David Fuller and Eoin Treacy's Comment of the Day
Category - Technology

    Europe's Retail Apocalypse Spreads to Online From Stores

    This article by William Mathis and Katie Linsell for Bloomberg may be of interest to subscribers. Here is a section:

    Europe’s retail crisis is spreading from bricks-and-mortar stores to e-commerce as Asos Plc plunged the
    most in 4 1/2 years after warning that Christmas shopping got off to a disastrous start.

    The gloomy update from a U.K. online retailer that competes with Amazon.com Inc. and has furnished fashions to the likes of Meghan Markle shows that retail weakness is widespread in the runup to the holidays.

    Asos fell as much as 43 percent Monday in London, wiping more than 1.4 billion pounds ($1.8 billion) off the market value. The news dragged down other online retailers like Boohoo Group Plc and Zalando SE, as well as store operators like Marks & Spencer Group Plc and Next Plc.

    “This goes against the script,” said Stephen Lienert, a credit analyst at Jefferies. “It was supposed to be bricks and mortar that’s dying and online is the future, but that headline gets ripped up today.”

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    One Fed official suggested on Friday delaying a December rate hike, the first to do so

    This note by Thomas Franck for CNBC may be of interest to subscribers. Here is a section: 

    St. Louis Federal Reserve President James Bullard reportedly said on Friday that the central bank could consider postponing its widely anticipated December rate hike because of an inverted yield curve.

    “The current level of the policy rate is about right,” Bullard said in a prepared presentation to the Indiana Banker’s Association, according to Reuters.

    Bullard is the first member of the Fed to speak publicly about a delay in December. The Fed president — while not a Federal Open Market Committee voter in 2018 — will be able to participate in rate hike decisions in 2019.

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    Riding in Waymo One, The Google Spinoff's First Self-Driving Taxi Service

    This article by Andrew Hawkins for the Verge may be of interest to subscribers. Here is a section:

    Over the course of three separate trips in Chandler, the trained drivers in my Waymo vehicles never take control. I’ve ridden in a Waymo vehicle without a human being in the driver’s seat once before, but it was not on public roads. I was fully prepared to experience a fully driverless ride while in Chandler, but, alas, Waymo rejected my request.

    The rides are uneventful, but it is exciting to experience the little flourishes that have been added for ride-hailing customers. The minivans still smell new, or at least recently cleaned. The screen on the back of the driver’s headrest features a large blue “start” button that I could press to initiate the ride. (There’s also a physical button in the headliner of the vehicle that performs the same task.) After pressing the button, a musical chime sounds and a robotic-sounding woman’s voice says, “Here we go.”

    As I said, I’m an experienced Waymo rider — three trips and counting — but this one feels more mature. Before, it felt like you were being driven by your half-blind grandmother, but now, riding feels… mostly normal. The car slows down for speed bumps, accelerates for lane changes, and handles a number of difficult maneuvers like unprotected left turns. And it even surprises me a couple of times, like when it ended up braking too far into the crosswalk at an intersection, and then reversed back a few inches to make room for pedestrians. Of course, it probably shouldn’t have stopped so abruptly in the first place, but it is still comforting to see the car correct its mistakes in real time.

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    Email of the day on my central bank total assets chart:

    You have mentioned that the graph showing central bank assets is one of the most important. Consequently, I wondered how the fact that they are reducing this tied in with your moderately optimistic views on the stock market. Do you think the US Fed Reserve will continue to reduce its balance sheet given recent market turmoil?

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    Powell Sees Solid Economic Outlook as Rates 'Just Below' Neutral

    This article by Christopher Condon for Bloomberg may be of interest to subscribers. Here is a section:

    Federal Reserve Chairman Jerome Powell said interest rates are “just below” the so-called neutral range, softening previous comments that seemed to suggest a greater distance and spurring speculation central bankers are increasingly open to pausing their series of hikes next year.

    Treasuries and stocks rose, as Powell’s “just below” comment tempered remarks he made last month that markets had interpreted to mean that a larger amount of tightening was likely. Speaking at an event on Oct. 3, Powell said that “we may go past neutral. But we’re a long way from neutral at this point, probably.”

    In his speech Wednesday to the Economic Club of New York, Powell said the Fed’s benchmark interest rate was “just below the broad range of estimates of the level that would be neutral for the economy -- that is, neither speeding up nor slowing down growth.”

    If rates are closer to what policy makers ultimately judge is the neutral level, that could signal the Fed will tighten monetary policy less than previously projected. Eurodollar futures pricing reacted to Powell’s comments, reflecting even firmer expectations that the Fed will hike only once next year.

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    Money in a digital age: 10 thoughts

    Thanks to a subscriber for this interesting transcript of a speech delivered by Agustin Carstens from the Bank of International Settlements. Here is a section:

    Another problem is that even those transactions that have seemingly entered the ledger can be retroactively voided. In technical terms, cryptocurrencies such as bitcoin cannot guarantee the finality of individual payments. Although a user can verify that her transaction has been included in the ledger, unbeknownst to her an adversary trying to double-spend coins can create rival versions of that ledger. Since which one of the two ultimately survives is uncertain, the finality of payments is never assured. And because mining, contrary to the decentralised idea, has become an oligopolistic industry, this is a likely threat.

    Transaction rollbacks can also occur due to so-called “forking”, when cryptocurrencies split into subnetworks of users, as has happened several thousand times in the course of the last 12 months (Graph 4). Again, this means that finality will forever remain uncertain.

    2. Cryptocurrencies are unstable, including so-called “stable coins”
    Remember that money is supposed to act as a unit of account, a means of payment and a store of value. I have just explained how cryptocurrencies fall short of the first two of those goals, and they are just as weak regarding the third.

    Generating any confidence in a cryptocurrency’s value requires that its supply is predetermined by a protocol. Otherwise, it would be supplied elastically and debase quickly. Therefore, any fluctuation in demand translates into changes in valuation. The valuations of cryptocurrencies are subject to extreme volatility, as shown in Graph 5. This inherent instability is unlikely to be fully overcome by better protocols or financial engineering, as exemplified by many failed so-called “stable coins” – including, most recently, Tether, which saw a marked loss of confidence and substantial deviations from its targeted one-to-one peg to the US dollar. 

    This outcome is not coincidental. Keeping the supply of the means of payment in line with transaction demand requires a central authority, typically the central bank, which can expand or contract its balance sheet. The authority needs to be willing at times to trade against the market, even if this means taking risk on its balance sheet and absorbing a loss. In a decentralised network of cryptocurrency users, there is no central agent with either the obligation or the incentive to stabilise the value: whenever demand for the cryptocurrency decreases, so does its price.

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    Salesforce Helps Drive Software Index on Revenue Forecast

    This article by Nancy Moran and Nico Grant for Bloomberg may be of interest to subscribers. Here it is in full:

    Salesforce.com Inc. climbed as much as 9.5 percent on an intraday basis Wednesday, helping to drive a third session of gains in the S&P 500 Software & Services Index, after
    issuing a revenue forecast that topped analysts’ estimates.

    Sales may reach as much as $3.56 billion in the fiscal fourth quarter, the San Francisco-based maker of cloud-based applications software said in a statement Tuesday. Analysts on average estimated $3.53 billion, according to data compiled by Bloomberg.

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    The Chinese scientist who claims he made CRISPR babies is under investigation

    This article by Antonio Regalado for the MIT Technology Review may be of interest to subscribers. Here is a section:

    He said the girls had been conceived using IVF but that his team had added “a little protein and some information” to the fertilized eggs. That was a reference to the ingredients of CRISPR, the gene-editing technology he apparently employed to delete a gene called CCR5.

    The claim set off a wave of criticism in China and abroad from experts who said the experiment created unacceptable risks for a questionable medical purpose. Feng Zhang, one of the inventors of CRISPR, called for a moratorium on its use in editing embryos for IVF procedures.

    Documents connected to the trial named the study’s sponsors as He along with Jinzhou Qin and said it was approved by the ethics committee of HarMoniCare Shenzhen Women and Children’s Hospital.

    On Sunday, the Shenzhen City Medical Ethics Expert Board said it would begin an investigation of He’s research and released a statement saying that HarMoniCare “according to our findings … never conducted the appropriate reporting according to requirements.” The former medical director of the private hospital, Jiang Su-Qi,  told Southern Capital News he had no recollection of approving He’s research while he was on its ethics committee.

    “These two children are the guinea pigs. They will go through their whole maturing process having not understood the risks ahead of time,” said Liu Ying of Peking University’s Institute of Molecular Medicine.

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    2019 US Equity Outlook: The Return of Risk

    Thanks to a subscriber for this report for Goldman Sachs which may be of interest. Here is a section: