Unintended consequences start to haunt Trump - Canadanewsmedia
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Unintended consequences start to haunt Trump



haunt Trump

U.S. President Donald Trump is getting a crash course in the law of unintended consequences.

His campaign against a supposed “invasion” of migrants across the Mexican border and his racially charged tweets against minorities have been put under the spotlight by last weekend’s gun massacres.

And his intensifying trade war with China has prompted Beijing to suspend U.S. agricultural imports, causing pain in farming states that he’ll need to win re-election in 2020.

Then there’s Huawei. As Bloomberg exclusively reports, the White House is holding off on a decision to approve licenses for U.S. companies to restart business with the Chinese tech giant after Trump blacklisted it in May over national-security concerns.

That move has alarmed U.S. tech companies including Google parent Alphabet. But there’s something far bigger at stake than a loss in sales: Trump is forcing Huawei — the world’s second-biggest smart-phone maker — to build a rival operating system to Android, which now powers about 80 percent of the world’s devices and is key part of Google’s business plan.

Huawei revealed the early outlines of that software today. While it may take years to become a serious alternative, it’s coming.

For every action, there’s a reaction. Trump is learning that the hard way.

U.S. Labeling China a Currency Manipulator Is “Mostly Symbolic’: Goldman

Aug.07 — Andrew Tilton, chief Asia Pacific economist at Goldman Sachs, talks about the trade war between the world’s two biggest economies, the Trump administration’s decision to formally labeled China a currency manipulator, and China’s monetary and fiscal policies. He speaks with David Ingles and Rishaad Salamat on “Bloomberg Markets: Asia.”

Global Headlines

Just in: The U.K. economy shrank for the first time in more than six years in the second quarter. It was a blow to newly installed Prime Minister Boris Johnson, who is urging the European Union to show “common sense” and rewrite the Brexit divorce deal.

On the brink: Italy’s leaders, including Deputy Premier Matteo Salvini, are calling for a confidence vote in parliament as soon as next week, which could lead to a snap election this fall. Italian bonds suffered their worst sell-off of the year, underscoring investor concern that there isn’t a clear path to stability for the government in Rome.

Taking heat:  Trump’s planned fundraising swing through the Hamptons today is creating headaches for some of his high-dollar donors, who face threats of boycotts and employee complaints for supporting a president Democrats say is racist. Celebrities and social-media users have threatened to cancel their memberships to Equinox Fitness Club and its indoor-cycling subsidiary SoulCycle after owner Stephen Ross agreed to host an event.

Softening stance?: Under intense pressure from gun-control advocates following the latest U.S. shootings, Senate Majority Leader Mitch McConnell said gun legislation will be at the top of the chamber’s agenda when lawmakers return from their August break. Expanded background checks and so-called red-flag laws to keep firearms out of the hands of dangerous individuals would be part of the debate, McConnell said, though he offered no indication he’d throw his support behind any particular proposal.

Divided region:  Prime Minister Narendra Modi hailed a “new era” in the disputed region of Kashmir while his Pakistani counterpart warned of “genocide” once a curfew — put in place to quash protests after India abolished the state’s seven decades of autonomy — is lifted. The escalating tensions come at a critical time for another long-running conflict: The U.S. is nearing a deal with the Taliban, and the support of both India and Pakistan are crucial to a lasting peace.

Who Gets Hurt More in U.S.-China Trade War?

Aug.01 — Leland Miller, president of China Beige Book International, talks about the trade spat between the U.S. and China. President Donald Trump abruptly escalated his trade war with China, announcing that he would impose a 10% tariff on a further $300 billion in Chinese imports. Miller speaks with Sophie Kamaruddin and Paul Allen on “Bloomberg Daybreak: Australia.”

Protracted unrest: Hong Kong’s airport steeled itself for three straight days of sit-in protests at its busy arrivals hall, boosting security days after dozens of flights were cancelled during a city-wide strike. It kicks off another weekend of rallies across the financial center, amid questions about how long the standoff between protesters and the government can continue.

What to Watch

  • Investors are pulling back from Argentina before a primary election Sunday that will set the stage for October’s presidential vote and a potential boom or bust for markets.
  • Also Sunday: Guatemalans will pick between a former first lady and an ex-director of prisons in a presidential runoff that has been overshadowed by tensions with the U.S. over migration.
  • Zambia is resisting calls to declare a food emergency that would allow donors to provide aid after the worst drought in nearly four decades has left millions facing hunger.

And finally … Beset by one blow after another in Trump’s trade war with China, some American farmers are turning to the latest craze in cash crops: hemp. Weed’s more sober cousin is prized for its concentration of cannabidiol, a non-psychoactive ingredient at the center of a booming wellness trend. John Boyd Jr. is just one soybean grower who’s jumping on the bandwagon, planting about 100 acres of hemp this year in what he called “a big risk.” The gamble might pay off after China told its state-owned companies this week to stop buying U.S. harvests.

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Retired British Columbia fisherman wins $60-million lottery jackpot




RICHMOND, B.C. — A retired fisherman from Richmond, B.C., has reeled in the catch of a lifetime — a $60-million lottery haul.

The B.C. Lottery Corp. says Joseph Katalinic matched all seven numbers in last month’s Lotto Max draw to win the largest lottery prize in the province’s history.

It says in a release there have previously been three $50-million winners in the province.

Katalinic retired as a commercial fisherman 20 years ago and told the lottery corporation he now plans to “live like a king.”

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U.S. central bank was split on rate cut decision




Federal Reserve officials were widely divided at their meeting last month when they decided to cut rates for the first time in a decade, with some arguing for a bigger rate cut while others insisted the Fed should not cut rates at all.

The minutes of the July 30-31 discussions released Wednesday show two officials believed the Fed should cut its benchmark policy rate by a half-percentage point, double the quarter-point reduction the central bank eventually agreed upon. On the other end, some Fed officials argued for no rate cut at all, believing that the economy was beginning to improve after a soft patch in the spring.

The minutes did not indicate any consensus on the pace of future cuts.

Financial markets have been turbulent since the July 31 rate cut, diving 800 points one day last week on the Dow Jones Industrial Average, as bad news has piled up in terms of the slowing global economy and the latest developments in President Donald Trump’s trade war with China.

Because of these developments, investors have become convinced the central bank will follow up the July rate cut with further cuts at coming meetings. But private economists are not so sure, believing the Fed may want to save some of its rate cut ammunition should the economy take a serious turn for the worse with the possibility of a recession.

The minutes provided little clarity on what the future course for rates will be, but markets are hoping that Fed Chairman Jerome Powell may send a stronger signal about future rate hikes when he delivers the keynote address at the Fed’s annual policy conference at Jackson Hole, Wyoming, on Friday.

“There is little sign that the Fed is willing to push back on the markets,” said Michael Pearce, senior economist at Capital Economics. “As such, another (quarter-point) cut in September still looks like a good bet, if only because the Fed will not want to disappoint lofty market expectations.”

The two Fed officials who argued for a bigger rate cut “favoured a stronger action to better address the stubbornly low inflation rates of the past several years,” the minutes said.

The July action was approved on an 8-2 vote with Esther George, president of the Fed’s Kansas City regional bank, and Eric Rosengren, president of the Boston Fed, dissenting and arguing that they favoured no rate cut at all.

The minutes said the majority view supported a quarter-point cut, viewing it as a “mid-cycle adjustment,” a phrase Powell used in his press conference that caused an adverse market reaction by investors hoping the July cut will be the first in a series of rate reductions.

The minutes highlighted three main reasons for the cut, including recent signs of deceleration of the economy and concerns about persistently low inflation. Officials also believed a rate cut would be a “prudent step from a risk-management perspective.”

The minutes said the Fed was worried about a slowdown in business investment and the global headwinds that are affecting Europe, Japan and other regions.

“Participants were mindful that trade tensions were far from settled and that trade uncertainties could intensify again,” the minutes said.

On Aug. 1, the day after the Fed’s rate cut, Trump announced that he would impose 10 per cent tariffs on $300 billion in Chinese imports in an effort to force the Chinese to make more trade concessions at the bargaining table. Since that announcement, Trump has said he would postpone about half of those tariffs until Dec. 15 to avoid hurting American consumers during the holiday shopping season.

But economists are warning that the tariffs already imposed will likely slow U.S. growth in coming quarters.

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RBC mixed third quarter; Pembina acquires Kinder Morgan Canada




RBC’s mixed results set a cautiously optimistic tone as third-quarter earning season begins for Canadian banks: Royal Bank of Canada leaned on its retail-banking and wealth-management divisions to boost third-quarter profit and overcome a weak spell in capital markets, setting a cautiously optimistic tone as earnings season for Canada’s big banks begins. Canada’s largest bank by assets is the first major lender to report fiscal third-quarter results, and its performance was mixed. Story (James Bradshaw)

CEO of RBC Capital Markets announces retirement, discusses outlook for division: On Doug McGregor’s 11-year watch as chief executive, RBC Capital Markets grew from a regional player into a leading global investment bank, navigating storms that swept away far larger institutions. Story (Andrew Willis)

Ontario Teachers’ Pension Plan first half results show move toward fixed income: Ontario Teachers’ Pension Plan made a strong shift to bonds in the first half of the year and benefited from robust returns in fixed income. The pension plan said it posted an overall 6.3 per cent return in the first half of 2019 and closed the quarter with a portfolio of $198.5-billion. Fixed income led the returns, Teachers said. Story (David Milstead)

Manulife tripled CannTrust holdings before licence scandal, SEC records show: Manulife Asset Management jacked up its holdings of CannTrust Holdings Inc. stock in the second quarter – just in time for the company’s surprise disclosure that it was growing cannabis without a licence. Story (David Milstead)

Toronto fintech Drop sees $44-million in latest funding round: Royal Bank of Canada is backing an upstart loyalty-management program geared at millennials called Drop Technologies Inc. as part of a US$44-million venture-capital financing. Story (Sean Silcoff)


Pembina to acquire Kinder Morgan Canada and other assets in $4.35-billion deal: Pembina Pipeline Corp. is buying Kinder Morgan Canada Ltd. and the U.S. portion of a key condensate pipeline for $4.35-billion, a deal that will bolster its position in the high-demand oil storage and transport business. For Houston-based Kinder Morgan Inc., the sale marks its exit from Canada after it sold its largest asset – the Trans Mountain oil pipeline – to Ottawa last year for $4.4-billion. It follows a formal process to seek buyers for the majority-owned Canadian operation that ended in the spring after failing to attract acceptable proposals. Story

Alibaba postpones up to $15-billion Hong Kong listing amid protests: sources: China’s biggest e-commerce company Alibaba Group Holding Ltd has delayed its up to $15-billion listing in Hong Kong amid growing political unrest in the Asian financial hub, two people with knowledge of the matter told Reuters. Story (Reuters)


For Canadian bank stocks, ‘the risk/reward equation is not stacking up attractively’: Merrill Lynch bank analyst Ebrahim Poonawala has turned more cautious on Canadian banks ahead of upcoming profit reports. Story (Scott Barlow)

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