The Poon Report - Daily News Summary Sept 12
News Summary
Bank rate-setter warns further interest rate rises needed to crush inflation
Taken from The Telegraph Tuesday, 12 September 2023
Comments come shortly after Bank of England Governor said rates were nearing their peak
Interest rates need to rise further to crush inflation, a top Bank of England policymaker has warned, in a blow to mortgage borrowers’ hopes that higher borrowing costs may soon ease.
Catherine Mann, a member of the Monetary Policy Committee (MPC), said the Bank needed to prove “our commitment to do what is necessary to achieve the 2pc [inflation] target, sooner rather than later”.
Officials have already raised rates 14 times from 0.1pc in December 2021 to 5.25pc today, but Ms Mann said more increases are needed to ensure inflation does not get stuck at high levels.
She said: “To pause or to hold the policy rate lower for longer risks inflation becoming more deeply embedded, which would then require more tightening in total.
“The longer inflation remains way above target, the more difficult it will be and the activity costs greater to ultimately get inflation to target.”
Shutdown risk looms as US Congress faces spending, impeachment brawl
Taken from Reuters News Tuesday, 12 September 2023
The U.S. House of Representatives returns this week for an expected political brawl over spending cuts and impeachment that could paralyze the Republican-controlled chamber, as Congress struggles to avoid a government shutdown.
The House and the Democratic-controlled Senate are due to be in session for about 12 days before funding expires on Sept. 30, leaving little time to agree on a package of 12 appropriations bills that can pass each chamber and win Democratic President Joe Biden's signature.
The main bone of contention among House Republicans is a demand by roughly three-dozen members of the hardline House Freedom Caucus to cut spending for fiscal 2024 to $1.47 trillion -- about $120 billion less than Biden and Republican House Speaker Kevin McCarthy agreed in May.
The White House and Senate leaders -- including top Republican Mitch McConnell -- have rejected that demand.
That dispute and other hardline demands, including opposition to Ukraine aid and calls for an impeachment inquiry against Biden, could imperil efforts to pass a short-term stopgap, known as a continuing resolution or "CR," which would keep federal agencies afloat while lawmakers debate full-scale appropriations.
Government shutdown will have 'modest impact' on economy: Expert
Taken from Yahoo Finance Tuesday, 12 September 2023
Lawmakers eye down a federal spending bill deadline at the end of the month, raising the likelihood of a government shutdown if legislative negotiations aren't successful. Jeannette Lowe, Strategas Securities Managing Director of Policy Research, examines the stalemate between House Democrats and Republicans, and the economic implications of a government shutdown.
"Our current odds are very high as well — 75% chance as of today that we do have a government shutdown on October 1," Lowe states. "One of the problems with having [lawmakers] pass a continuing budget resolution — which they have done many times in the past — is that the House conservatives are currently asking for other policy provisions to be attached to it."
Russia targeted civilian cargo ship with cruise missile - UK
Taken from BBC News Tuesday, 12 September 2023
The UK has accused Russia of targeting a civilian cargo ship with multiple cruise missiles as it rested in the Ukrainian port of Odesa last month.
The attack - which took place on 24 August - was thwarted by Ukrainian air defences, the UK's foreign office said.
The Liberian-flagged ship was targeted by missiles fired by a Russian carrier in the Black Sea, it added.
In July, Russia warned ships travelling to Ukraine's ports through the Black Sea may be seen as military targets.
The warning came after Moscow withdrew from a landmark UN-backed grain deal, which had seen civilian cargo ships promised the freedom to export Ukrainian grain through the Black Sea.
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Speaking to parliament on Monday, UK Prime Minister Rishi Sunak said the foiled attack on the grain ship succeeded only in "demonstrating just how desperate Putin is".
"Ukraine has the right to export its goods through international waters and they have the moral right to ship grain that is helping feed the world," Mr Sunak said.
Russia has yet to comment on the attack.
All Wilko shops to shut with 12,500 jobs likely to go
Taken from BBC News Tuesday, 12 September 2023
The Wilko name will disappear from UK High Streets after a rescue deal for the chain fell through.
All of its 400 stores across the UK will close by early October, the GMB union has said.
It means redundancies are likely for all 12,500 staff at the family-owned business.
It is understood no bidders are interested in running shops under the Wilko name, although some parties are interested in rebranding their stores.
The billionaire owner of HMV, Doug Putman, hoped to keep up to 300 Wilko shops open, but his bid failed as rising costs complicated the deal.
This week will see the first Wilko stores close, after administrators PwC previously announced 52 shops across the country would cease trading on Tuesday and Thursday.
FDA approves new Covid-19 boosters from Pfizer and Moderna
Taken from FT Tuesday, 12 September 2023
Drug regulator’s decision is the first step towards a new round of jabs as cases rise in the US
The US federal drug regulator has approved new Covid-19 boosters from Moderna and Pfizer, as it moves to contain infections from spreading more quickly in the US.
Anyone 5 years of age and older will be eligible to receive an updated jab from either Moderna or BioNTech/Pfizer as long as it has been at least two months since a previous Covid-19 vaccination, the Food and Drug Administration said on Monday.
“The FDA anticipates that the updated vaccines will be available in the near future,” the regulator said, without giving a specific date. A Centers for Disease Control and Prevention advisory panel is set to meet on Tuesday to discuss its recommendations for who should receive the jab, and after its decision distribution could begin as soon as this week.
RTX hit with $3bn charge from Pratt & Whitney aero engine recall
Taken from FT Tuesday, 12 September 2023
Hundreds of aircraft to be grounded in setback for airlines already struggling with demand
Hundreds of aircraft worldwide will be grounded over the next few years owing to problems with Pratt & Whitney engines, in a $3bn hit to parent RTX and another setback for airlines already struggling to meet soaring post-pandemic travel demand.
The US aerospace and defence group, formerly known as Raytheon, said P&W will recall 600-700 engines from 2023 to 2026, leading to the grounding of an average 350 aircraft a year.
RTX said it would post a charge of up to about $3.5bn in the third quarter, mostly owing to compensating its customers, and $1.5bn less in free cash flow in 2025, a greater hit than it initially signalled in July.
The Arlington, Virginia-based company now expects full-year sales of $67.5bn to $68.5bn compared to $67.1bn in 2022. It had raised guidance in July for sales of between $73bn and $74bn.
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Big tech stocks lead Wall Street stocks higher
Taken from FT Tuesday, 12 September 2023
European and Chinese equities rise, but Hong Kong property shares fall on poor new-home sales figures in China
US stocks rose on Monday as a jump in Tesla shares led a rally in mega-cap tech stocks, while investors awaited the closely watched US inflation report later this week.
Wall Street’s benchmark S&P 500 finished 0.7 per cent higher on Monday, while the tech- focused Nasdaq Composite gained 1.1 per cent.
Tesla rose 10.1 per cent after Morgan Stanley analysts said the electric-car maker could add $500bn in value as its supercomputer Dojo opened new markets to the company.
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Other heavyweight technology groups also rose on Monday, with all of the Magnificent Seven stocks except Nvidia making gains.
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The S&P 500 has advanced more than 16 per cent year to date, while its information technology sector has added 41 per cent in the same period.
Meanwhile, traders were waiting for US consumer price index data due on Wednesday, with a view to how this latest inflation report could affect the outlook for interest rates through the end of this year.
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In China, the benchmark CSI 300 index added 0.7 per cent after Saturday’s inflation data showed consumer prices rose 0.1 per cent in August, following July’s deflationary figures.
But Hong Kong’s Hang Seng index slid 0.6 per cent, dragged lower by steep declines in property stocks as new home sales in China’s biggest cities shrank by half in the first week of this month.
‘Xi Jinping is preparing for war’: China hawk in Congress pushes new investment restrictions
Taken from MarketWatch Tuesday, 12 September 2023
President Joe Biden has taken a number of steps to prevent the flow of strategic U.S. technologies to China, but some in Congress feel that he hasn’t done enough.
Wisconsin Rep. Mike Gallagher, the Republican chairman of the House Select Committee on the Chinese Communist Party, said Monday that he is not confident that the Treasury Department will be aggressive enough in implementing new restrictions on U.S. investment in Chinese companies working with militarily applicable advanced technologies that Biden proposed last month.
Biden erred, argued Gallagher during an event staged by the Council on Foreign Relations, in “putting Treasury in the lead with a ton of off-ramps,” adding that the Treasury Department, including during the Trump administration, has historically had a “more dovish position” on China than other executive departments.
“We shouldn’t be financing our own destruction,” Gallagher said, arguing that Congress should legislate a stricter rule banning U.S. entities from investing in specific sectors of the Chinese economy, including artificial intelligence and microelectronics.
He argued that the Biden administration’s decision to only block outbound investment from private sources, while allowing investment in Chinese companies that trade on stock exchanges, is inadequate.
Vietnam ups durian trade to China, land border offers cost advantage to challenge Thai dominance
Taken from SCMP Tuesday, 12 September 2023
Vietnam is increasing durian exports to China by using land-border shipments to control costs, a strategy that may challenge Thailand’s dominance in the market.
Cross-border shipments have surged since China formalised regular shipments of the popular, uniquely pungent fresh fruits from Vietnam a year ago.
In the first half of 2023, Vietnam exported US$876 million of durian, with US$835 million shipped to China, Vietnamese media reports said.
Trucking durians across the 1,306km (812-mile) land border will save money that should be reflected in retail prices, said Jack Nguyen, a partner at business advisory firm Mazars in Ho Chi Minh City.
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The market potential for Vietnamese durian shipped by land has already prompted border cities in China to improve trade logistics.
China pledged to make border transport easier in January 2022, the month when the Regional Comprehensive Economic Partnership trade agreement took effect.
US expects top diplomat Antony Blinken will host China’s Wang Yi before year-end
Taken from SCMP Tuesday, 12 September 2023
Washington expects US Secretary of State Antony Blinken will host China’s foreign minister Wang Yi in the United States before year-end, whether at next week’s UN General Assembly (UNGA) or after, the State Department said on Monday.
“I’ll let the Chinese Government speak to whether Wang Yi will or will not attend UNGA next week. But that said whether it’s UNGA or whether it is after UNGA sometime before the end of the year, it is still our expectation that Secretary Blinken will host Foreign Minister Wang Yi here in the United States,” State Department spokesperson Matthew Miller told reporters.
The Wall Street Journal reported last week that China is planning to dispatch vice-president Han Zheng to UNGA, instead of sending Yi on a broader US trip as previously signalled, citing people briefed on the matter.
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China’s top security agency has hinted that any meeting between Xi and Biden in San Francisco later this year will depend on the United States “showing sufficient sincerity”.
Britain needs China to hit net zero, says Kemi Badenoch
Taken from The Telegraph Tuesday, 12 September 2023
Business Secretary among senior ministers to talk up importance of relations with Beijing despite new row over suspected spy in Parliament
Britain needs China to reach its net zero targets, the Business Secretary has said, as Cabinet ministers insisted a row over spying should not result in a breaking of ties with Beijing.
Kemi Badenoch’s comments came as Tory backbenchers demanded action against China in the wake of allegations that a parliamentary researcher was a spy for the country.
She was one of a series of senior ministers, including the Prime Minister, to speak out in favour of continuing to engage with Beijing despite the claims.
On a tour of a Mini car factory in Oxford as she announced a £600 million investment to produce only electric cars by 2030, Mrs Badenoch said: “At the moment, China is leading on this technology, so we wouldn’t be able to get to where we want to get to on net zero by completely stopping or banning Chinese products.
“You can’t exclude Chinese-made products from the battery ecosystem.”
Qualcomm Inks Deal With Apple to Supply iPhone Chips Through 2026
Taken from WSJ Tuesday, 12 September 2023
Agreement comes as Apple has been trying to build its own modem chips to stop using Qualcomm’s
Qualcomm reached a three-year deal with Apple to supply the iPhone maker with 5G communications chips, the latest sign that Apple’s effort to make them in-house has yet to bear fruit.
The deal might indicate that Apple’s long-running effort to develop its own modems isn’t making its way into the company’s flagship phones any time soon. Apple bought Intel’s smartphone-modem business in 2019 for $1 billion, bringing on some 2,200 staff members and a portfolio of patents. Intel also had struggled to develop 5G modems and had been losing around $1 billion a year on the operation.
Qualcomm said Monday it would supply Apple with the modem chips for smartphone launches in 2024, 2025 and 2026, in a deal with terms similar to a previous arrangement between the companies.