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(Bloomberg) --
China’s leader faces a raft of looming problems. Apple’s new Mac Pro will be built in Texas. And the tour-operator collapse that left 150,000 people stranded overseas isn’t bad news for everybody. Here are some of the things people in markets are talking about today.
Under Pressure
Life in China is getting harder — and President Xi Jinping should be worried. As the country prepares to celebrate 70 years of Communist Party rule on Oct. 1, a protracted U.S. trade war, protests in Hong Kong, soaring pork prices and the slowest economic growth in decades are just some of the looming problems facing China’s leader. The Communists oversee the world’s second-biggest economy, which is increasingly asserting its influence around the globe. But they must constantly ensure the masses have no desire to kick them out. Beijing has some control over the cost of food, but it’s still at the mercy of factors outside of its control. Meanwhile any trade resolution with the U.S. is still far off, and in Hong Kong, demonstrations show no signs of abating.
Market Open
Asian stocks are set for a muted open on Tuesday after U.S. shares ended flat on a mixed day for global economic data. Treasuries were steady. U.S. data bolstered confidence that recession signals emanating from the bond market are overdone, while gloomy data from France and Germany — the heart of the euro area — was a stark reminder to investors of the fragility of the global economy. While markets remain on edge ahead of next month’s planned high-level trade talks between the U.S. and China, they’re also fixated on any action or messaging from the world’s major central banks that could support growth. Federal Reserve Bank of St. Louis President James Bullard said the central bank may need to ease monetary policy further to offset downside risks from trade conflicts and too-low inflation.
Built in Texas
Apple’s new Mac Pro desktop computer will be assembled in Austin, Texas. The U.S. government approved on Friday Apple’s request for a waiver on 25% tariffs on several parts imported from China, including processors, power components and the computer’s casing. While some key components will be made in China and exported to the U.S. for final assembly, Apple said the new Mac Pro includes 2.5 times the value of American-made parts as the previous model, which has been made in Austin since 2013. It will include components made by more than 12 U.S. companies in states such as New York, Vermont and Arizona for distribution to U.S. customers, Apple said. The company didn’t specify whether this includes Mac Pros being sold outside the U.S.
Silver Lining (for Some)
The collapse of tour operator Thomas Cook on Monday put 21,000 jobs at risk and left more than 150,000 tourists stranded overseas, requiring the British government to deploy the “largest repatriation in peacetime history.” However, the demise of one of the U.K.’s best-known travel brands isn’t bad news for everybody: Speculators including Sona Asset Management and XAIA Investment, who invested in derivatives that pay out when a company defaults, stand to earn as much as $250 million from the bankruptcy. Thomas Cook will be the latest of several big payouts this year for hedge funds and traders who bought the credit-default swaps, with more expected to follow as Europe’s economy slows and a growing number of companies come under stress.
Zombie Revival
For most people, the transition to 5G means faster mobile data speeds. For Kim Duk-yong, it means amassing a fortune worth hundreds of millions of dollars. When South Korea became the first country to launch nationwide fifth-generation mobile services in April, Kim’s KMW, a supplier of telecom equipment used in 5G networks, was a major beneficiary. Shares of the company surged sevenfold this year, boosting the company’s market value to about $2.6 billion and Kim’s own fortune to about $900 million. He’s one of the first big winners of the shift to 5G, in a remarkable transformation for a company that had been mired in losses before the first half of 2019. “We were even called a zombie company by banks,” Kim told ZDNet Korea, a technology news website, back in August.
What We’ve Been Reading
This is what’s caught our eye over the past 24 hours.
- Exxon’s South China Sea oil project tests Beijing’s influence.
- Australia’s central bank is under increasing pressure to cut rates below 1%.
- Why Trump’s call with Ukraine has reinvigorated calls for impeachment.
- “All you can talk about is money,” activist Greta Thunberg scolds world leaders.
- China’s economic might requires new trade rules, Australia’s PM says.
- Investors should be worried about a Warren presidency, an analyst warns.
- This restaurant chain plans to sell Japanese curry to India.
- A gilded age playboy’s 1,100-acre polo estate is up for sale.
To contact the editor responsible for this story: Alex Millson at amillson@bloomberg.net
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