Brazilian former army captain Jair Bolsonaro clinched victory in epochal presidential elections on Sunday, ushering in the first far-right administration in Latin America’s largest country since its military dictatorship ended more than three decades ago. Mr Bolsonaro defeated Fernando Haddad of the leftist Workers’ Party, or PT, with just over 55 per cent of valid votes compared to nearly 45 per cent, sparking celebrations and fireworks by thousands of supporters on the beach outside the president-elect’s house in Rio de Janeiro. “We cannot continue to flirt with socialism, with communism and with populism and with the extreme left,” Mr Bolsonaro said in a speech broadcast on social media, after which he held a televised prayer session with supporters at his home.
IBM is buying open-source software pioneer Red Hat for $34bn, in the biggest acquisition in the IT veteran’s 107-year history. The deal will help both companies accelerate the move to cloud computing among big corporate clients, as well as providing a much-needed boost to IBM’s revenue growth. “This is to reset the entire cloud landscape,” said Ginni Rometty, IBM’s chief executive, in an interview. “We have been reshaping IBM for this moment.” IBM is paying $190 per share in cash for Red Hat, a 63 per cent premium to Friday’s closing share price, giving it an enterprise value of $34bn. The company’s latest push into open source software follows a similar move by Microsoft, whose $7.5bn acquisition of code-sharing site Github closed last week.
Turkey’s president has alleged that journalist Jamal Khashoggi was killed in a “savage” pre-planned murder at the Saudi consulate in Istanbul, directly contradicting the Gulf kingdom’s account of the commentator’s death. The accusations by Recep Tayyip Erdogan are the most detailed to be made in public by Ankara since Khashoggi’s disappearance this month, significantly raising the pressure on the Saudi royal family as it hosts a high-profile investment conference. It also puts the spotlight back on the Saudi leadership after a week in which it attempted to draw a line under the disappearance. Khashoggi’s killing has triggered more international condemnation of the Gulf state than at any point since Crown Prince Mohammed bin Salman took de facto control last year.
Italy’s populist government defied eurozone budget enforcers on Monday, refusing to curtail its plans for a sharp increase in public spending and insisting that breaking the EU’s fiscal rules would not threaten the currency union’s stability. Giovanni Tria, economy minister, wrote in a letter to the European Commission that the new spending proposed by Rome was needed to restart growth in the eurozone’s third-largest economy after a decade of economic stagnation. Mr Tria wrote that challenging Brussels’ request for changes to the budget “was a hard, but necessary decision in light of Italy’s delay in getting back to pre-crisis levels of GDP and the desperate economic conditions in which the most disadvantaged citizens find themselves”.
Investors wasted no time after Netflix Inc. (NFLX) announced it beat third-quarter earnings expectations Tuesday afternoon, sending shares of the streaming giant up 11% in after-hours trading. Netflix reported adding a net 6.96 million subscribers in the most recent quarter, with 1.09 million coming from the U.S. and 5.87 million coming from overseas, soundly beating the FactSet consensus of 5.32 million and the company’s own forecast of 5 million. Netflix missed subscriber growth expectations last quarter, which sent the stock into a nosedive..
President Donald Trump has gone on the attack against the Federal Reserve, but it’s highly unlikely the Fed will listen, at least one market observer says.
Last week, Trump amped up his criticism of the Fed by calling its decision to hike rates “crazy” and “out of control.” Markets are pricing in another increase in December, in what would be the ninth increase of a tightening cycle that began in late 2015. Still, the fed funds rate remains near historical lows. “Loco, crazy, fake, whatever you want to call it, I think that has zero impact on the Fed,” said Michael Schumacher, head of interest rate strategy at Wells Fargo US stocks suffered their worst fall in more than eight months on Wednesday as recent interest rate rises undercut popular trading strategies and sent shares of once high-flying technology stocks tumbling. The tech-heavy Nasdaq Composite dropped more than 4 per cent, its biggest one-day decline since June 2016, while the S&P 500 fell 3.3 per cent, its worst day since February. The benchmark index has fallen five days in a row — its longest losing streak of Donald Trump’s presidency. The US sell-off bled into Asia in early morning trading on Thursday. Shares in companies listed in China and Hong Kong dropped by more than 3 per cent, while Japan’s Topix index was down as much as 3.4 per cent. Technology companies were among the worst hit.
The biggest exchange-traded bond fund has suffered a record one-day withdrawal, after the global fixed-income market saw more than $900bn evaporate in last week’s Treasury-led bond rout. BlackRock’s flagship debt ETF, the $53bn iShares Core US Aggregate Bond ETF (or AGG for short) recorded outflows of almost $2bn on Tuesday, according to Bloomberg data — the biggest one-day withdrawal since its launch in 2003. Outflows from other big bond ETFs have moderated this week, which could indicate that a single big position in AGG was liquidated. But broader fund flow data from EPFR Global show that more than $8.1bn was pulled out of bond mutual funds and ETFs in the 14 days to October 3.
On Tuesday, Bloomberg doubled down on its bombshell report from last week, which alleged China had surreptitiously implanted tiny chips into the motherboards of servers to spy on US companies such as Apple and Amazon. If true, this would be one of the worst hacks in history.
In its new story, Bloomberg reports that a US telecom discovered and removed “manipulated hardware” in its servers. The article does not name the telecom and the key claims are all attributed to one source, Yossi Appleboum, co-CEO of security consultant Sepio Systems. Bloomberg reports Appleboum provided “documents, analysis, and other evidence,” but does not publish those or provide more information about what types of documents or evidence it has. The US Senate confirmed Donald Trump’s second Supreme Court justice on Saturday in a narrow vote that secured a conservative majority on the high court. Brett Kavanaugh was confirmed as expected in a 50-48 vote, the narrowest margin for any justice since the 19th century. Only one Democratic senator supported Mr Kavanaugh after what has been a bitter and highly partisan confirmation battle. The vote was a victory for Mr Trump and establishment Republicans, who have given the president their support in return for his nominations of conservative judges. Last year, Mr Trump appointed Neil Gorsuch to the Supreme Court seat Republicans refused to allow Barack Obama to fill.
Federal Reserve Chairman Powell said the central bank has a ways to go yet before it gets interest rates to where they are neither restrictive nor accommodative.In a question and answer session Wednesday with Judy Woodruff of PBS, Powell said the Fed no longer needs the policies that were in place that pulled the economy out of the financial crisis malaise.
"The really extremely accommodative low interest rates that we needed when the economy was quite weak, we don't need those anymore. They're not appropriate anymore," Powell said. "Interest rates are still acommodative, but we're gradually moving to a place where they will be neutral," he added. "We may go past neutral, but we're a long way from neutral at this point, probably." Italy’s economy minister insisted his government will reduce the country’s budget deficit from 2020 onwards, in a small concession to Brussels ahead of Rome sending its formal spending plan to the European Commission for approval later this month. The populist coalition governing Italy announced last week that it planned to keep the deficit at 2.4 per cent of gross domestic product for the next three years, busting though spending EU targets and sparking a sell-off in Italian assets. But economy minister Giovanni Tria the government had shifted its plans and would begin lowering the budget deficit as a percentage of gross domestic product from 2020.
Canada has agreed to join a US deal with Mexico to revamp Nafta, ending months of uncertainty over trade in North America that had been hanging over the economies of all three countries ever since Donald Trump took office in the White House. Officials from the US and Canada said the agreement had been reached late on Sunday, just hours before a deadline for the US and Mexico to send the text of the deal to Congress. The new trilateral pact is to be called the United States Mexico Canada Agreement, they said. “USMCA will give our workers, farmers, ranchers and businesses a high-standard trade agreement that will result in freer markets, fairer trade and robust economic growth in our region,” Robert Lighthizer, US trade representative, and Chrystia Freeland, Canada’s foreign minister, said in a joint statement. “It will strengthen the middle class, and create good, well-paying jobs and new opportunities for the nearly half billion people who call North America home.”
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March 2021
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