signature style of technocratic-autocratic rule, though the 2014 Umbrella Movement failed to stop the Communist Party from installing its preferred leadership team.

Thus, as the Chinese military masses across the border for military drills that have so far failed to cow the restive Hong Kong public (though they have rolled back the aggression, for now, at least), Nikkei Asian Review reports that Beijing has developed a plan to cut Hong Kong out of the loop entirely.

That is, the Chinese government is reportedly planning to “transform” Shenzen, the southeastern tech hub that links the mainland to HK, into ‘the new Hong Kong’ by imposing pro-business reforms and bolstering social services for workers – in short, molding the city into a model of Hong Kong that offers many of the incentives to multinational corporations in terms of broadening market access, while maintaining the restrictions on speech and political activities that exist in the mainland.

Many of the reforms were outlined in a document released Sunday by China’s State Council, the Communist Party’s equivalent of the executive branch’s cabinet.

Another benefit (that could alienate American companies): The state will back the swift development of 5G in Shenzen.

China looks to draw multinationals worldwide to the tech hub, a move that essentially would rob Hong Kong of its forte as a magnet for investment. The guidelines come as Chinese paramilitary officers train in Shenzhen amid the weeks-old protests in Hong Kong, suggesting that Beijing may apply both economic pressure and armed force to the restive territory.

Shenzhen will serve as a “demonstration area” for Chinese socialism, the document reads. This will include upgraded health-care infrastructure, coupled with a world-class education system that includes job training.

The city will accelerate the development of a fifth-generation wireless network. Talent from outside the mainland will find it easier to cross the border and reside in Shenzhen.

Shenzhen will turn into “one of the leading cities in the world in terms of economic strength and quality of development” by 2025, the guidelines say. The city will become a “national model of high-quality development” by 2035 and a “top cosmopolis” worldwide by the middle of the 21st century.

If Beijing follows through, this could create huge problems for Hong Kong and its monetary authority. As we reported over the weekend, investors are already struggling with the threat of worsening capital flight. As protests drag on, markets wobble, and Beijing grumbles, Hyman Capital’s Kyle Bass’s long-shot bet against the HKD peg to the dollar is starting to look increasingly plausible.

According to Beijing’s new paper, Shenzen will rival or surpass HK in terms of development by mid-century. 

Shenzhen will turn into “one of the leading cities in the world in terms of economic strength and quality of development” by 2025, the guidelines say. The city will become a “national model of high-quality development” by 2035 and a “top cosmopolis” worldwide by the middle of the 21st century.

At the same time, Hong Kong’s government is rolling out a new stimulus package that will bolster support for education and electrical subsidies in a city that has become increasingly unaffordable for the average resident.

As Hong Kong looks increasingly unstable, the mainland’s biggest selling point – social stability imposed by President Xi’s increasingly autocratic regime – will become that much more pertinent. But can it sell Western companies on the idea? HSBC’s response could be an important bellwether, as the FT reported in Monday’s paper.

via ZeroHedge News https://ift.tt/2Zj0dVy Tyler Durden

Authored by Sven Henrich via NorthmanTrader.com,

The Fed has a math problem and so do markets. Everyone from the president on down is demanding rate cuts, lots of them. “Mid-cycle” adjustment Fed Chair Jay Powell called the July rate cut and it’s bought the Fed precious little as markets sold off in the wake off more trade tensions and yields continued to plummet. And now markets demand more. Lots more. A 50b rate cut appears to be the bare minimum markets demand for September. Call it pricing it in, and the implication is clear: The Fed can’t ill afford to disappoint.

And what markets are currently pricing in is anything but a “mid-cycle” adjustment:

That’s nearly a 100bp rate cut over the next year. President Trump of course wants a 100bp now AND some QE sprinkled on top of that:

…..The Fed Rate, over a fairly short period of time, should be reduced by at least 100 basis points, with perhaps some quantitative easing as well. If that happened, our Economy would be even better, and the World Economy would be greatly and quickly enhanced-good for everyone!

— Donald J. Trump (@realDonaldTrump) August 19, 2019

Leaving a discussion about the economic wisdom of such demands at this time aside for the moment, let’s look at the implications of Mr. Trump’s demand, and, on a longer time frame, the market’s demand for 100bp in rate cuts.

See the problem is the Fed has very limited ammunition vis a vis previous cycles and that fact seems to escape everyone.
Between December 2015 and December 2018 the Fed raised rates 9 times from zero bound. Historically speaking the weakest rate hiking cycle ever. In 2018 expectations were still high for further rate hikes in 2019. In fact Goldman Sachs had projected 5 rate hikesfor 2019 as late as November of 2018.

Those days are long gone as global yields have collapsed and economic data has continued to show significant slowing. Hence the rate cut in July:

And therein lies the math problem. With one rate cut already under its belt the Fed now only has 8 rate cuts to work with before being right back at zero bound.

Cutting by 50bp in September would leave the Fed with only six 25bp rate cuts to play with. Cutting another 50bp over the next year would leave the Fed with only four 25 bp rate cuts implying the Fed would have given back nearly half of its entire rate raising cycle in just 12 months which took it 3 years to accomplish. Doesn’t sound like a “mid-cycle’ adjustment to me.

For reference: In 2001 the Fed had to embark on a rate cutting cycle of 550bp to stop the unfolding recession. In 2007 it took 500bp. This time the Fed has started its rate cutting cycle from a 225-250bp basis. See when cycles turn in earnest they get angry and demand a lot of Fed handholding.

So I must ask: With such limited ammunition to work with and so much ammunition required to actually stop a cycle turn, why would the Fed waste more rate cuts with markets still near all time highs and unemployment still at 50 year lows? Why risk a 50bp rate cut and be left with only six 25 bp rate cuts in the coffer? Recession risk after all is rising and even Pimco is acknowledging this. Unless the ultimate future is negative rates into the negative 200bp-250bp territory zone, which would imply a full out disastrous crisis, then perhaps markets are expecting way too much from Momma Fed at this stage.

And if this is the case, then markets may be setting themselves up for disappointment. The first test of this thesis will come on Friday during Jay Powell’s Jacksonhole speech. Markets are eagerly awaiting a signal to confirm more aggressive rate cuts. The Fed has a math problem and a market beast that wants to be fed. By the Fed.

Jay Powell can ill afford to disappoint. But there may be another problem lurking. If the Fed goes too aggressive, feeling beholden to markets, it may inadvertently send another signal altogether: Recession risk is real and markets may ultimately not like the sound of that either. Best of luck Jay Powell.

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via ZeroHedge News https://ift.tt/2KHTSLh Tyler Durden

Just as the administration was apparently trying to pump the market even higher with an idiotic story about possible payroll tax cuts (and during a session that was, for a brief time, focused on German fiscal stimulus, no less) a report about State AGs moving ahead on an anti-trust probe of big tech has emerged to hammer futures lower.

If accurate, the WSJ report would represent one of the most significant escalations in the push to break up the big tech companies yet. The news hit the Nasdaq, but in the context of the past week, the move wasn’t particularly significant.

The makeup of the multi-state group, which includes red and blue states, has yet to be determined, but meetings have been held to ensure that the state’s suit ‘dovetails’ with the FTC and DoJ investigations.

But the push isn’t expected to start just yet.

The effort is expected to be formally launched as soon as next month, the people said, and is likely to focus on whether a handful of dominant tech platforms use their marketplace powers to stifle competition.

As part of the probe, the state attorneys are likely to issue civil investigative demands, similar to subpoenas, to tech giants and other firms, the people said.

They said the new investigation could dovetail with plans by the U.S. Justice Department, which last month announced its own antitrust review that will focus on tech companies including Alphabet Inc. ’s Google unit and Facebook Inc.

The Wall Street Journal reported in June that a number of attorneys general were considering launching a probe into antitrust concerns surrounding Big Tech.

As that effort moves toward a formal investigation, representatives of about a dozen states attorneys general, including Republicans and Democrats, met with top Justice Department officials in Washington in July to discuss concerns about lack of competition in the tech industry, according to people familiar with the meeting.

The big tech firms mostly declined to comment to WSJ, but as the paper noted, Facebook, Apple and others have maintained that social media as an industry faces intense competition.

via ZeroHedge News https://ift.tt/2NsO7Dl Tyler Durden

Just like they did with loyalists to Venezuelan leader Nicolas Maduro, and in other countries as well (Iran comes to mind), Twitter and Facebook have identified networks of “bots” or fake accounts purportedly set up by the mainland government with the intent to “sow discord” during the Hong Kong protests that are entering their 11th week.

Twitter said Monday in a blog post that it had suspended nearly 950 accounts, while identifying another 200,000 that it believed might be members of ‘botnets’.

What we are disclosing:

This disclosure consists of 936 accounts originating from within the People’s Republic of China (PRC). Overall, these accounts were deliberately and specifically attempting to sow political discord in Hong Kong, including undermining the legitimacy and political positions of the protest movement on the ground. Based on our intensive investigations, we have reliable evidence to support that this is a coordinated state-backed operation. Specifically, we identified large clusters of accounts behaving in a coordinated manner to amplify messages related to the Hong Kong protests.

As a result, Twitter said it would be “updating our advertising policies with respect to state media. Going forward, we will not accept advertising from state-controlled news media entities.”

Separately, Facebook said that a tip from Twitter led it to remove seven pages, three groups and five accounts involved in “coordinated inauthentic behavior” targeting the Hong Kong pro-democracy movement. Some 15,500 accounts followed one or more of the now-deactivated pages, while roughly 2,200 accounts joined at least one of the groups, the company said.

“We’re taking down these Pages, Groups and accounts based on their behavior, not the content they posted,” Nathaniel Gleicher, Facebook’s head of cybersecurity policy, said in a post. “As with all of these takedowns, the people behind this activity coordinated with one another and used fake accounts to misrepresent themselves, and that was the basis for our action.”

Of course, this hardly seems like a significant level of activity, and we imagine these companies would be hard-pressed to argue that these accounts contributed to some of the more chaotic episodes during the anti-extradition bill protests.

But these companies can’t risk letting the world forget that ‘state-sponsored actors’ can easily exploit social media to send whole societies into upheaval. All it takes is a few memes like the ones pictured below (and culled from Twitter’s blog, as examples of some of the content that was removed).

via ZeroHedge News https://ift.tt/2Z0APop Tyler Durden

Authored by Simon Black via SovereignMan.com,

In the latest sign that absolutely nothing makes sense anymore, WeWork filed formal regulatory paperwork with the Securities and Exchange Commission last week, officially notifying the world that it will soon be going public.

If you haven’t heard of WeWork (or it’s parent– ‘The We Company’), it’s a real estate company that owns practically zero real estate.

Instead, they lease vast amounts of office space in commercial buildings on long-term contracts, and then sub-lease that space to individual tenants– often small businesses– with short-term contracts.

It’s essentially the same business model as Regus – which provides virtual office services, business addresses, and short-term office space, in pretty much every major city around the world.

Yet Regus is actually profitable. Its parent company, UK-based International Workspace Group, reported a profit of nearly 300 million British pounds (about $350 million USD) for the first six months of 2019. And the company consistently makes money.

WeWork, on the other hand, consistently burns cash and has no expectation of making money “in the foreseeable future” according to its own SEC filing.

In fact, WeWork lost almost $1 billion in the first six months of 2019, putting it on pace to lose even more money than the $1.9 billion it lost in 2018.

WeWork currently has around 10 million square feet of office space, and hopes to grow to 40 million in total.

But Regus already has nearly 60 million square feet of office space worldwide. And it’s still expanding.

So Regus is MUCH larger and turns a healthy profit. WeWork is smaller and loses tons of money.

You’d think that Regus would be a much more valuable company. But no. Regus is valued at less than $5 billion. While WeWork is going public at a valuation of nearly $50 billion– ten times higher.

Much of this excess is due to WeWork’s legendary silver-tongued and messianic co-founder/CEO, Adam Neumann.

Neumann has actually been able to convince people that WeWork is a technology company, as a way to justify its absurdly high valuations.

In addition to extolling their ‘culture of inclusivity’ and ‘energy of an inspired community’, the company’s SEC filing refers to their ‘extensive technology’ more than 120 times.

Of course, there’s never any description of the technology, or what it actually does.

There’s also not a SINGLE line item in WeWork’s financial statements that shows ANY research and development.

For technology companies, this is ALWAYS an important item in their financials.

Google spent $16 BILLION on research & development last year, amounting to roughly 14% of its revenue. Amazon spent $22 billion, 12% of its revenue. Facebook spent $7.8 billion, nearly 20% of its revenue.

And even stodgy old Johnson & Johnson, which doesn’t even pretend to be a tech company, spent more than $10 billion (13.8% of revenue) on research & development in 2018.

WeWork claims to be a tech company, even though all they really have is a reservation system that is slightly less impressive than what Enterprise Rent-a-Car uses.

They keep saying how important technology is to their business (as if technology isn’t important to EVERY business in 2019. Duh.)

But WeWork doesn’t even investment enough money in R&D to register a single footnote in their financial statements.

This proves, beyond all doubt, that it’s just a big, giant farce.

The biggest farce of all, though, is WeWork’s mission to “elevate the world’s consciousness.” That’s straight out of the company’s SEC filing.

Jeez I thought this was supposed to be a real estate company.

This reminds me of when Snapchat went public a few years ago; investors thought Snapchat was a sexting social media app for pedophiles teenagers.

But according to its own SEC filing, Snapchat claimed to be a camera company… which was incredibly bewildering to investors.

WeWork has totally blown Snapchat away on the absurdity scale with this nonsense about consciousness.

What does that even mean?

Business is about focusing capital, energy, and brainpower to achieve specific, tangible outcomes that support a coherent strategy.

You’re supposed to be able to measure those outcomes… otherwise it’s impossible to tell whether or not management is properly executing the plan.

How exactly does one measure ‘global consciousness’? How do you know if your plan to elevate said consciousness is working?

And most importantly, how are you supposed to make money elevating consciousness? Because that doesn’t strike me as an especially profitable venture.

But that’s exactly the point. We’re living in a world now where profits don’t matter.

I mean… there’s more than $10 TRILLION worth of bonds in the world with negative yields. Banks are even loaning money to borrowers at negativeinterest rates.

And some of the most popular (and expensive) investments in the world lose billions of dollars each year with no end in sight.

You don’t need a PhD in economics to realize that there’s something wrong with this picture.

And to continue learning how to ensure you thrive no matter what happens next in the world, I encourage you to download our free Perfect Plan B Guide.

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via ZeroHedge News https://ift.tt/2NhlbxO Tyler Durden