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email: [email protected]Briefing
iMinutes show Fed split over rate move
Jay Powell, Federal Reserve chairman, faced
divisions among US central bank officials as he
pressed ahead with a one-notch interest rate cut
last month, with some calling for more aggressive
easing and others resisting any action. The split,
revealed in minutes from the Fed’s last rate-setting
meeting, released yesterday, added to the challenge
facing Mr Powell ahead of the next meeting in
September, when investors expect a new move to
cut rates.— NEW TOOLS, PAGE 2iGoldman in running for Aramco role
The Wall Street bank has clawed its way into
contention for a role in the Saudi oil group’s listing,
after a charm offensive by top executives including
a former Trump administration official.— PAGE 11iItalian opposition party ready for talks
The Democratic party has declared its openness to
replacing Matteo Salvini’s League in coalition as
leaders sought a way out of a fresh crisis.— PAGE 3;
EDITORIAL COMMENT, PAGE 8; INSIDE BUSINESS, PAGE 12iPell loses appeal over child sex abuse
Australian cardinal George Pell
has lost an appeal against his
conviction for child sex abuse,
the latest chapter in a case that
has plunged the Catholic
Church into crisis.—PAGEiPentagon flags China threat in Mideast
Michael Mulroy, Washington’s top defence official
for the region, has told the FT that Beijing’s push for
influence could undermine co-operation with US
allies that grow too close to Beijing.—PAGEiUS and Japan race to seal trade accord
Insiders have said talks between Japanese economy
minister Toshimitsu Motegi and US trade chief
Robert Lighthizer yesterday could determine the
chances of a limited deal being reached.—PAGEDatawatch
Turning point
Business should stand up to China
on Hong Kong— JOHN GAPPER, PAGE 9
THURSDAY 22 AUGUST 2019 WORLD BUSINESS NEWSPAPER
World Markets
STOCK MARKETS
Aug 21 prev %chg
S&P 500 2927.38 2900.51 0.
Nasdaq Composite 8031.33 7948.56 1.
Dow Jones Ind 26258.25 25962.44 1.
FTSEurofirst 300 1478.69 1461.95 1.
Euro Stoxx 50 3391.72 3350.23 1.
FTSE 100 7203.97 7125.00 1.
FTSE All-Share 3946.69 3904.60 1.
CAC 40 5435.48 5344.64 1.
Xetra Dax 11802.85 11651.18 1.
Nikkei 20618.57 20677.22 -0.
Hang Seng 26270.04 26231.54 0.
MSCI World $ 2119.57 2131.81 -0.
MSCI EM $ 980.11 977.73 0.
MSCI ACWI $ 506.61 509.06 -0.CURRENCIES
Aug 21 prev
$ per € 1.109 1.
$ per £ 1.213 1.
£ per € 0.915 0.
¥ per $ 106.470 106.
¥ per £ 129.153 128.
SFr per € 1.088 1.
€ per $ 0.901 0.Aug 21 prev
£ per $ 0.824 0.
€ per £ 1.094 1.
¥ per € 118.112 117.
£ index 74.887 74.
SFr per £ 1.190 1.COMMODITIESAug 21 prev %chg
Oil WTI $ 56.08 56.13 -0.
Oil Brent $ 60.67 60.03 1.
Gold $ 1504.55 1496.60 0.INTEREST RATES
price yield chg
US Gov 10 yr 131.83 1.58 0.
UK Gov 10 yr 150.87 0.48 0.
Ger Gov 10 yr -0.67 0.
Jpn Gov 10 yr 120.42 -0.25 -0.
US Gov 30 yr 115.20 2.04 -0.
Ger Gov 2 yr 101.29 -0.90 0.price prev chg
Fed Funds Eff 2.40 2.38 0.
US 3m Bills 1.94 1.94 0.
Euro Libor 3m -0.45 -0.44 0.
UK 3m 0.76 0.77 0.
Prices are latest for edition Data provided by MorningstarMADHUMITA MURGIA
AND JAVIER ESPINOZA— LONDON
MEHREEN KHAN— BRUSSELSFacebook’s new digital currency, Libra,
is under early scrutiny from EU anti-
trust regulators, according to two peo-
ple familiar with the matter.The European Commission has sent out
questionnaires to groups involved with
the project as part of a preliminary
information-gathering operation, amid
fears that the currency could unfairly
disadvantage rivals, the people said.
The social media company has drawn
heavy criticism from regulators, central
bankers and politicians since it unveiled
plans to launch a low-cost digital cur-
rency alongside 27 other companies —
includingVisa,Mastercard,Uberand
Spotify— by the end of next year. Each
partner has pledged to invest $10m.Facebook also plans to integrate its
own Libra-backed digital wallet, known
as Calibra, into Facebook services such
asWhatsAppand Messenger.
The commission is “currently investi-
gating potential anti-competitive
behaviour” after fears over “possible
competition restrictions” relating to the
use of consumer data, according to a
document seen by Bloomberg.
Facebook has come under fire from
EU policymakers in the past two years
over high-profile data privacy breaches,
the spread of online disinformation,
electoral interference and terrorist con-
tent. However, the platform has not yet
been the subject of an EU antitrust
investigation.
The Libra probe comes as the world’s
biggest tech companies are coming
under increasing scrutiny from Europe.
The European Commission has intro-duced a wave of measures to clamp
down on the spread of “fake news” and
hate speech.
Brussels is also finalising legislation
that will force platforms to remove
terrorist content within an hour of
being alerted by law enforcement
authorities.
EU antitrust investigations can take
years to resolve and involve significant
fines for companies found in breach of
competition rules. Brussels imposed its
biggest ever fine if €4.34bn on Google
last year.
So far, regulators such as the interna-
tional Financial Stability Board have
said they would not allow Facebook to
launch Libra without close scrutiny.
Data protection officials in the US, EU,
UK, Australia and Canada have also
raised concerns over the “privacy risks”
surrounding Facebook’s plans.Brussels antitrust team begins circling
Facebook’s proposed digital currency
©THE FINANCIAL TIMES LTD 2019
No: 40,175★†Printed in London, Liverpool, Glasgow, Dublin,
Frankfurt, Milan, Madrid, New York, Chicago, San
Francisco, Orlando, Tokyo, Hong Kong, Singapore,
Seoul, Dubai, DohaAnalysisiPAGE 4Trump ‘insult’ hides harsh
truth for CopenhagenAustralia A$7.00(inc GST)
China RMB
Hong Kong HK$
India Rup
Indonesia Rp45,
Japan ¥630(inc JCT)
Korea W4,
Malaysia RM11.
Pakistan Rupee 350
Philippines Peso 140
Singapore S$5.80(inc GST)
Taiwan NT$
Thailand Bht
Vietnam US$4.Antidepressant
use has increased
in the developed
world as taboos
relating to mental
health weaken.
Iceland has the
highest rate of
consumption, with
145.3 out of every
1,000 people
taking a daily
dose. The UK
comes secondAntidepressants
Daily doses per *Or most recent data available
Source: OECDIceland
UK
Norway
Israel
Turkey
Italy
Chile
South Korea
*Grudge match
Inside the generational feud at
Wall St firm Apollo— BIG READ, PAGE 7
Money for old rope
Farmers hope for a second coming
for ‘miracle plant’ hemp— PAGE 17
TOMMY STUBBINGTON— LONDONThe cost of servicing the debt of devel-
oped countries has sunk to its lowest
level for more than four decades, piling
pressure on governments to borrow and
spend more in order to jump-start the
flagging global economy.
Advanced economies will spend just
1.77 per cent of their combined gross
domestic product on debt interest this
year, according to the OECD — the low-
est since 1975 and down from a peak of
3.9 per cent in the mid-1990s.
This sharp decline comes despite the
huge debt accumulated by many coun-
tries since the financial crisis. The debt-
to-GDP ratio across advanced econo-
mies has risen from 45 per cent in 2001
to 76 per cent this year, according to theIMF. The question of whether govern-
ments should launch a fresh economic
stimulus by borrowing to spend more
will be a topic for those attending
today’s annual gathering of central
bankers at Jackson Hole, Wyoming.
They meet as fears grow that mone-
tary policymakers are running out of
tools to combat a global slowdown. Calls
are mounting for fiscal authorities to
stimulate economies with projects in
infrastructure, digital connectivity and
environmental improvement.
“It’s pretty straightforward: if bor-
rowing is cheaper you should probably
do more of it,” said Olivier Blanchard,
the former IMF chief economist who has
become a vocal advocate of looser fiscal
policy. “If your interest rate is very low
then monetary policy can no longer beused the way it usually is, so you need to
do more with fiscal policy.”
The drop in debt servicing costs is
because of investors’ strong demand for
government bonds, which has pushed
the price of new borrowing to record
lows. More than $16tn of bonds around
the world trade with negative yields,
meaning some governments are in
effect being paid to borrow.
“It’s like the markets are screaming at
governments to borrow more,” said
Mark Dowding, chief investment officer
at BlueBay Asset Management.
But some sceptics worry that the easy
money investors are flinging at govern-
ments might be dangerous temptation
to add to already high debt.
“The availability of cheap money
doesn’t mean you should borrow for thewrong reasons,” said Maya MacGuineas,
president of the US think-tank Commit-
tee for a Responsible Federal Budget.
“Interest rates might be low today but,
due to high debt levels, we are very vul-
nerable to any rises in the future.”
Countries with relatively low levels of
debt such as Germany are facing grow-
ing calls to raise their borrowing. “Nega-
tive yields are investors’ way of telling
Germany that it doesn’t have enough
debt and we could easily absorb a lot
more,” said Eric Stein, a bond portfolio
manager at Eaton Vance in Boston.
Calls for more borrowing are not lim-
ited to low-debt economies. President
Donald Trump signalled this week that
he was weighing a fresh fiscal stimulus.
Bankers seek new toolspage 2
Neel Kashkaripage 9Falling debt costs raise pressure
for spending on public projects
3 Calls for fresh stimulus 3 Borrowing cheapest since 1975 3 Bankers fear lack of options
‘We can do it’
Johnson push
for Brexit deal
German chancellor Angela Merkel leads
Boris Johnson to inspect a military hon-
our guard in Berlin on his first foreign
visit since taking office as Britain’s
prime minister last month.
Ms Merkel said she hoped the UK and
EU could reach agreement within 30
days on the key issue of avoiding a hard
border in Ireland to prevent Britain’s
leaving without a withdrawal agree-
ment on October 31. Mr Johnson, who
has rejected the “Irish backstop” provi-
sion in the existing deal, said there was
“ample scope” to reach accord. “Wir
schaffen das,” he said, or, “We can do it.”
But a senior official in Paris said
France believed the likeliest outcome
was a no-deal Brexit.
Full storypage 2
John MacDougall/AFP/Getty ImagesOlivier
Blanchard,
former IMF
chief economist,
says: ‘If your
interest rate is
very low then
monetary policy
can no longer
be used the way
it usually is’
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