The Economist - USA (2019-08-17)

6 The EconomistAugust 17th 2019
The world this week Business

Spookedbyconcernsover

trade,geopoliticaltensions

andthepossibilityofreces-

sion,stockmarketshadtheir

worstdayoftheyearsofar.The

s&p 500 , DowJonesIndustrial

Averageandnasdaqindicesall

fellby3%ina day.InEurope

thedaxwasdownby2.2%and

theftse 100 by1.4%.Investors

wereparticularlyconcernedby

theyieldonlong-termAmeri-

cangovernmentbondsfalling

belowthatonshort-term

bondsforthefirsttimesince

2007.Suchayield-curve

inversionisusuallyseenasa

harbingerofa downturn.

Alsoweighingonmarketswas

newsthatGermany’sgdp

shrankby0.1%inthesecond

quartercomparedwiththe

previousthreemonths,un-

derliningtherecentfallin

Germanexportsandindustrial

output.Britain’seconomy

alsoshrankinthesecond

quarter,by0.2%,thefirst

contractionofBritishgdp

sincetheendof2012.

Meanwhile,thegrowthrateof

Chineseindustrialoutput

slowedto4.8%inJulycom-

paredwiththesamemonth

lastyear.Thatwastheslowest

paceinmorethan 17 yearsand

moreevidenceofthechilling

effectsofthetradewaronthe

Chineseeconomy.

Father Christmas

Earlier in the week, despon-

dent markets had lifted when

the Trump administration said

it would postpone a 10% tariff

on some Chinese imports until

December 15th. The list of

goods includes smartphones,

laptops, video-game consoles

and toys, which Donald Trump

suggested would benefit

shoppers in the run-up to

Christmas. The delay applies to

two-thirds of the products

subjected to this particular

levy. A 10% tariff will be collect-

ed on the other Chinese goods

from September 1st.

South Korearemoved Japan

from its list of trusted trading

partners, escalating a trade

dispute between the pair

(Japan dropped South Korea’s

preferential trading status

earlier this month). Trade

between the two countries will

now have to go through more

red tape.

Saudi Aramco, Saudi Arabia’s

state oil company, is to take a

20% stake in the refining and

chemicals assets owned by

Reliance Industries, an Indian

conglomerate. The deal, which

is still being negotiated, deep-

ens existing ties between the

companies and will be one of

the biggest foreign invest-

ments in India to date.

Boeingdelivered just 19 planes

in July, the least since the

financial crisis. The company

is holding more than 150 of its

737 maxaircraft, which have

been grounded after two fatal

crashes. The ripples from the

grounding continue to spread.

Norwegianairline said it was

ending flights from Ireland to

America in part because of the

“continued uncertainty” of the

737 max’s return to service. It is

Norwegian’s first retreat from a

transatlantic market it had

entered assertively.

Cathay Pacific’s share price

regained the ground it lost

amid protests at Hong Kong’s

airport. The territory’s biggest

airline was also ordered by

China’s aviation authority to

takecrewoffanyplanebound

forthemainlandif theysup-

portedtheprotesters.Cathay

saidit wouldcomply,leavingit

vulnerabletoclaimsofbeing

pro-Chinese.

Afteryearsofon-offnegotia-

tionswitha plotworthyofa

soapopera,Viacomandcbs

agreedtomerge,reunitingtwo

mediacompaniesthatwere

splitin 2006 andcombining

assetssuchasParamountand

mtvwithoneofAmerica’sbig

fournetworks.ShariRedstone,

whosefamilycontrolsboth

companies,willbecomechair-

womanofViacomcbs.

A minefield

Britain’s advertising authority

banned two tvads under new

rules on gender stereotyping.

One ad, for Volkswagen,

depicted men being more

adventurous than women. The

other, for Philadelphia cream

cheese, showed two men

distracted by lunch neglecting

their babies. Mondelez, the

maker of Philadelphia, said it

chose two dads “to deliberately

avoid the typical stereotype” of

two mothers. The regulator

disagreed, ruling that “the men

were portrayed as somewhat

hapless” and that the “humour

in the ad derived from the use

of the gender stereotype”.

WeWork’sparent company

filed documents for its eagerly

awaited ipo, which might

happen next month. The office

rental firm is the latest in a

string of high-profile startups

to float on the stockmarket this

year. Like many of its contem-

poraries, WeWork’s filing

suggests it struggles to make a

profit. In the first half of this

year it recorded a $905m loss.

Uber’ssharepricefellbya fifth

in the days after it revealed a

$5.2bn quarterly loss. Most of

that was because of share-

based compensation paid to

workers after Uber’s ipo, but

even on its favoured measure

of profitability it made a loss of

$656m, more than in the same

quarter last year. Dara Khos-

rowshahi, the chief executive,

accepted that investors were

frustrated with mounting

losses, conceding that “There’s

a meme around, which is, can

Uber ever be profitable?”.

Uber

Source: Company reports

Net losses, $bn

2017 18 19

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