Macro Links Oct 19th – Deepmind Goes Skynet

Macro Links Oct 19th – Deepmind Goes Skynet

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DEEPMIND GOES SKYNET

DeepMind’s Go-playing AI doesn’t need human help to beat us anymore – The Verge

Google’s AI subsidiary DeepMind has unveiled the latest version of its Go-playing software, AlphaGo Zero. The new program is a significantly better player than the version that beat the game’s world champion earlier this year, but, more importantly, it’s also entirely self-taught.

“By not using human data — by not using human expertise in any fashion — we’ve actually removed the constraints of human knowledge,” said AlphaGo Zero’s lead programmer, David Silver, at a press conference. “It’s therefore able to create knowledge itself from first principles; from a blank slate […] This enables it to be much more powerful than previous versions.”

Stunning AI Breakthrough Takes Us One Step Closer to the Singularity

Remember AlphaGo, the first artificial intelligence to defeat a grandmaster at Go? Well, the program just got a major upgrade, and it can now teach itself how to dominate the game without any human intervention. But get this: In a tournament that pitted AI against AI, this juiced-up version, called AlphaGo Zero, defeated the regular AlphaGo by a whopping 100 games to 0, signifying a major advance in the field. Hear that? It’s the technological singularity inching ever closer.

“This technique is more powerful than previous versions of AlphaGo because it is no longer constrained by the limits of human knowledge,” notes the DeepMind team in a release. “Instead, it is able to learn tabula rasa [from a clean slate] from the strongest player in the world: AlphaGo itself.”

DeepMind’s Superpowerful AI Sets Its Sights on Drug Discovery – Bloomberg

DeepMind, the London-based artificial intelligence company owned by Alphabet Inc., is planning to let its software learn how to fold proteins, an important problem for drug discovery.

The company is best known for AlphaGo, software that beat the world’s top human players at the ancient strategy game Go. But now it has created software based on a different design, called AlphaGo Zero, which can beat all previous versions of AlphaGo. Unlike earlier versions, AlphaGo Zero learned completely from scratch, with no knowledge of how humans play the game, DeepMind chief executive Demis Hassabis said at a press conference held ahead of the publication of the new research in the scientific journal Nature Wednesday.

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NIGER ATTACK, FALLEN SOLDIER FALLOUT

JohnMcCain: W.H. not being up front about Niger attack – CNNPolitics

Sen. McCain argued Wednesday that the Trump administration is not being forthcoming about the attack in Niger that left four US soldiers dead and two wounded. Pressed further on whether the administration was being up front about the ISIS-affiliated attack, McCain answered bluntly: “No.”

The Arizona Republican did not go into detail about what kind of information he was looking for, saying only that he was interested in “all the specifics.”

“That’s why we’re called the Senate armed services committee. It’s because we have oversight of our military,” he said. “So we deserve to have all the information.”

The Defense Department is conducting an initial review of the deadly attack, searching for precise answers as to how 50 ISIS-affiliated fighters were able to ambush the group of soldiers two weeks ago.

White House staff drafted Niger sympathy statement for Trump that was never released – POLITICO

Staffers at the National Security Council drafted and circulated a statement of condolence for President Donald Trump to make almost immediately after a deadly ambush of U.S. soldiers in Niger earlier this month.

But Trump never publicly issued the statement, and, some two weeks later, is now in hot water over his initial silence on the soldiers’ deaths and alleged controversial comments he made to a widow of one of the dead.

Trump Denies Making Insensitive Remarks to Soldier’s Widow – WSJ

President Donald Trump denied he made insensitive remarks in a phone call to the widow of a U.S. soldier and accused a Democratic congresswoman of making up the claim, which was supported by a member of the soldier’s family.

Mother of fallen soldier: ‘Trump did disrespect’ my family | TheHill

The mother of Sgt. La David Johnson, who was killed in an ambush in Niger earlier this month, said President Trump did disrespect her family.

Trump didn’t know fallen soldier’s name, kept calling him ‘your guy,’ congresswoman says – ABC News

Wilson isn’t changing her story after Trump suggested she would.

Trump’s Condolence Call to Soldier’s Widow Ignites an Imbroglio – The New York Times

A furious back-and-forth turned what can be an emotionally wrenching encounter into an ugly spectacle between the president and a bereaved citizen.

Trump offered a grieving military father $25,000 in a phone call – The Washington Post

“No other president has ever done something like this,” Trump told the late soldier’s father. The man said he has not received the check, but the White House said Wednesday that it was sent.

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SESSIONS TESTIMONY

Sessions says he can’t ‘make a blanket commitment’ not to jail journalists – The Washington Post

“We will utilize the authorities that we have, legally and constitutionally, if we have to,” Sessions said during a Senate Judiciary Committee hearing.

Sessions, Franken engage in testy battle over discussions with Russians – CNNPolitics

Jeff Sessions told Democratic Sen. Al Franken Wednesday that he had no “improper discussions” with the Russians in a tense exchange during the attorney general’s hearing with the Senate judiciary committee Wednesday.

“Not being able to recall what you discussed with him is very different than saying, ‘I have not had communications with the Russians,'” Franken said. “The ambassador from Russia is Russian. And how your responses morphed from, ‘I did not have communications with the Russians’ to ‘I did not discuss substantive, I did not discuss the political campaign’ and then finally going to, ‘I did not discuss interference in the election.’ That, to me, is moving the goal posts every time. … By the end, we’re going to a 75-yard field goal.”

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HEALTHCARE FLIP-FLOP

Trump Pulls Back From Senate Deal to Fund Health Subsidies – The New York Times

President Trump on Wednesday backed away from his endorsement of a bipartisan Senate proposal to stabilize health insurance markets, throwing the legislative effort into doubt even as the chief architect of the deal predicted that it would become law before the end of the year.

Deal to Prop Up Obamacare Stalls After Trump’s Mixed Signals – Bloomberg

Trump had personally encouraged Republican Senator Lamar Alexander of Tennessee to reach a deal with Democrat Patty Murray of Washington, but as soon as the deal was announced Tuesday, he started sending conflicting signals about his stance.

The president further deepened the confusion during a meeting with senators later Wednesday morning. “Lamar Alexander’s working on it very hard from our side. And if something can happen, that’s fine,” Trump told reporters. “But I won’t do anything to enrich the insurance companies because right now the insurance companies are being enriched.”

Trump Signals Opposition to Bipartisan Health-Care Deal – WSJ

President Donald Trump sent a strong signal that he opposes a bipartisan deal on health care after earlier expressing support, sowing confusion and raising questions about the bill’s chances of success.

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GOP TAX PLAN

Treasury secretary: Pass a tax bill or markets will tank – POLITICO

Steven Mnuchin has a stern warning for Congress: You could blow up the stock market if you fail to cut taxes.

The Treasury secretary, in the first episode of the “POLITICO Money” podcast, said Wall Street’s big runup following the election of President Donald Trump is largely based on expectations of Congress passing a major tax-relief bill, and failure to do so could have significant consequences. The Dow is now up about 25 percent since the election, a fact Trump tweets about frequently.

“There is no question that the rally in the stock market has baked into it reasonably high expectations of us getting tax cuts and tax reform done,” Mnuchin said in the interview. “To the extent we get the tax deal done, the stock market will go up higher. But there’s no question in my mind that if we don’t get it done you’re going to see a reversal of a significant amount of these gains.”

‘It’s very hard not to give tax cuts to the wealthy,’ Steven Mnuchin now says

“The top 20 percent of the people pay 95 percent of the taxes,” the Treasury secretary said. “The top 10 percent of the people pay 81 percent of the taxes. So when you’re cutting taxes across the board, it’s very hard not to give tax cuts to the wealthy with tax cuts to the middle class,” he concluded. “The math, given how much you are collecting, is just hard to do.”

Mnuchin pledges ‘fix’ to tax plan’s deduction elimination | New York Post

Treasury Secretary Steve Mnuchin said the administration planned to “fix” its tax reform plan’s proposed elimination of deductions for state and local taxes — a move that would hammer New York and other high tax states. “We’re working on fixing that right now. We’re conscious of that issue,” Mnuchin told Politico in an interview published on Wednesday.

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KURDISH AND IRAQI CONFLICT, ISIS

Struggle Over Kirkuk Puts the U.S. and Iran on the Same Side – The New York Times

American officials, including President Trump, insisted that the United States was not taking sides in the dispute, but some analysts say that the United States approved the Iraqi plan to enter Kurdish-held areas and that Iran helped broker the agreement with a Kurdish faction to withdraw its fighters from Kirkuk, allowing the Iraqi forces to take over largely unopposed.

As Iraqi Forces Consolidate Control of North, Kurds Flee – WSJ

Thousands of Kurdish civilians fled their homes in northern Iraq, fearing harassment by government forces and Shiite militias who have taken control of a vast swath of territory from Kurdish fighters.

With Loss of Its Caliphate, ISIS May Return to Guerrilla Roots – The New York Times

With the fall of its capital and loss of territory, the Islamic State may be reeling but not vanquished. Islamic State leaders signaled more than a year ago that they had drawn up contingency plans to revert to their roots as a guerrilla force after the loss of their territory in Iraq and Syria. Nor does the group need to govern cities to inspire so-called lone wolf terrorist attacks abroad, a strategy it has already adopted to devastating effect in Manchester, England, and Orlando, Fla.

For ISIS, Losing Territory Means Losing Revenue – WSJ

Once the wealthiest terror group in the world, Islamic State is losing lucrative sources of income and its ability to recruit fighters along with the territory in Iraq and Syria that is rapidly slipping from its grip.

Inside Islamic State’s Other Grisly War, a World Away From Syria – WSJ

Islamists in the Philippines pledged allegiance to ISIS and occupied the city of Marawi, torching churches and beheading hostages. On the verge of defeat, like their Syrian counterparts, they have left behind devastation and a model for other militants.

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NAFTA, IRAN DEAL, TRADE TENSIONS

Republicans gear up to fight Trump over Nafta

Republicans in Congress are examining how to block a potential move by Donald Trump to pull the US out of the North American Free Trade Agreement as members of the president’s own party also warn him that any such move could put a joint push for tax cuts at risk.

The preparations come amid rising concerns on Capitol Hill and among US businesses about changes to the 23-year-old trade pact with Canada and Mexico that the Trump administration is pursuing and what they fear are “poison pill” proposals intended to force a collapse of increasingly bitter negotiations.

They also illustrate how the Trump administration is becoming isolated in Washington on trade and other issues and how pro-trade Republicans are gearing up for another fight with the president to protect a Nafta they see as vital to the US economy.

Delayed Nafta Talks to Seep Into Political Races Next Year in U.S., Mexico – WSJ

The decision to extend negotiations over the North American Free Trade Agreement into next spring will inject trade into the middle of political campaigns in the U.S. and Mexico next year, and may complicate efforts to sign and ratify a new version of the pact. The U.S., Canada and Mexico said Tuesday that they would take a longer-than-expected pause in the talks and allow negotiations to run through the first quarter of 2018, extending a previous goal of wrapping up a deal around the end of the year.

Iranian leader urges Europe to defy ‘mentally retarded’ Donald Trump over nuclear pact | Irish Examiner

Iran’s supreme leader has described Donald Trump as “mentally retarded” as he urged Europe to do more to back the 2015 nuclear deal after the US president refused to re-certify the pact.

European companies have rushed into the Iranian markets since the landmark accord, and Ayatollah Ali Khamenei’s comments show he hopes to leverage them into protecting the nuclear deal.

Tillerson Hails Ties With India, but Criticizes China and Pakistan – The New York Times

Rumors about whether Mr. Tillerson has been considering leaving the Trump administration have surrounded him for months. His relationship with President Trump is thought to be rocky, with Mr. Trump posting messages on Twitter that undercut Mr. Tillerson’s diplomatic efforts and Mr. Tillerson openly disagreeing with the president on important policy matters.

But top American officials have been calling for closer ties with India for most of India’s seven decades as an independent nation, and little was new about Mr. Tillerson’s calls for improved military and economic relations between the two.

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PUERTO RICO

Puerto Rico death toll is probably much higher than official count

The official count from Hurricane Maria is now 48 deaths. “We knew from reports on the ground, and investigative journalists who’ve also been looking into this, that this was very likely way too low of a number,” said Eliza Barclay, an editor at Vox.

So they dug into the numbers, cross-checking with news reports, and found that the number of casualties resulting from the hurricane was probably much closer to 450. Two members of Congress have now announced they will request an audit of the official death toll.

‘Shrinking, shrinking, shrinking’: Puerto Rico faces a demographic disaster – The Washington Post

“We are watching a real live demographic and population collapse on a monumental scale,” according to Lyman Stone, an independent migration researcher and economist at the Agriculture Department. The hurricane hit “might just be the kick in the pants Puerto Rico needs to really fall off this demographic cliff into total epochal-level demographic disaster.”

After Maria, José Andrés and his team have served more meals in Puerto Rico than the Red Cross – The Washington Post

Nearly a month after Maria, Andrés, World Central Kitchen and volunteers have reached a milestone in their #chefsforpuertorico campaign: As of Tuesday, they’ve prepared and delivered a million meals to residents. As a point of comparison, the American Red Cross has served more than 540,000 meals and snacks (and distributed more than 534,000 relief supplies) in the weeks since hurricanes Irma and Maria struck Puerto Rico, according to a spokeswoman for the organization.

FEMA has provided more than 14 million meals and 11 million liters of water in all 78 municipalities in Puerto Rico, said spokesman Dan Stoneking. That number includes meals provided by state, local and volunteer organizations, such as World Central Kitchen, which FEMA has helped fund. Many of FEMA’s meals are military and civilian MREs, or meals ready to eat, which do not include hot food.

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NEW ZEALAND ELECTION, RUSSIA ELECTION

New Zealand Finally Knows Who Will Be Prime Minister, Nearly Four Weeks Since Its Election

Ardern learned she would become prime minister at the same time as the rest of New Zealand, watching NZ First leader Winston Peters’ speech live on national television. After weeks of negotiations, Peters revealed on Thursday afternoon that his party would be entering into a coalition government with Labour, ending the National party’s nine years in office.

New Zealand Labour Will Form Government for First Time in Nine Years – Bloomberg

Jacinda Ardern will become New Zealand’s youngest prime minister in more than 150 years after winning the backing of a minor nationalist party to form a coalition government. After 12 days of negotiations, New Zealand First leader Winston Peters threw his support behind the 37-year-old, saying an economic slowdown was looming and that capitalism needed to regain its “human face.”

Kiwi Tumbles After Labour Party Wins Support to Form Government – Bloomberg

New Zealand’s dollar dropped the most in five months after the opposition Labour Party won the support of smaller players to form a new government, raising questions over policy direction for the central bank and on immigration.

The kiwi fell as much as 1.6 percent to 70.38 U.S. cents as New Zealand First Party, which holds the balance of power after last month’s inconclusive elections, backed Labour to form a coalition government.

Investors are concerned the economy would slow under a Labour-led government that wants to boost social spending and have the Reserve Bank of New Zealand add full employment to its mandate of price stability. Both Labour and New Zealand First want to cut immigration from record levels, which would risk exacerbating a skills shortage and curbing growth, according to an earlier report by Standard Chartered Research economists.

“The market is selling the New Zealand dollar on the risk that a new Labour government, supported by New Zealand First in parliament, would change the RBNZ’s mandate from solely targeting inflation,” said Mansoor Mohi-uddin, head of currency strategy in Singapore at NatWest Markets, a unit of Royal Bank of Scotland Group Plc.

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POLITICAL ADS, PROPAGANDA, EXTREMISM

McCain Backs Measure to Tighten Disclosure of Online Political Ads – WSJ

A proposal to require social media companies to disclose information about political advertising on their platforms has drawn the support of a key Republican, Sen. John McCain.

Trump Campaign Staffers Pushed Russian Propaganda Days Before the Election

Kellyanne Conway and Donald Trump Jr. pushed messages from an account operated from Russia’s ‘troll farm’—including allegations of voter fraud a week before Election Day.

In Italian Schools, Reading, Writing and Recognizing Fake News – The New York Times

A new program, aided by companies like Facebook, will aim to teach students how to recognize and stop the sharing of fake news and conspiracy theories.

Facebook and Google Helped Anti-Refugee Campaign in Swing States – Bloomberg

In the final weeks of the 2016 election campaign, voters in swing states including Nevada and North Carolina saw ads appear in their Facebook feeds and on Google websites touting a pair of controversial faux-tourism videos, showing France and Germany overrun by Sharia law. French schoolchildren were being trained to fight for the caliphate, jihadi fighters were celebrated at the Arc de Triomphe, and the “Mona Lisa” was covered in a burka.

“Under Sharia law, you can enjoy everything the Islamic State of France has to offer, as long as you follow the rules,” intoned the narrator of one ad.

Unlike Russian efforts to secretly influence the 2016 election via social media, this American-led campaign was aided by direct collaboration with employees of Facebook and Google. They helped target the ads to more efficiently reach the intended audiences, according to internal reports from the ad agency that ran the campaign, as well as five people involved with the efforts.

Kenyan Election Official Fears New Vote Won’t Be Credible – The New York Times

The chairman of the electoral commission accused the top political parties of interfering with the election, scheduled for next week.

YouTube’s AI tech flags 83% of extremist videos taken down

YouTube has revealed that more than 80 per cent of violent and extremist videos taken down in September were flagged up by its new spam-fighting artificial intelligence tools. The Google-owned company began applying machine learning algorithms to its videos in June, so that it could quickly spot hateful content and flag it to human reviewers.

Playboy model seeks to dislodge (or maybe help) Putin – POLITICO

Ksenia Sobchak, a former pin-up and socialite with ties to Vladimir Putin, announced on Wednesday that she will run for the Russian presidency, triggering furious accusations of Kremlin trickery by the opposition.

Sobchak, 35, is the daughter of Anatoly Sobchak, a former mayor of St. Petersburg and the man who gave Putin his first job in politics after he left the KGB. Some believe she is Putin’s goddaughter, a claim that she has consistently denied. Her mother, Lyudmila Narusova, sits in the upper house of the Russian parliament.

Alexei Navalny, the Russian opposition leader who also wants to run for the presidency, said last month that Sobchak would act as a “spoiler” candidate and that she was coordinating her bid with the Kremlin.

“This is a loathsome Kremlin game that goes by the title of ‘let’s put a liberal laughing-stock up for the elections in order to distract attention,’” Navalny said. Sobchak hit back, accusing Navalny of seeking a “monopoly” over Russian opposition politics.

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RATES, LIQUIDITY, SYSTEMIC RISK, BALANCE SHEETS

Bitcoin Just Had Its Biggest Drop in a Month – Bloomberg

Traders waiting for a pullback in bitcoin’s price to rebuild positions in the world’s largest cryptocurrency may have the U.S. Commodity Futures Trading Commission to thank.

In a primer on the asset class published Tuesday, the agency said virtual “tokens” used in initial coin offerings can come under CFTC oversight, a message that a market averse to scrutiny did not take well. Bitcoin fell as much as 8.4 percent, its biggest loss in almost a month, to as low as $5,109.

The U.S. Securities and Exchange Commission has already said tokens from some ICOs can be securities under its oversight. “There is no inconsistency between the SEC’s analysis and the CFTC’s determination” from 2015 that virtual currencies are commodities, the CFTC said.

China’s Giant Ball of Money May Be Headed Back to Stocks – Bloomberg

Property, overseas investments and shadow-banking products have all been targeted by China’s campaign to curb financial risks over the past year. What’s left?

Some analysts are betting that restrictions on other popular investment channels will lure what’s often called China’s giant ball of money back into stocks, which, despite steady gains, have seen a slow take up in volumes since a spectacular boom and bust in 2015. Chinese equity holdings will swell by up to 11 trillion yuan ($1.7 trillion) in the 2 1/2 years through end-2019 amid policies to clean up the financial system, Morgan Stanley predicts.

European Stock Volatility Hits a Record Low – Bloomberg

Tranquility ruled the bourses of Europe on Wednesday as the VStoxx Index of euro-area volatility dropped to an all-time low. Still, the calm has yet to spur levels of exuberance seen across the Atlantic. While a rally has lifted U.S. benchmark indexes to record highs, European stocks still trade about 30 percent below their March 2000 peak.

Chinese property boom props up Xi’s hopes for the economy

Urged on by Beijing, 38 per cent of all bank loans issued in the 12 months to August were home mortgages, according to official data, and local governments purchased 18 per cent of all residential floor space sold last year as part of a drive to provide affordable housing, according to estimates by E-House China Research Institute.

The result has been another heady boom in construction. Rome was not built in a day, but based on residential floor area completed last year, China built the equivalent of a new Rome about every six weeks.

Some economists and investors warn that short-term growth from the latest housing boom has come at a cost: inflating a property bubble whose eventual bursting will inflict great pain. A senior Chinese legislator recently warned in unusually blunt terms that the economy has been “kidnapped” by property.

17V19 - HOUSE PRICES CHINA

Machines Took Over the Stock Market. Next Up, Bonds – WSJ

In part because of its complexity and relatively low liquidity, that corner of Wall Street has been one of the more resistant to technological changes sweeping trading, lending and just about everything else in banking. A recent study by the Bank for International Settlements estimated that only 40% of investment-grade corporate bond trading was executed through computers rather than over the phone, compared with 75% in Treasury-debt trading, 80% in stocks and 90% in a broad array of futures contracts.

Now, investment banks are pushing to stoke more electronic trading in the market, especially with small trades that otherwise might fall through the cracks. It is yet another example of banks turning to technology to try to generate revenue growth at relatively low cost.

Starting with smaller trades, those under $1 million, is a safer route for the banks because it doesn’t threaten the profit margins on the big trades they do with institutions.

Hedge Funds Stung by Prospect of Interest-Rate Rises – WSJ

Computer-driven funds have been trying to profit for months from steady declines in the dollar, British pound and government bond yields. But many took a battering last month when the Federal Reserve and Bank of England pointed to future interest rate rises, sending those assets into reverse.

While some funds have clawed back some ground in the early days of this month, many are nevertheless finding that this September slump has dented their 2017 performance.

The losses highlight how many hedge funds and more traditional investors have been positioned for current benign economic conditions to continue—conditions in which inflation and interest rates stay low while bonds and stocks edge higher.

Investors Are Cautious on Tech’s Big Startups: Many May Be Overvalued – WSJ

Silicon Valley should brace for more political backlash against the tech sector as the companies increasingly grow in size and power, prominent startup investors said Wednesday.

“The system is not working right,” said Sam Altman, president of the tech incubator Y Combinator, at a panel at The Wall Street Journal’s WSJ D.Live technology conference. “I don’t know if tech companies are going to get broken up, but I do know the tech backlash is going to be strong.”

Driving these concerns are job losses and economic inequality resulting from advances in tech and artificial intelligence, mixed with tech giants’ growing influence in Americans’ lives and politics, the panelists said.

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MACRO OP-EDS, INSIGHT, EVENTS AND TRENDS

Step Inside the Silicon Valley of Agriculture

How did the Netherlands, a country better known for its tulips, become a leading tomato producer and the top exporter of onions and potatoes? With more than half its land area used for agriculture, the nation is a pioneer in greenhouse horticulture. Dutch farmers are trailbrazing innovative methods that result in producing more food with fewer resources—methods that are increasingly relevant as climate change and more dramatic cycles of drought and flooding wreak havoc on traditional farming, coupled with a global population on target to reach 10 billion by 2050.

State-of-the-art technology also fuels the business of getting produce and flowers to market. Round-the-clock packaging plants and highly-automated cargo terminals at the port of Rotterdam help maintain the country’s rank as the number two global exporter of food products (by value) behind the United States.

Now the country has added knowledge and technology to its extensive list of exports. The government, universities, research institutes, and private growers and breeders are involved in food systems projects around the world. This export of knowledge also happens on Dutch soil—at university campuses where thousands of international students earn degrees to help address food security issues in their home countries.

Thirty years ago this week, Wall Street slid into the abyss

When it was over, the Dow Jones Industrial Average .DJI had lost 22.6 percent in one day, equivalent to a drop of about 5,200 points in the index today. The benchmark U.S. S&P 500 index .SPX plunged 20.5 percent on Black Monday, equal to a drop of over 520 points today, and the Nasdaq dropped 11.4 percent, comparable to a drop of about 750 points.

Many describe the events of Black Monday as the first instance of computer trading gone haywire, caused by the use of portfolio insurance, a hedging strategy against market declines that involves selling short in stock index futures.

The prior week’s fall in U.S. stocks led to selling by investors in Asian markets to limit losses. Those losses then signaled investors in Europe to sell, which caused increased selling by the time U.S. markets were to open on Black Monday.

“It was like nobody wanted to question the computer,” said Ken Polcari, director of the NYSE floor division at O’Neil Securities in New York, who was a 26-year-old in his second year as a member of the NYSE.

“Then what happens is it feeds on itself because as the prices got worse the risk management software kept spitting out a new message – You need to sell more,” said Polcari.

Donald Trump’s poisoning of global trade

How many poison pills does it take to kill a trade deal? Three, according to Donald Trump. Mexico and Canada are bending over backwards to preserve the North American Free Trade Agreement. But their tolerance for Mr Trump’s demands is wearing thin. It seems a matter of time before he declares America’s exit from “the worst trade deal ever”. The temptation to withdraw from the World Trade Organisation will grow as Mr Trump’s term wears on. Anyone who thinks he has dropped his vow to rip up the global trading system has not been paying attention.

Reporters used to joke that “Worthwhile Canadian trade initiative” was the dullest headline ever written. Mr Trump has made it exciting. A year ago it would have been hard to imagine Canada and Mexico teaming up against the US. Mr Trump has driven them together. One such poison pill is the demand that Nafta “sunset” every five years, which is like putting a recurring expiry date in a marriage agreement. Divorce becomes inevitable.

Another is the demand that half of all duty-free content for cars made in North America be sourced to the US. This would shred the regional supply chains that automakers have set up. A third is to scrap Nafta’s disputes resolution system, which gives investors protection against arbitrary contract-breaking. Mr Trump built his business by dishonouring contracts. He is not about to stop now.

Such tactics are the opposite of the art-of-the-deal image Mr Trump has spun. According to that playbook, Mr Trump opens with extravagant demands that force his counterparties to improve their offers. The final deal is far better than had he begun with a realistic gambit. Yet when Mr Trump refuses to dilute his outrageous opening offer, the suspicion arises that he never wanted a deal. That, indeed, has been his approach to almost every negotiation. Mr Trump’s Nafta talks are rigged to fail. From the Iran nuclear deal, to the fate of Obamacare and immigrant “Dreamers”, Mr Trump sets up others to carry the can. “I’m not going to blame myself,” Mr Trump said this week on Obamacare. The buck stops on Capitol Hill, the state department, Mexico City, Ottawa — take your pick.

Why Silicon Valley Is Going Gaga for Bitcoin | Vanity Fair

For a lot of people on the periphery of this technology, the extraordinary rise in bitcoin’s value has become cause for alarm. The Web is littered with news articles, blog posts, and white papers warning that bitcoin and its sibling currencies are worth nothing, and the rise and fall of the currencies’ worth, which can fluctuate by billions of dollars a minute, certainly backs that up. But while Jamie Dimon and other bankers might scoff at these digital currencies, Silicon Valley is extremely bullish. There’s a reason, too: if Dimon had invested in bitcoin when he first called it a joke, in 2015, he would have received a tenfold return on his investment.

There are a number of reasons why bitcoin and cryptocurrencies are doing so well right now. One of the more plausible scenarios was outlined this week in a very clever post written by Adam Ludwin, an investor and co-founder of Chain.com, a bitcoin developer platform, which argues that bitcoin is an entirely new asset class, similar to equities and bonds, and that “bitcoin is capitalism, distilled.” The “capitalism” part of the sentence helps explain why some in Silicon Valley are so specifically exuberant about it right now. “In the short-run, there will be extreme volatility as FOMO competes with FUD, confusion competes with understanding, and greed competes with fear (on both the buyer side and the issuer side),” Ludwin wrote. “Most people buying into crypto assets have checked their judgement at the door.”

This gets someone like me a bit nervous about what cryptocurrencies could end up doing to society in the long run. Silicon Valley culture is largely fueled by people who love to decimate industries that don’t work, often without any thought of how the disruption could lead to other negative results happening in society (see the recent social-media debacle around the election ). In typical Valley fantasy, people are seeing only the positive potential with bitcoin, not the potentially ugly outcomes when humans molest it for their own interests.

One of the many factors currently fueling the ascent of bitcoin is the rise of initial coin offerings, or I.C.O.s, where some lucky investors are reaping astounding returns. You can think of these like a traditional initial public offering, or I.P.O., but without the layers upon layers of regulation and government bureaucracy that come with a company going public. With an I.C.O., a start-up raises money for a new venture by selling “coins” that are very similar to shares of a public company. The coins then rise and fall as the company’s value oscillates. In 2014, when the founding of a new cryptocurrency called Ethereum was announced, it raised $18 million by selling a new digital coin called “Ether” for 40 cents per coin. Today, Ethereum has a market cap of around $30 billion. So if you had spent $100 on Ether during the I.C.O., you would have made $74,900 in profit. As Nathaniel Popper detailed in The New York Times earlier this summer, I.C.O.s have been generating billions of dollars in returns for some—and a lot of scams, too.

How the Frightful Five Put Start-Ups in a Lose-Lose Situation – The New York Times

The technology industry is now a playground for giants. Where 10 or 20 years ago we looked to start-ups as a font of future wonders, today the energy and momentum have shifted almost completely to the big guys. In addition to the many platforms they own already, one or more of the Five are on their way to owning artificial intelligence, voice assistants, virtual and augmented reality, robotics, home automation, and every other cool and crazy thing that will rule tomorrow.

Start-ups are still getting funding and still making breakthroughs. But their victory has never been likely (fewer than 1 percent of start-ups end up as $1 billion companies), and recently their chances of breakout success — and especially of knocking the giants off their perches — have diminished considerably.

The best start-ups keep being scooped up by the big guys (see Instagram and WhatsApp, owned by Facebook). Those that escape face merciless, sometimes unfair competition (their innovations copied, their projects litigated against). And even when the start-ups succeed, the Five still win.

Because today’s giants are nimbler and more paranoid about upstart competition than the tech behemoths of yore, they have cleverly created an ecosystem that enriches themselves even when they don’t think of the best ideas first. The Five run server clouds, app stores, ad networks and venture firms, altars to which the smaller guys must pay a sizable tax just for existing. For the Five, the start-up economy has turned into a heads-I-win-tails-you-lose proposition — they love start-ups, but in the same way that orcas love baby seals.

Google’s Founders Wanted to Shape a City. Toronto Is Their Chance. – The New York Times

“Years ago, we were sitting there thinking, Wouldn’t it be nice if you could take technical things that we know and apply them to cities?” Eric Schmidt, the executive chairman of Alphabet (now Google’s parent company), said Tuesday. “And our founders got really excited about this. We started talking about all of these things that we could do if someone would just give us a city and put us in charge.”

That is, of course, an outlandish idea. “For all sorts of good reasons, by the way, it doesn’t work that way,” Mr. Schmidt acknowledged. But there he was standing Tuesday before an array of Canadian flags, in front of Prime Minister Justin Trudeau and Ontario officials, to announce the closest thing anyone has seen to a tech company that takes the reins in a major city.

Toronto has about 800 acres of waterfront property awaiting redevelopment, a huge and prime stretch of land that amounts to one of the best opportunities in North America to rethink at scale how housing, streets and infrastructure are built. On Tuesday the government and the group overseeing the land announced that they were partnering with an Alphabet subsidiary, Sidewalk Labs, to develop the site.

They want it to embody the city of the future, a technological test bed for other communities around the world, “the world’s first neighborhood built from the internet up.”

How to Deal With Scaramucci and Faber: Don’t – Bloomberg

Let me say something here. These people are not important. They are not titans of industry or allocators of capital or government officials or accurate analysts of markets. Perhaps they used to be, but now they just trade on their outrageousness, and their burning desire to remain relevant is going to drive them to take increasingly desperate measures. Maybe just … stop, with them? Like, you don’t have to have them on your television show. You don’t have to go to Scaramucci’s conference, or to the launch party for his next pretend media venture. You don’t have to — and of course I am guilty here — pay attention to their provocations, or parse their coy retractions. They will not go away of their own accord, but if we ignore them then that is almost as good.

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CENTRAL BANKS & MONETARY POLICY

Conservatives Are Campaigning Against Yellen’s Reappointment to Fed – Bloomberg

House Republicans have been one of the biggest critics of the Federal Reserve since the financial crisis, passing several pieces of legislation aimed at constraining the central bank, including requiring it to follow a policy rule and subjecting it to government oversight if there were deviations. Yellen reached out lawmakers at the start of her term in 2014 but her relationship with conservatives has remained tense.

The Economy Is Humming, but That May Not Win Janet Yellen Another Term – The New York Times

Ms. Yellen’s peril reflects the polarization of American politics. The three previous Fed chairs were reappointed at least once by a president of the opposite political party, but some Republicans are eager to oust Ms. Yellen, a registered Democrat who has strongly defended post-crisis financial regulations.

She may also become a victim of her own success. Steady economic growth and the tranquillity of financial markets have emboldened some critics, who see an opportune moment for a transition to new leadership.

But Mr. Trump also faces warnings that replacing Ms. Yellen is an unnecessary risk to the economic growth the president has repeatedly pointed to as a primary success of his young administration.

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USA ECONOMY DATA, CITIES AND STATES

Drop in September U.S. Home Starts Reflects Slump in South – Bloomberg

A larger-than-forecast decline in U.S. new- home construction reflected the weakest pace of building in the South since October 2015, showing the fallout from hurricanes Harvey and Irma, according to government figures Wednesday.

Similar to other recent economic data, figures on housing starts have the potential to remain volatile for several months. The widespread damage from the hurricanes also may cause a further shortage of workers and ready-to-build lots, along with lingering supply-chain delays and higher prices for raw materials.

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GLOBAL ECONOMY DATA

China’s Economy Grew Steadily, Thanks to Loans and Homes – The New York Times

China turned to a tried-and-true recipe to cook up another three months of respectable growth. Heavy lending by state-owned banks, brisk government spending and strong exports helped keep China’s economy growing briskly and steadily. China’s statistical agency said on Thursday that the economy had grown 6.8 percent in the July-to-September period, compared with the same quarter a year ago.

President Xi Jinping had put heavy pressure on practically every government ministry to make sure that the economy put in a solid performance. The Chinese Communist Party’s twice-a-decade congress began this week, and it’s a time when the country’s leaders want predictability and an image of strength.

China economy records 6.8% growth in third quarter

China’s economy grew at 6.8 per cent in the third quarter year on year, slightly below the previous period but still above the government’s full-year target, boosting President Xi Jinping’s effort to consolidate power at a five-yearly Communist party congress.

Analysts have said that Mr Xi was determined to ensure strong growth in the lead-up to the party congress, where he will seek to install loyalists in key positions as part of the leadership transition.

Despite the solid headline figure, economists warn that the economy this year benefited from the lagging impact of significant monetary and fiscal stimulus in 2016. That stimulus boosted short-term growth but added to long-term risks from reliance on debt-fuelled investment to drive growth.

China Leans on Old-Time Drivers to Reach 6.8% Growth in Third Quarter – WSJ

The third-quarter pace slowed from 6.9% in the second quarter, though it puts the full-year target set by the leadership for growth of about 6.5% well within reach. Adding to a sense of optimism in official circles, China’s central-bank Gov. Zhou Xiaochuan said just days ahead of the political conclave that second-half growth could reach 7%.

Increased industrial activity and higher commodity prices were major reasons behind the strong growth. The latter, partly a result of policies to cut overcapacity, benefited state-owned manufacturers in particular. That is because the capacity cuts led to the closures of many private firms, especially in industries like coal and metals.

Recovering global demand also helped, giving China some economic breathing room, which has meant an economic slowdown that many expected hasn’t materialized.

This doesn’t mean China has entered a new cycle of accelerating growth, economists warn. To keep near-term growth steady, Beijing has delayed fixing some of its long-running problems, such as industrial overcapacity and excessive debt. That, in turn, economists say, means risks for a prolonged slowdown in the economy are rising, not declining.

Economists also have long questioned whether the government’s statistics reflect the true state of the economy. The Conference Board, a nonprofit research firm, estimates that China’s growth rate is around 4%.

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COLOR, EARNINGS, SENTIMENT, VALUATIONS

American Express C.E.O. Ken Chenault to Step Down – The New York Times

“I’ve treasured every day of my 37-year career here,” Mr. Chenault, 66, said on a conference call with analysts. “It’s been a journey that spanned profound changes in the world of business.”

Mr. Chenault, the son of a dentist, joined American Express nearly four decades ago as a director of strategic planning and rose to become the company’s top executive in 2001. He has been the lone African-American at the helm of a big Wall Street firm since E. Stanley O’Neal stepped down as the chief executive officer of Merrill Lynch a decade ago, at the start of the financial crisis.

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TAXATION, WEALTH HAVENS, CAPITAL SHELTERS

Panama Papers: Africa′s elite are plundering their countries | Africa | DW | 18.10.2017

A new report based on the Panama Papers reveals how Africa’s politicians, generals and business leaders are systematically siphoning off billions of dollars and parking the money offshore.

“We often point fingers at foreign multinationals that come to make a fortune here in Africa,” Maxime Domegni, a Togo journalist involved in the investigation, told DW. “But this investigation shows the extent to which African oligarchs are complicit in plundering the continent.”

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FOREX, CRYPTOCURRENCY, EXCHANGE IMPACTS

The Yen and Japanese Stocks Are Breaking Up – MoneyBeat – WSJ

One of the most commonly accepted relationships in markets—between Japanese stocks and the dollar-yen exchange rate—is showing signs of strain.

The thinking has long been that a strong yen is bad for Japan’s export-oriented economy as it makes the country’s goods less competitive globally, in turn boding poorly for corporate earnings and future stock gains. In the past, Japanese stocks have often fallen when the yen rises.

That relationship has broken down this year.

Tezos Raised $232 Million in a Hot Coin Offering, Then a Fight Broke Out – WSJ

One of the year’s biggest initial coin offerings, a $232 million token sale by Tezos, is embroiled in a management fight that is threatening the deal and highlighting the risks in this red-hot corner of finance.

Tezos’s fundraising in July at that point was the largest initial coin offering, a new type of rapid fundraising that has captured imaginations and rivaled venture capital for technology startups.

But a battle between the founders of the company and the head of the Swiss foundation they installed to give it more independence has put most trading of Tezos coins on ice, possibly until early next year.

That could alarm investors who were hoping that Tezos might catch on quickly. Sales of digital tokens like Tezos coins have concerned regulators and become a sign for some investors of a bubble in the cryptocurrency world.

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FINTECH, BLOCKCHAIN, DIGITAL PAYMENTS

Google, Goldman Sachs two of the most active investors in blockchain: Report

Google and Goldman Sachs are two of the most active corporate investors in blockchain companies, according to a report.

Blockchain is the underlying technology behind cryptocurrencies like bitcoin. But it is also being developed for use in a variety of industries from finance to insurance, promising cheaper and faster processes.

The number of corporate investors in blockchain companies hit a record high of 91 this year, just behind the 95 venture capital firms in the space, according to a report by data firm CB Insights published Tuesday. So far this year, there have been 42 equity investment deals by corporates, totaling $327 million. This is just behind the $390 million for the whole of 2016.

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HEDGE FUNDS, PRIVATE EQUITY, MONEY MGMT

Soros-Backed Hedge Fund Beats Peers With 23% Return – Bloomberg

Glen Point Capital, a $2.3 billion hedge fund that invests money for billionaire George Soros and other clients, surged 22.7 percent through September this year, according to a person with knowledge of the matter.

The macro trading firm, started by former BlueBay Asset Management money managers Neil Phillips and Jonathan Fayman, made most of its money by betting on emerging-market debt securities and foreign exchange throughout the year, the person said, asking not to be identified because the information is private. A spokesman for London-based Glen Point declined to comment.

Glen Point’s focus on developing markets has helped it race ahead of macro hedge funds that are still producing mediocre returns this year, with some of the biggest players in the industry even losing money. Brevan Howard Asset Management LLP’s flagship hedge fund lost 4.6 percent this year through September, while Chris Rokos’s money pool was down 1.2 percent after a recovery last month.

Ivy League Endowments Humbled as Bull Market Beats Esoterica – Bloomberg

Endowments with a big slice of their assets exposed to public equities were rewarded by a bull market in the year through June, when the S&P 500 and MSCI All Country World indexes returned 18 percent and 19 percent, respectively. Hedge funds returned just 8 percent on average, according to data compiled by Bloomberg. Venture capital and other difficult-to-price assets also performed worse than stocks.

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ENERGY COMPANIES, NOCs, INDUSTRY

Iraq approaches BP to develop reclaimed Kirkuk oilfields

Iraq has asked BP to develop oilfields around Kirkuk, two days after Baghdad regained control of much of the region from Kurdish forces. The oil ministry said Jabar al-Luaibi, the minister, had “sent a request for BP to quickly come in to begin studies and restart measures to develop the oilfields in Kirkuk province”.

Russia’s Rosneft Expands in Kurdistan With Five Oil Projects – Bloomberg

Rosneft PJSC signed a deal with Iraq’s semi-autonomous Kurdistan to develop five oil blocks, cementing ties with the region even as tensions over sovereignty flare into armed clashes between Kurdish forces and Iraqi government troops.

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ENERGY CRUDE OIL, OIL SANDS, SHALE

Welfare Kings? Study Finds Half of New Oil Production Unprofitable Without Government Handouts | DeSmogBlog

A new study published in the peer-reviewed journal Nature Energy found that 50 percent of new oil production in America would be unprofitable if not for government subsidies.

The study, performed by researchers at the Stockholm Environment Institute and Earth Track, Inc., found that, at prices of $50 per barrel, light oil produced by hydraulic fracturing (“fracking”) was heavily dependent on subsidies. In fact, forty percent of the Permian basin in Texas would be economically unviable without subsidies, and for the home of Bakken crude production, Williston Basin, that number jumps to 59 percent, according to the researchers.

But what happens with these subsidies when the price of oil is over $100 per barrel, as it was several years ago? The authors of the study report that, under such a scenario, government subsidies are simply “transfer payments” to oil investors. The oil would be profitable without the subsidies, which become, at that point, simply free cash for investors.

While this study provides valuable insight into how subsidies affect oil production and the climate, it notes that its conclusions are not unique. The authors point out: “As others have found regardless of the oil price, the majority of taxpayer resources provided to the industry end up as company profits.”

Forget Peak Demand, Norway’s Oil Chief Wants More Crude to Pump – Bloomberg

The prospect of oil demand peaking as the world switches to cleaner energy sources is fiercely debated in Norway. The future of the oil industry, which made the country one of the world’s richest, was one of the biggest issues in last month’s election. While drilling opponents only made small gains, Norwegians are questioning whether it makes moral and financial sense to explore for more oil, especially in the Arctic, as the world fights climate change.

In charts: has the US shale drilling revolution peaked?

The track of the number of active rigs and oil production shows the huge productivity gains that have been made. A rush to drill in shale formations such as the Eagle Ford in Texas and the Bakken in North Dakota was followed by a flood of production, which mostly held up even after most rigs stopped running in 2014-16.

Over the past year, however, the productivity gains seemed to have slowed considerably, suggesting that the revolutionary era for progress in shale is over. In the Eagle Ford shale, productivity — as measured by production from new wells per active rig — has been falling. Those productivity data from the Energy Information Administration are an imperfect measure, however. For a start, they do not take into account the extent to which companies are drilling wells and then deliberately not bringing them into production as they wait for higher prices. (These are known as DUCs, or Drilled but UnCompleted wells.) So what can we say about the true picture of productivity in shale?

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ENERGY RENEWABLES, NUCLEAR

Solar Finds Unexpected Champion in Sean Hannity – Bloomberg

The U.S. solar industry has enlisted one of President Donald Trump’s best media friends for a campaign against import tariffs: Sean Hannity. Hannity voiced an advertisement asserting that tariffs on solar imports would threaten jobs in the U.S. The spot gained visibility after the Solar Energy Industries Association trade group tweeted it Tuesday.

In the ad, Hannity says that “American solar can compete just fine on its own.” That’s counter to the contention of Suniva Inc., a bankrupt solar manufacturer that last month convinced the U.S. International Trade Commission that cheap foreign imports had harmed it. Trump, a regular guest on Hannity’s prime-time Fox News program, has until mid-January to decide whether to impose tariffs. A representative for Hannity didn’t return calls and emails Wednesday.

Solar Wants to Help Fix a Power-Grid Problem It Helped Create – Bloomberg

Big solar farms helped create a power-grid predicament in California. And now they’re offering to help solve it.

Solar panels have proliferated in the Golden State, flooding the grid with power supplies in the middle of the day when the sun’s out — and then quickly vanishing after sunset. This has created a sharp curve in California’s net-power demand that’s shaped like a duck. And the so-called duck curve is getting steeper every year, sending wholesale electricity prices plunging into negative territory, forcing generators offline and making it increasingly difficult to maintain the reliability of California’s transmission lines.

First Solar Inc. Chief Executive Officer Mark Widmar thinks he has a solution: change the way solar farms are paid. If the state’s utilities compensate them for shutting generation when the grid doesn’t need it and providing power later when it does, he said, farms could use increasingly sophisticated inverters and software controls to adjust. They’re only running full bore right now, he said, because their contracts with customers encourage them to produce as much energy as possible, he said.

The Dutch have built a cycle lane from used toilet paper | World Economic Forum

Can you imagine cycling on a road made from used toilet paper? The Dutch – known for their love of two-wheeled transport – are doing just that, thanks to an innovative waste recycling scheme.

The Dutch reportedly use around 180,000 tons of toilet paper every year. Two Dutch companies – CirTec and KNN Cellulose – have developed the technology to turn that waste into a road-building material.

The toilet paper flushes through to a waste treatment plant where it is filtered out, cleaned and sterilized at very high temperatures. The end result is a fluffy material or pellet that can be used in asphalt. It can also be used for bioplastics and building materials. Much of the toilet paper in the Netherlands is high quality, which means that it is high in cellulose, resulting in a better end-product.

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POLLUTION, CLIMATE & ENVIRONMENT

Medieval diseases are making a grim comeback

While the plague seems to us a medieval affliction, it has never fully disappeared. On average, about 500 cases are documented globally each year, mostly in Africa, South America and India. The infection is treatable with antibiotics if caught early.

Now the World Health Organization has noted an unusually large outbreak of plague in Madagascar. One case has also been reported in the Seychelles. The threat is very likely to be contained but the resurgence of this historic pestilence demonstrates the fragile biological stand-off between human and bacterium.

Warning of ‘ecological Armageddon’ after dramatic plunge in insect numbers | Environment | The Guardian

The abundance of flying insects has plunged by three-quarters over the past 25 years, according to a new study that has shocked scientists.

Insects are an integral part of life on Earth as both pollinators and prey for other wildlife and it was known that some species such as butterflies were declining. But the newly revealed scale of the losses to all insects has prompted warnings that the world is “on course for ecological Armageddon”, with profound impacts on human society.

The new data was gathered in nature reserves across Germany but has implications for all landscapes dominated by agriculture, the researchers said.

The cause of the huge decline is as yet unclear, although the destruction of wild areas and widespread use of pesticides are the most likely factors and climate change may play a role. The scientists were able to rule out weather and changes to landscape in the reserves as causes, but data on pesticide levels has not been collected.

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BREXIT, SCOXIT, LONDON, UK ECONOMY

Brexit burden will hit businesses outside the UK too

Last week brought bad news for companies trying to get “Brexit-ready”. With stalling negotiations between Brussels and the UK government, British business is no nearer to being able to plan for life after the UK leaves the EU. And it is not just British business that is getting worried.

With 17 months to go before Brexit formally happens, exporters, importers, and companies that are just a cog in an international supply chain, are running out of time to address the mountain of nitty-gritty practical considerations — whether new customs procedures, a distinct regulatory framework, or a different mix of employees — that Brexit implies. For all European companies either operating in or trading with the UK, the task is simultaneously as onerous but as unclear as it was 16 months ago, the day after the referendum.

Jeremy Corbyn to meet EU leaders in Brussels for Brexit talks – POLITICO

U.K. Labour leader Jeremy Corbyn will be in Brussels Thursday for talks on Brexit with European leaders. The opposition leader will meet with Michel Barnier, the EU’s chief Brexit negotiator, and Antonio Tajani, the president of the European Parliament. He will also hold talks with the prime ministers of Italy, Sweden and Portugal, who are all from the same center-left political family.

Britain confronts tough German line on Brexit

“We hit the wall,” said one senior British official. While many past EU confrontations featured an Anglo-French fight mediated by the Germans, this time Britain appears to be pitted against a hardline Berlin, with Paris giving little solace to London.

This is what the Brexit cliff edge looks like – POLITICO

The smart money is on the U.K. and EU coming up with some kind of deal on how to handle Britain’s exit from the bloc. But with talks deadlocked — despite a more positive atmosphere in the fourth round last month — and the Brexit clock ticking down to a 2019 out date, a no-deal departure is in the cards.

Prime Minister Theresa May told the Tory faithful in her closing speech to the party’s annual conference last week that she believes a deal is possible, but that the British government is planning for the worst. “It is our responsibility as a government to prepare for every eventuality. And let me reassure everyone in this hall — that is exactly what we are doing,” she said.

So what would actually happen — beyond the likely chaos, acrimony and no doubt to some on both sides of the Channel, proclamations of a great opportunity waiting to be seized — in case the U.K. does leave without a deal?

Why Dover is braced for customs gridlock after Brexit

“From the 500 or so [lorries going to non-EU countries] that we process now, we could suddenly be doing up to 10,000 a day,” says Mr Dixon, a stocky 51-year-old who has lived in Dover all his life. “I don’t know how we — or Dover itself — could cope with an increase on that scale.”

As they contemplate the uncertainty ahead, customs experts are agreed on one point: a disorderly Brexit — in which the UK leaves the EU with no deal in March 2019 — would spell disaster. “Catastrophic is the word I would use,” says Mr Dixon. “It puts the shivers up you. It would devastate the local community.”

James Hookham, deputy chief executive of Britain’s Freight Transport Association, says his members fear a no deal scenario would mean “disorganisation and chaos”.

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EUROPE

Europe’s Fastest-Growing Economy Could Be Headed for Trouble – The New York Times

Much of the growth in Romania is the product of a consumer bonanza, and economists worry that the good times cannot last given a lack of investment.

To pay for wage hikes, the government has been cutting spending on investment for highways and other public works — a decision not unlike withholding a child’s college tuition to finance a new swimming pool. Romania’s dilapidated infrastructure has long limited commerce. The fear is that pay raises plus tax cuts have generated a momentary jolt of economic activity that will leave the country indebted.

“We are making the same mistakes as Greece,” said Cristian Paun, an economist at Bucharest University of Economic Studies. “We are still continuing to increase the public debt when we are in a boom.”

Billionaire tycoon Andrej Babiš woos Czechs voters

A win for the upstart party founded by Mr Babiš in 2011 would represent another success for Europe’s anti-establishment forces in elections this year, after a strong showing for the National Front in France’s presidential election, the entry of the AfD into Germany’s Bundestag, and gains for the Freedom party in Austria.

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CHINA

Xi’s Grand Vision for China Prioritizes Party Power Over Reform – Bloomberg

President Xi Jinping laid out a sweeping vision to transform China into a strong global power while guaranteeing Communist Party rule for decades. Those looking for details on major economic reforms didn’t find much.

In a speech to party cadres that went on for more than three hours, Xi on Wednesday outlined a three-decade road map to entrench China’s great power status. By 2050, Xi said the country would be a global leader in innovation, influence and military might.

“Our country is approaching the center of the world stage and making continuous contributions to humankind,” Xi told almost 2,300 delegates gathered for the party’s twice-a-decade congress in Beijing. “The Chinese nation is standing tall and firm in the East of the World.”

China’s Xi Feeds Expectations for a Lengthy Reign – WSJ

Opening a twice-a-decade Communist Party congress, Chinese President Xi Jinping signaled his ambition to shape the country far into the future as he set a new goal potentially achievable in his lifetime: to build a modern nation by 2035.

The Chinese leader staked an ideological claim to lead the party and China to a period of greater power and prosperity, coining a new catchphrase for it—“thought[s] on socialism with Chinese characteristics for a new era”—which gives him wide remit to reorient established policies. The top Chinese leadership hailed the speech.

He also brought forward a longstanding goal to achieving “socialist modernization” by 2035 while affirming the goal of placing China in front ranks of nations by 2049.

Forget Marx and Mao. Chinese City Honors Once-Banned Confucian. – The New York Times

When China’s most powerful leader in 40 years endorses a philosopher, even a long-dead Confucian one, people rush to take action.

Since Mr. Xi began promoting the philosopher three years ago, officials in and around Guiyang have built a Wang Yangming-themed park, constructed a museum to showcase his achievements, turned a small cave into a shrine in his honor and, yes, commissioned a robot to bring him to life.

Born in 1472, Wang was a scholar with a promising career in the imperial court in Beijing when, in 1506, he spoke out against the cruelty of a well-known courtier. That offense earned him banishment to faraway Guiyang.

During his years here, Wang ran a post house on the edge of town. That gave him time to meditate on the philosophical problem that would define his legacy: understanding how people know right from wrong. His conclusion: People have an inborn conscience that they must act upon, regardless of the consequences.

US fast-food chains chase growth in small-town China

The Chinese county-seat of Zouping, with a population of 700,000, is a backwater by Chinese standards, its bustling high street almost bereft of overseas brands. But it is firmly on the radar of fast-food chain Kentucky Fried Chicken.

Two KFC outlets there are magnets for families dining out and young people planning romantic meetings. “It’s pricier than other restaurants, but it’s more special,” says Kong Jianzhi, 35, treating her four-year-old daughter to a chicken burger.

KFC and McDonald’s outlets are opening at a rate of more than one a day in China, mostly in smaller towns such as Zouping, to revive growth in China’s fast food market, which generates annual sales of $125bn, according to Euromonitor.

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JAPAN

Can robots make up for Japan’s care home shortfall?

The early footsoldiers in the bid to automate nursing homes are machines such as Chapit, which looks like a mouse, sits at a person’s bedside and engages in a rudimentary chat; Robear, which looks like a bear and can lift a person off their bed and into a wheelchair; and Palro, a small humanoid that can lead a room full of elderly people in an exercise routine, occasionally breaking the boredom by setting quizzes.

These advances and many like them are good but gimmicky, say government officials. A paper on nursing care robots by the Ministry of Health, Labour and Welfare says that deeper work is needed on machinery and software that can either replace human care workers or increase staff efficiency.

In all cases, the challenge is not simply producing the idea — such as shoes that track their elderly users or robotic walking assistants that can “read” the road — but producing them at a viable price.

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ASIA PACIFIC

Chinese and Western tech giants battle for Southeast Asia

This showdown in Southeast Asia comes after Chinese and Western players have neatly carved up the major markets: the multinationals controlling the US and Europe and Alibaba and Tencent ruling the roost in China, where Facebook, Google’s search engine and Twitter are all blocked.

“The importance of Asia is coming to the forefront,” says Karim Temsamani, president of Google’s Asia-Pacific operations. “Half the world’s population is here and household wealth is set to grow faster than anywhere else over the next 15 years. This is the centre of the world again, and companies that understand the people here and the way they use technology are going to win in this region.”

“There’s a lot of deal activity now,” says Florian Hoppe, partner at Bain & Co in Singapore. “It’s clearly an escalating battle and the impacted sectors are getting broader and broader.”

That wide frontline sees the groups stretching their tentacles into the ecosystems around ecommerce, such as payments and logistics, while offering other services to keep consumers hooked within a single app — such as gaming, food delivery and messaging — to capture more of their time and money.

17V19 - SE ASIA ECOMMERCE

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ELECTORAL POLITICS

John McCain flattens Fox News reporter Peter Doocy: ‘Why would you ask something that dumb?’ – The Washington Post

Doocy asked McCain in a reporters’ scrum: “Has your relationship with the president frayed to the point that you are not going to support anything that he comes to you and asks for?”

McCain bristled at the implication: “Why would you say something that stupid? Why would you ask something that dumb? Huh? My job as a United States senator, is a senator from Arizona, which I was just reelected to. You mean that I am somehow going to behave in a way that I’m going to block everything because of some personal disagreement? That’s a dumb question.”

Signaling Frustration, Senior House Republican Plans to Quit Early – The New York Times

Amid disarray in Washington, Representative Pat Tiberi of Ohio, a senior lawmaker close to party leaders, is expected to quit midway through his term.

An abrupt departure by Mr. Tiberi, who is an influential member of the House Ways and Means Committee, would signal a deepening level of discontent among mainstream Republicans in Congress. Despite holding Congress and the White House, Republicans have so far failed to achieve longstanding policy goals like overhauling the tax code and repealing the Affordable Care Act.

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SCANDALS, LAWSUITS, FINES, REGULATORY

Samsung Is Under Scrutiny Again as South Korean Police Raid Offices – The New York Times

Barely two months after its crown prince was sent to prison on corruption charges, the family that controls Samsung’s vast business empire is again facing allegations of white-collar crime.

The South Korean police raided the head office of Samsung’s construction arm on Wednesday as they investigated whether Lee Kun-hee, the group’s patriarch, had misappropriated company funds to renovate his family’s home. Investigators will soon begin questioning others, including company officials, an officer involved with the investigation said.

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MEDIA, CABLE, SPORTS, ENTERTAINMENT

Michael Duffy Departs Time as an Era Keeps Ending | Vanity Fair

A three-decade, 50-cover-story vet goes over the side as a new digital regime consolidates: “With Duffy gone, the vestiges of what Time used to be go with him,” said a former colleague.

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AUTOS, ELECTRIC, SELF-DRIVING

Mass Firings at Tesla Raise Labor Questions – Capital & Main

Why would a corporation setting nearly impossible manufacturing goals suddenly fire hundreds of workers at its one and only automobile plant? Could it be because it wanted to exchange vocally pro-union workers with temps that are cheaper to employ and easier to control?

Those are the questions the labor organizing campaign at Tesla is asking, after the company issued a wave of terminations, allegedly linked to performance issues among its 33,000 employees. Several members of the campaign, known as A Fair Future at Tesla, were among those fired, and they all claim to have had excellent performance records. None have been able to obtain the negative reviews that were supposed to be the rationale for their firing.

Tesla announced the firings, which are reportedly still continuing, last week. Though no official number of terminations would be given, estimates range from 400 to 1,200. The company did not give advance notice under the WARN Act because, it insisted, they were performance-based terminations, not layoffs.

Fired employees claim they never had the kind of review that would explain the terminations. “I had great performance reviews. I don’t believe I was fired for performance,” said Daniel Grant, a production associate at the plant for three years. Grant claims he was injured on the job on a Friday, and fired the following Monday. “The company didn’t show me or others our most recent reviews when they fired us.”

Only when you understand Tesla’s labor issues does a more plausible explanation emerge. For months, Grant and other Tesla workers have spoken out about low pay, hazardous working conditions and a culture of intimidation at the Fremont plant. They have sought to affiliate with the United Auto Workers to win a voice on the job.

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AIRLINES, SHIPPERS, RAIL, TRANSPORTS

United to Boost Flying Capacity as Unit Revenue Improves – WSJ

United Continental Holdings Inc. UAL said Wednesday it would continue to increase flying capacity to defend market share at its big airport hubs as the airline reported forecast-beating quarterly earnings.

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MEDICAL, PHARMA, BIOTECH

F.D.A. Approves Second Gene-Altering Treatment for Cancer – The New York Times

The treatment, considered a form of gene therapy, transforms the patient’s cells into what researchers call a “living drug” that attacks cancer cells. It is part of the rapidly growing field of immunotherapy, which uses drugs or genetic tinkering to turbocharge the immune system to fight disease. In some cases the treatments have led to long remissions.

“The results are pretty remarkable,” said Dr. Frederick L. Locke, a specialist in blood cancers at the Moffitt Cancer Center in Tampa, and a leader of a study of the new treatment. “We’re excited. We think there are many patients who may need this therapy.”

He added, “These patients don’t have other options.” About 3,500 people a year in the United States may be candidates for Yescarta. It is meant to be given once, infused into a vein, and must be manufactured individually for each patient. The cost will be $373,000.

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