Category: Financial News

Facebook is making smart glasses?

Australia, Big Data, Business, Countries, Europe, Financial News, General, Main, Social Media

In an example of life imitating cheesy sci-fi art, Facebook is partnering with EssilorLuxottica, an multinational corporation that owns Ray-Ban and Oakley among other brands, to create a line of smart glasses. The first pair will debut next year and will carry the Ray-Ban logo, according to a press release on the EssilorLuxottica website.

The news was first delivered by Zuck himself at the recent Facebook Connect conference. “I can’t go into full product details yet, but they’re gonna be the next step on the road to augmented reality glasses, and they look pretty good too,” the Facebook CEO said.

He added that “The goal here is to develop some normal-size, nice-looking glasses that you can wear all day, interact with holograms, digital objects and information while still being present with the people in the world around you.”

Andrew Bosworth, Vice President of Facebook Reality Labs, said the goal is to make it easier for people to connect with their friends and family—because it’s really not easy enough to connect now with text messaging, video calls and more traditional technologies like 1800 numbers. No, we need glasses that double as phones too.

“We’re passionate about exploring devices that can give people better ways to connect with those closest to them,” Bosworth stated. “Wearables have the potential to do that. With EssilorLuxottica we have an equally ambitious partner who’ll lend their expertise and world-class brand catalogue to the first truly fashionable smart glasses.”

Rocco Basilico, Chief Wearables Officer at Luxottica, said the partnership is intended to “reset expectations around wearables.”

“We are especially proud of our collaboration with Facebook, which projects an iconic brand like Ray-Ban into an increasingly digital and social future. Combining a brand that is loved and worn by millions of consumers around the globe with technology that has brought the world closer together, we can reset expectations around wearables.

“We are paving the way for a new generation of products destined to change the way we look at the world.”

Specs and pricing have not been made available as of this writing.

Australian economy sees record contraction

Australia, China, Financial News, General, Main, Politics

Australia is now dealing with an economic recession due to the impact of the coronavirus pandemic on the hospitality, tourism and service industries. According to the Australian Bureau of Statistics (ABS), the country’s GDP declined by a whopping 7 percent during the June quarter, a new record. It follows a bad March quarter in which GDP fell by 0.3 percent.

“The global pandemic and associated containment policies led to a 7.0 per cent fall in GDP for the June quarter. This is, by a wide margin, the largest fall in quarterly GDP since records began in 1959,” said Michael Smedes, Head of National Accounts at the ABS.

He added that household spending is way down as people adjust to the ongoing lockdown measures:

“The June quarter saw a significant contraction in household spending on services as households altered their behaviour and restrictions were put in place to contain the spread of the coronavirus.”

Australia was already suffering from economic woes owing to the bushfires that ravaged much of the country throughout the second half of 2019 and into the early months of 2020. In addition to destroying 46 million acres of land and killing over a billion animals, the bushfires affected more than a quarter of Australian businesses. The tourism and fishing sectors were hit particularly hard.

Then, just as the fires began to die down, news of a deadly new virus out of China broke. Within months economies around the world were brought to a grinding halt, forcing people to hunker down in their adjustable beds.

“We have done everything possible to cushion the blow for the Australian community from Covid-19,” Treasurer Josh Frydenberg said Wednesday. “Our priority has and will continue to be saving lives and ensuring that Australia’s healthcare system has the capacity to test and to trace and to treat coronavirus cases.”

Making matters worse is the economic row between Canberra and Beijing, which began when PM Morrison expressed support for an independent, international probe into how precisely the pandemic began. Beijing took exception to this and retaliated by slapping tariffs on barley imports and suspending other imports altogether.

European Central Bank official rails against Facebook Libra

Europe, Financial News, Politics, Regulation News, Technology NewsNo Comments

Yves Mersch, executive board member of the European Central Bank, outlined on Monday a series of warnings concerning Facebook’s proposed blockchain digital currency Libra.

What is Libra?

Development of Libra began in 2017, and public reports first came to light the next year. Creators Morgan Beller, David Marcus, and Kevin Weil formally announced it this June. They also revealed its planned release in 2020.

Whereas Bitcoin and many other blockchain currencies are decentralized, relying on unaffiliated miners to maintain solvency and stability, Libra’s assets are centralized by the Libra Association. Guarantees of $10 million investments from each supporting partner—injected before Libra opens to the public—intend to stabilize the digital currency. Concerns with volatility significantly deter investment in blockchain currencies.

Libra’s expected 2020 release coincides with the release of a digital wallet, Calibra, that will allow payment through Messenger and WhatsApp. Similar messaging-app-integrated payment systems are hugely popular in China (WeChat Pay, AliPay) and Japan (LINE Pay). This market gap still exists in other parts of the world; apps such as Google Pay, Venmo, and Cash App do not integrate payment and SMS services. Investing partners include Mastercard, eBay, PayPal, and Uber, which should give a likely indication of Libra’s plans for market implementation.

Governments push back

The criticism from the ECB is both general and specific. 

Mersch expressed distrust in Facebook as a whole, reminding the public that Libra’s developers are:

“the very same people who had to explain themselves in front of legislators in the United States and the European Union on the threats to our democracies resulting from their handling of personal data on their social media platform.”

He also criticized its centralized, hefty investment-based structure:

“With such a setup, it is difficult to discern the foundational promises of decentralization…normally associated with cryptocurrencies and other digital currencies. On the contrary, similarly to public money, Libra will actually be highly centralized, with Facebook and its partners acting as quasi-sovereign issuers of currency.”

Be humble

Digital currencies have always been subject to criticism and regulation from governments; they disrupt traditional wealth distribution and storage. Libra also seeks to profit off market disruption, creating a currency privately regulated by the very companies that are selling you their products.

Libra has received criticisms and/or cease and desist requests from the United States, France, England, Germany, and Japan.

Trump, economists criticize Fed’s interest rates cut

Countries, Financial News, North America, Politics, Regions, Regulation News, USANo Comments

The Federal Reserve’s decision to cut interest rates by a quarter of a percentage point failed to pacify US President Donald Trump, who has routinely hit out at Fed chair Jerome H. Powell for keeping rates too high. The federal funds target rate range is now 2% to 2.25%.

“As usual, Powell let us down, but at least he is ending quantitative tightening, which shouldn’t have started in the first place – no inflation,” Trump wrote on Twitter. “We are winning anyway, but I am certainly not getting much help from the Federal Reserve!”

Trump went on to say that he would like to see further and more aggressive rate cutting going forward.

“What the Market wanted to hear from Jay Powell and the Federal Reserve was that this was the beginning of a lengthy and aggressive rate-cutting cycle which would keep pace with China, The European Union and other countries around the world.”

But Trump was not the only one critical of the cut. Two Fed officials also disagreed with the decision, albeit for different reasons.

CNBC reports that Boston Fed President Eric Rosengren and Kansas City Fed President Esther George—who had both expressed misgivings about a potential rate cut—both voted against the measure, arguing that rates ought to remain unchanged.

“Given that the economy is quite strong, given that I do think that inflation is going to be very close to 2%, and given that the growth in the economy is satisfactory, I think that’s an environment where you don’t have to take a lot of action,” Rosengren told CNBC.

Others were critical as well. Chris Rupkey, chief financial economist at MUFG Union Bank, slammed the rate cut as an “unwise decision,” arguing that “The Fed’s decision today is like in the days when doctors bled their patients to heal them.”

He added that, in his view, the Fed “manufactur[ed] reasons to cut interest rates despite a strong economy with no recession signs apparent anywhere out on the horizon.”

The decrease was the first since 2008, when the Fed hacked rates down to almost zero percent in the midst of massive economic fallout caused by the US subprime mortgage crisis.

Fall in Asian markets reflects pessimism over US-China trade deal

Asia, China, Countries, Financial News, North America, Politics, Regions, Regulation News, South East Asia, USANo Comments

Negotiations between Washington and Beijing over a trade deal may be ongoing, but that doesn’t mean people are optimistic about the potential for a settlement, as evinced by the fall in Asian markets during early trading Wednesday.

The decline came in the wake of a Twitter rampage from US President Donald Trump—who has been less than consistent (one might say erratic) on this issue—in which he lit into China for not importing more agricultural products from the US and took credit for the Asian country’s allegedly failing economy.

“China is doing very badly, worst year in 27 – was supposed to start buying our agricultural product now – no signs that they are doing so. That is the problem with China, they just don’t come through. Our Economy has become MUCH larger than the Chinese Economy is last 3 years,” he wrote.

Continuing he wrote:

“My team is negotiating with them now, but they always change the deal in the end to their benefit.”

And in conclusion:

“China has lost 5 million jobs and two million manufacturing jobs due to the Trump Tariffs. Trumps [sic] got China back on its heels, and the United States is doing great.”

Trump did not provide any sources to back up the stated figures, but then I probably didn’t have to tell you that.

MarketWatch summed up the immediate fallout, reporting that “Japan’s Nikkei slid 1% and Hong Kong’s Hang Seng Index  fell 1.3%. The Shanghai Composite retreated 0.8% while the smaller-cap Shenzhen Composite lost 0.5%. South Korea’s Kospi fell 1% as North Korea tested more short-range ballistic missiles, and benchmark indexes in Taiwan, Singapore and Indonesia all fell. Australia’s S&P/ASX 200 slipped 0.2%.”

Individual stocks were also down.

MarketWatch reports that, in addition to Trump’s unpredictability, an ongoing trade dispute between South Korea and Japan is roiling markets. Said dispute stems from Tokyo’s decision to deny South Korea a special trade status known as “white country.”

Did Elon Musk just violate the terms of his SEC agreement?

Financial News, Politics, Regulation News, Technology NewsNo Comments

This past March, Tesla CEO Elon Musk dubbed 2019 “the year of the solar roof.” In June, during the company’s annual shareholder meeting, he announced that Tesla was installing its solar roof in eight US states.

Then, just this week, Musk posted on Twitter that Tesla was aiming to produce around 1,000 solar roofs per week by the end of 2019.

“Spooling up production line rapidly,” he wrote in response to an inquiry from one of his more than 27 million Twitter followers. “Hoping to manufacture ~1000 solar roofs/week by end of this year.”

On its face the tweet seems unremarkable enough. However, as a number of news websites have pointed out, Musk recently signed an agreement with the US Securities and Exchange Commission (SEC). The agreement stipulates, among other things, that Musk obtain approval from one of his company’s securities lawyers prior to sharing any production numbers publicly that have not been shared before.

The agreement came about after the SEC claimed he had violated a settlement regarding previous tweets that (apparently falsely) indicated Tesla was preparing to go private.

The offending tweet that allegedly violated the settlement—and led to the recent SEC agreement—was posted in February and claimed that Tesla expected to make around half a million cars in 2019.

“Tesla made 0 cars in 2011,” Musk wrote on 20 February, “but will make around 500k in 2019.”

Now, in the wake of his solar roof tweet, people are questioning whether the SEC agreement has had the intended effect of reining in Musk’s behavior on social media. Tesla had not previously released any information about solar roof production numbers for 2019.

Bloomberg reports that the subject was not addressed in its second-quarter investor letter; nor was it mentioned by executives on a follow-up earning call.

According to the paper, Tesla personnel did not respond to questions about whether Musk got the required pre-approval, while SEC spokesperson Judy Burns declined to comment.