Financial Times Europe - 19.09.2019

(Jacob Rumans) #1

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Briefing


i K reviews US move on defence groupU
British ministers have made a rare intervention in
the £4bn takeover of Cobham by US private equity
firm Advent International, to assess whether there
are national security concerns —PAGE 13; LEX, PAGE 12

i uncker doubt over Brexit deal chancesJ
European Commission president Jean-Claude
Juncker has warned that time is tight and British
prime minister Boris Johnson has yet to spell out his
demands on the so-called Irish backstop.— PAGE 2

i usiness gloom extends to 6th quarterB
The US Business Roundtable’s outlook has shown a
further fall in confidence as geopolitical tensions,
the US-China trade stand-off and slowing global
economic growth continue to take their toll.— PAGE 4

i BA applications fall for second yearM
Applications to the most highly
ranked American MBA courses
have fallen again, with colleges
blaming a “negative cycle” of
anti-immigrant rhetoric and
trade tensions.— PAGE 2

i S to step up foreign investment scrutinyU
The White House has moved to broaden the powers
of the Committee on Foreign Investment in the US
to examine non-controlling investments and real
estate deals not previously under its scope.— PAGE 4

i mart TVs send data to tech groupsS
Two large-scale analyses have shown the devices
are leaking sensitive user data to groups including
Netflix, Google and Facebook — in some cases when
they are idle.— PAGE 13; ANNE-MARIE SLAUGHTER, PAGE 11

i ented car aspirations signal India woeD
Weakening demand has sounded alarm bells, with
one analyst remarking that “the fact that this kind
of aspirational spending has been put on the back
burner shows how deep the distress is”.— PAGE 4

Datawatch


Blinded by the light


WeWork’s prophet failed to foresee


his own downfall— JOHN GAPPER, PAGE 11


THURSDAY19 SEPTEMBER 2019 WORLD BUSINESS NEWSPAPER EUROPE


World Markets


STOCK MARKETS
Sep 18 prev %chg
S&P 500 2997.51 3005.70 -0.
Nasdaq Composite 8154.13 8186.02 -0.
Dow Jones Ind 27045.38 27110.80 -0.
FTSEurofirst 300 1529.66 1529.21 0.
Euro Stoxx 50 3532.72 3521.26 0.
FTSE 100 7314.05 7320.40 -0.
FTSE All-Share 4024.85 4027.31 -0.
CAC 40 5620.65 5615.51 0.
Xetra Dax 12389.62 12372.61 0.
Nikkei 21960.71 22001.32 -0.
Hang Seng 26754.12 26790.24 -0.
MSCI World $ 2201.77 2195.88 0.
MSCI EM $ 1018.93 1027.08 -0.
MSCI ACWI $ 526.32 525.56 0.

CURRENCIES
Sep 18 prev
$ per € 1.106 1.
$ per £ 1.248 1.
£ per € 0.886 0.
¥ per $ 108.225 108.
¥ per £ 135.102 135.
SFr per € 1.101 1.
€ per $ 0.904 0.

Sep 18 prev
£ per $ 0.801 0.
€ per £ 1.129 1.
¥ per € 119.691 119.
£ index 77.248 77.
SFr per £ 1.243 1.

COMMODITIES

Sep 18 prev %chg
Oil WTI $ 58.15 59.10 -1.
Oil Brent $ 63.58 64.55 -1.
Gold $ 1502.10 1497.20 0.

INTEREST RATES
price yield chg
US Gov 10 yr 129.08 1.75 -0.
UK Gov 10 yr 148.60 0.56 -0.
Ger Gov 10 yr -0.51 -0.
Jpn Gov 10 yr 119.45 -0.19 -0.
US Gov 30 yr 109.83 2.22 -0.
Ger Gov 2 yr 101.01 -0.73 -0.

price prev chg
Fed Funds Eff 2.13 2.40 -0.
US 3m Bills 1.99 1.99 0.
Euro Libor 3m -0.43 -0.42 -0.
UK 3m 0.78 0.78 0.
Prices are latest for edition Data provided by Morningstar

JA M E S P O L I T I —WASHINGTON
P E T E R W E L L S— NEW YORK
A H M E D A L O M R A N —JEDDAH

Donald Trump has asked the Treasury
department to “substantially” toughen
economic sanctions on Iran, as the US
weighs its response to astrike gainsta
Saudi Arabian oil facilities that
knocked out more than half the king-
dom’s production.

The US president made the announce-
ment in a tweetyesterday, shortly after
appointing Robert O’Brien, the state
department’s envoy for hostage affairs,
to be his next national security adviser.
Mr O’Brien, a lawyer, replaces John
Bolton, who abruptly left the White
House team this month.
Mr Trump’s demand for more aggres-
sive economic sanctions suggests he is
taking a more cautious approach to the

crisis triggered by the attack on the
Saudi oil facility, which Mike Pompeo,
his secretary of state, said was an “act of
war” against the kingdom.
Mr Trump said on Tuesday that Iran
appeared o be behind the attack, whicht
triggered a steep rise in oil prices on
Monday. Iran has denied any involve-
ment. Mohammad Javad Zarif, Iran’s
foreign minister, tweeted that the US
was “deliberately targeting” Iranian
citizens, accusing Mr Trump of “eco-
nomic terrorism”.
The US has imposed crippling sanc-
tions on Iran since abandoning the
nuclear deal negotiated by President
Barack Obama during his second term
in office, meaning that there will not be
much scope for additional punishment.
“The Trump administration will be
scraping the bottom of the barrel,” said
Henry Rome, an analyst at the Eurasia

Group in Washington. “They’ve gone
down the list of top industries and
crossed them out. They can target
minor industries and individuals...
and they can certainly make announce-
ments every day for the next year and a
half but at this point there is very little
utility to that,” he added.
The Treasury did not respond to a
request for comment.
Some of Mr Trump’s closest political
allies on Capitol Hill suggested a softer
approach would fail. Lindsey Graham,
the Republican senator from South
Carolina saidyesterday that Iran had
not been “deterred” in its “provocative
behaviour”. “I am looking for a response
that would be unequivocal. If they don’t
pay a price for bombing a neighbour’s
oilfields, then all hell is going to break
out in the Middle East.”
Additional reporting by Andrew England

Trump seeks tighter Iran sanctions as


US brands Saudi attack an ‘act of war’


© THE FINANCIAL TIMES LTD 2019


No: 40,199★†


Printed in London, Liverpool, Glasgow, Dublin,
Frankfurt, Milan, Madrid, New York, Chicago, San
Francisco, Orlando, Tokyo, Hong Kong, Singapore,
Seoul, Dubai, Doha


AnalysisiPAGE 4

Cross-party bid to crack
Brazil’s cycle of corruption

Austria €3.80 North Macedonia Den
Bahrain Din1.8 Malta €3.
Belgium €3.80 Morocco Dh
Bulgaria Lev7.50 Netherlands €3.
Croatia Kn29 Norway NKr
Cyprus €3.60 Oman OR1.
Czech Rep Kc105 Pakistan Rupee
Denmark DKr37 Poland Zl 20
Egypt E£42 Portugal €3.
Finland €4.50 Qatar QR
France €3.80 Romania Ron
Germany €3.80 Russia €5.
Gibraltar £2.70 Serbia NewD
Greece €3.60 Slovak Rep €3.
Hungary Ft1200 Slovenia €3.
India Rup220 Spain €3.
Italy €3.60 Sweden SKr
Latvia €6.99 Switzerland SFr6.
Lebanon LBP7500 Tunisia Din7.
Lithuania €4.30 Turkey TL
Luxembourg €3.80 UAE Dh17.


Across the EU, the
use of recycled
materials stands
at about 12 per
cent. Countries are
consuming fewer
raw materials
while only
recycling slightly
more. The
Netherlands has
the highest
‘circularity rate’;
Greece the lowest

Circular argument
 of resources from recycled
and recovered materials, 

  


Netherlands
France
UK
Italy
Germany
Denmark
Finalnd
Ireland
Greece

Source: Eurostat

Led astray


The hedge fund investors losing


faith in herd instinct— BIG READ, PAGE 9


Border lines


The ethics of reporting on Mexico’s


migrant crisis— JUDE WEBBER, PAGE 10


B R E N DA N G R E E L E Y— WASHINGTON
A DA M SA M S O N— LONDON
J O E R E N N I S O N— NEW YORK


The US Federal Reserve yesterday cut
interest rates, after taking action earlier
in the day to steady money markets as
funding conditions suddenly tightened.
The Fed cut its main policy rate by a
quarter of a percentage point to a range
of 1.75 per cent to 2 per cent.
The move came after the New York
Federal Reserve pumped $75bn of
short-term cash into the US money
market in its second attempt this week
to steady short-term funding markets.
Banks and investors rushed to snap up
the loans with bids topping $80bn.
The New York Fed had stepped into
the market for the first time in more
than a decade on Tuesday.


The reduction in the Fed’s main rate
came after data and surveys showed
business investment falling and the
manufacturing industry cooling as the
Donald Trump’s trade skirmish with
China affected sentiment. The US presi-
dent himself has piled pressure on the
Fed to cut rates, citing action by other
central banks, including the ECB.
“Although household spending has
been rising at a strong pace, business
fixed investment and exports have
weakened,” the Federal Open Market
Committee said.
The New York Fed’s intervention
came after a severe imbalance in the so-
called repo market sent the cost of bor-
rowing cash overnight — known as the
repo rate — surging to a historic peak.
That pushed the Fed’s main policy

rate, the federal funds rate, above the
central bank’s 2 per cent to 2.25 per cent
target. Data releasedyesterday showed
the rate rose to 2.3 per cent on Tuesday,
from 2.25 per cent on Monday and
2.14 per cent at the end of last week.
“US funding markets were shocked
this week as a combination of factors
reduced the amount of cash available to
fund securities positions,” said Alex
Roever, head of US rates strategy at
JPMorgan Securities, one of the two
dozen primary dealers that act as trad-
ing counterparties for the Fed.
Joseph Abate, a managing director
focusing on money markets at Barclays
Capital, another primary dealer,
pointed to a “perfect storm” of “tempo-
rary pressures”.
Analysts specifically pointed to com-

panies pulling billions of dollars out of
money market funds,typically signifi-
cant providers of cash in repo transac-
tions, ahead of tax deadlines.
It had been exacerbated, they said, by
a flood of Treasuries hitting the market,
something that sharpened dealers’
demand for cash via repo transactions.
Banks, which typically step into the
market, had made less cash available
because of a decline over the past sev-
eral years in their excess reserves, said
Mr Roever.
He warned that this week’s events
might be a “prequel to what could come
at year-end when US banks significantly
reduce their footprint in the money
markets”.
Letters age 10p
Spotlight on Fed age 21p

Fed rate cut follows second bid to


ease overnight lending squeeze


3 Quarter-point reduction 3 $75bn pumped into money market 3 Tightening forces hand


Stalemate


Israel faces


coalition pain


Israel was in political limbo last night as
Benjamin Netanyahu and his chief rival
Benny Gantz were neck and neck in a
national election that is likely to lead to
weeks of tortuous coalition talks.
Mr Netanyahu, who is bidding for a
record fifth term as Israeli leader, fell six
short of a parliamentary majority as his
rightwing Likud party and its allies
secured 55 seats with 80 per cent of
votes counted. Mr Gantz’s centre-right
Blue and White alliance and other anti-
Netanyahu parties had 56 seats.
Mr Gantz is more likely to be offered
the first chance to form a government.
Mr Netanyahu would need to join forces
with political enemies who he has
repeatedly derided to stay in office.
Hanging in the balance age 3p Neither Benny Gantz, left, nor Benjamin Netanyahu was on course for a majority —Tomer Neuberg/Eyevine & Ariel Schalit/AP


President
Donald Trump
himself has
piled pressure
on the Fed to cut
interest rates,
citing action by
other central
banks, including
the ECB
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