The Argentine government introduced emergency capital controls, restricting the amount of dollars that people and firms can buy. The measures are meant to stop money gushing out of the country amid a run on the peso, which has tumbled as investors fret that October’s presidential election will be won by a ticket that includes Cristina Fernández de Kirchner, a former president whose spendthrift policies ruined the economy.
India’s economy grew by 5% in the second quarter compared with the same three months last year, the country’s slowest growth rate in six years and well below market forecasts. Separate figures showed that domestic car sales slumped in August (by 49% for Tata Motors compared with August 2018) and that manufacturing activity was cooling rapidly. More government stimulus is now on the cards.
The Indian government also announced plans to streamline the country’s state-controlled banks, which hold lots of bad debt, cramping their ability to lend, and proposed that ten state banks be merged into four new ones. Markets gave the idea a cool reception.
Australia’s GDP grew by 1.4% in the second quarter, the slowest pace since the financial crisis. Exports are booming, but consumers in the Lucky Country are reining in their spending.
Turkey’s annual inflation rate fell to 15% in August, the lowest it has been for 15 months. Inflation soared to 25% at the end of last year amid a currency crisis. Today’s more stable lira and decreasing price pressures have boosted expectations that the central bank will again slash interest rates when it meets on September 12th, though probably by not as much as the 4.25-percentage-point cut to rates in July.
America and China agreed to resume high-level talks in early October to try to resolve their trade dispute. Negotiators last met in July and there is little hope that a breakthrough will come soon. There was evidence this week that the dispute is having an effect on manufacturing. Factory output in America surprisingly contracted in August for the first time in three years. In Britain manufacturing activity fell to a seven-year low. And in Germany a purchasing-managers’ index suggested that manufacturing had shrunk for an eighth consecutive month. Figures in China showed manufacturing contracting for the fourth month in a row.
Uber’s share price hit a new low ahead of the expected passage of a bill in California that would reclassify the employment status of the company’s drivers in the state from contractor to employee, a threat to its low-labour-cost business model.
The rural-urban split
Walmart decided to stop selling ammunition that can be used in military-style weapons and handguns. The retailer has come under pressure to do more to curb gun sales since last month’s mass shooting at one of its stores in El Paso. This week a gunman murdered seven people at random in west Texas. Walmart stopped selling handguns in the 1990s and semi-automatics in 2015, but the latest surge in shootings has led to calls for parents to boycott its stores in the back-to-school season.
A key ally of Muhammad bin Salman, Saudi Arabia’s crown prince and de facto ruler, was put in charge of Saudi Aramco. The promotion of Yasir al-Rumayyan to chairman makes the on-off IPO of the state oil company more likely; it could come as early as next year.
Cathay Pacific’s chairman stood down, three weeks after its chief executive resigned amid the political turmoil in Hong Kong, Cathay’s home hub. The airline draws a lot of business from the Chinese mainland, where the government has told it to bar cabin crew who participate in Hong Kong’s pro-democracy protests from flying to Chinese airports. Cathay has sacked two pilots who joined the marches. The new chairman, like the new CEO, comes from Swire Group, a conglomerate with a 45% stake in Cathay.
Nickel prices soared to five-year highs after the Indonesian government brought forward a ban on exports of nickel ore to December, two years earlier than it had proposed. The metal is used in stainless steel and increasingly in batteries for electric cars, an industry which Indonesia wants to develop domestically.
A web of intrigue
There were more privacy scandals involving internet companies. Google was fined $170m in America for illegally collecting data from child users on its YouTube site in order to target them with ads. And a two-year hacking campaign was uncovered (by Google’s researchers) that tapped into text messages and photos on hundreds of thousands of iPhones. As a reminder that no one is immune, the Twitter account of Jack Dorsey, Twitter’s boss, was briefly hijacked; a number of offensive messages and a bomb threat were tweeted out.