The Economist - USA (2019-07-20)

8 The EconomistJuly 20th 2019
The world this week Business

In a presentation to scientists,

Elon Musk said that a startup

he backs which is developing

technology to integrate artifi-

cial intelligence with the brain

plans to begin tests on humans

by the end of next year. Neura-

linkis working on a system

that will connect the human

brain to machines by implant-

ing hundreds of electrode

“threads”, thinner than strands

of hair, into the brain, using a

surgical robot. The procedure

is intended for patients with

severe neurological disorders,

but could eventually be used to

boost the brain’s power.

News emerged that Facebook

is to be fined $5bn in America

for violating users’ privacy in

the Cambridge Analytica scan-

dal. Although this would be by

far the biggest penalty levied

on a technology company in

the United States, one biparti-

san group of senators

described it as “egregiously

inadequate”, and that $5bn was

too small to “alter the incen-

tives and behaviour of Face-

book and its peers”. The Federal

Trade Commission is awaiting

approval for the settlement

from the Justice Department.

Meanwhile, there was more

push back from officials

against Facebook’s plan to

launch a global crypto-

currency, to be named Libra.

Steven Mnuchin, America’s

treasury secretary, said that

given concerns about the

potential for money-launder-

ing, Libra was a national secu-

rity issue and that Facebook

has “a lot of work to do” con-

vincing government.

The negative political rum-

blings on Libra were one factor

behind a dramatic fall in digi-

tal-currency prices, a volatile

market at the best of times.

Bitcoinplunged by a third over

the course of the week.

The eu’s competition regulator

trained its sights on Amazon.

The retailer is to be investigat-

ed over the process for sharing

the “Buy Box” on its website

with independent vendors,

and whether it uses data

provided by the vendors to its

ownadvantagewhensellingits

ownproducts.

Netflix’ssharepricetumbled

afterit disclosedthatit hadlost

subscribersinAmericaforthe

firsttimeineightyearsand

hadsignedupjust2.7mnew

usersgloballyinthesecond

quarter,farbelowitsforecast

of5m.Netflixraisedthesub-

scriptionpriceforitsAmerican

customersearlierthisyear,just

asit isabouttofacestrong

competitionfromothermedia

companiesstartingtheirown

onlinestreamingservices.

Brexitnightmare

Sterlingfellsharplyagainst

the dollar and other curren-

cies. Markets are waking up to

the likely victory of Boris John-

son in the race to become

Britain’s new prime minister.

Mr Johnson maintains a hard-

line position that he is pre-

pared to leave the euwithout a

deal on October 31st; Britain’s

fiscal watchdog thinks a no-

deal Brexit would plunge the

country into recession.

Four months into its search for

a new ceofollowing the abrupt

departure of Timothy Sloan,

Wells Fargoreported a higher-

than-expected quarterly net

profit of $6.2bn. The bank is

struggling to find a new boss as

it continues to deal with the

regulatory fallout from a fake-

accounts scandal. Other Amer-

ican banksalso released sec-

ond-quarter earnings. Profit

came in at $9.7bn for JPMorgan

Chase, $7.3bn for Bank of

America and $2.4bn for Gold-

man Sachs, all above forecasts.

China’sgdpgrew by 6.2% in

the second quarter, year on

year, the slowest pace in three

decades. As the trade war with

America hits exports, China’s

economy is now fuelled by

domestic demand.

South Korea’scentral bank

sliced a quarter of a percentage

point off its main interest rate,

to 1.5%. It was the first cut in

three years and comes amid a

slump in the country’s exports.

The new governor of Turkey’s

central bank suggested that

there was now “room to

manoeuvre” on cutting

interest rates, given a fall in

inflation to 15.7%. Murat Uysal

was appointed to the job when

his predecessor was ousted in a

row over monetary policy with

the government. Recep Tayyip

Erdogan, the country’s presi-

dent, said recently that he

expects a “serious” reduction

in the 24% benchmark rate.

Anheuser-Busch InBev

scrapped a sale of shares in its

Asian business, blaming mar-

ket conditions. The brewer had

hoped to raise $9.8bn on the

Hong Kong stock exchange,

which would have made it the

world’s biggest ipothis year,

ahead of Uber.

Strange brew

AG Barr, the maker of irn-bru,

a soft drink that holds a special

place in the Scottish psyche,

issued a profit warning, blam-

ing a “disappointing” summer

in Scotland for a drop in sales.

The company, which counts

Tizer and Big Willie ginger beer

among its brands, has also had

to reduce the amount of sugar

in its drinks to comply with a

sugar tax. irn-bru’s distinct

fluorescent orange colour (and

its unique taste, a product of 32

flavouring agents) evokes such

passion that a butcher in Fife

once produced irn-bru

infused sausages.

The poundagainst the dollar

Source: Datastream from Refinitiv

$ per£

2016 17 18 19

1.

1.

1.

Brexit vote 1.