The Economist UK - 21.09.2019

8 The EconomistSeptember 21st 2019
The world this week Business

SaudiArabia soughttoassure

markets that oil production

levels would return to normal

within weeks following the

attack on two oil facilities,

which cut around 5.7m barrels

of oil a day from output. An-

alysts are sceptical that pro-

duction can recover in such a

short timespan. The attack had

caused a huge spike in the

price of Brent crude.

The Federal Reservesliced its

benchmark interest rate for the

second time within two

months, by another quarter of

a percentage point to a range of

between 1.75% and 2%. There

has been mounting evidence

that uncertainty over trade is

starting to drag on the econ-

omy, especially manufactur-

ing. But with services flourish-

ing and consumer spending

buoyant, two of the Fed’s rate-

setters voted against a cut.

Earlier the Fed injected billions

of dollars into the financial

system because of an unex-

pected shortfall of cash avail-

able to banks, leading to a

surge in the “repo rate”for

overnight loans. It was the

Fed’s first such surprise in-

tervention in money markets

since the financial crisis.

The chief economist of the

European Central Bankde-

fended its decision to cut

interest rates and restart its

quantitative-easing scheme

amid fierce criticism from

Germany and the Netherlands.

The ecbreduced its main rate

to -0.5%, taking it further into

negative territory. Jens Weid-

mann, the head of Germany’s

Bundesbank, said the ecb had

overreacted to the euro zone’s

slowdown. Bild, a German

newspaper, lampooned Mario

Draghi, the ecb’s soon-to-retire

president,asCountDraghila,

lamentingthe“horror”for

prudentsaverswhoarebeing

suckeddry.MrDraghisteps

downonHalloween.

PurduePharmafiledfor

bankruptcyprotection,partof

a tentativesettlementit has

reachedwith 24 statesand

thousandsoflocalgovern-

mentstoresolveclaimsthat

theaggressivemarketingofits

OxyContinpainkillercontrib-

utedtoAmerica’sopioidcrisis.

Underitsbankruptcyplanthe

drugmakerwillbecomea

publictrustandtheSackler

familywillrelinquish

ownership.Purduesaysthe

settlementisworth$10bn,but

thatisnotenoughforthetwo

dozenstates,includingCali-

forniaandNewYork,thatare

contestingtheagreement.

Won’t work

WeWorkpostponed its ipo

amid tepid interest from in-

vestors and a drop in its ex-

pected stockmarket value. The

office-rental firm has never

made a profit and was trying to

go public amid market doubts

about the prospects for other

loss-making startups that have

floated shares this year. Adam

Neumann, WeWork’s hipster-

ish ceo, said he was “humbled”

by the experience.

Another blockbuster ipothat

was shelved earlier this year

was back on track, but in a

much slimmer form. An-

heuser-Busch InBevstarted

taking orders for an offering of

shares in its Asian division

minus its Australian business,

which it sold after pulling the

ipotwo months ago. The brew-

er will float the shares on the

Hong Kong stock exchange at

the end of the month.

Under pressure from an activ-

ist investor, at&twas report-

edly considering whether to

divest its Directvbusiness, a

satellite-media provider that

the telecoms giant acquired in

2015 as part of its diversifica-

tion strategy. Elliott, an activist

hedge fund, revealed recently

that it has bought a stake in

at&tand criticised its manage-

ment’s approach to acquisi-

tions, which has saddled the

company with around $160bn

in net debt.

The United Automobile Work-

ers union held its first strike at

General Motorssince 2007.

Around 48,000 employees

downed tools, disrupting more

than 50 factories and car-parts

warehouses. A collective-

bargaining deal agreed to in

2015 has expired, but the com-

pany says the pay rises and

other terms in a new contract

are generous. The union argues

that it made sacrifices when

gm faced bankruptcy in 2009,

and that its workers should be

rewarded for creating “a

healthy, profitable industry”.

The “Supreme Court”

Facebookannounced its plans

for an independent “oversight

board” to regulate decisions it

makes about censorship on the

social network. The board will

hear its first cases in 2020, and

will eventually have 40

members.

Sandoz stopped distributing its

Zantac heartburn medicine

while regulators investigate

the presence of an impurity

called ndma, which is classi-

fied as a probable human

carcinogen. The Swiss drug-

maker said that this was a

precautionary measure.

The move towards autono-

mous carsstepped up a gear

when Shanghai became the

first city in China to allow test

vehicles to carry passengers.

The riders will be volunteers

and a driver will sit in the car,

but if there are no accidents on

Shanghai’s complex and busy

road system the three car firms

that have been granted the

permits will get the green light

to increase their fleets.

Brentcrude-oilprice

Source: Datastream from Refinitiv

2019, $perbarrel

Jun Jul Aug Sep

55

60

65

Attack on Saudi facilities 70