Major International Business Headlines Brief::: 25 August 2021

Wed Aug 25 12:58:13 CAT 2021

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Major International Business Headlines Brief::: 25 August 2021

 <https://www.nedbank.co.zw/> 

ü  US House approves Biden's $3.5tn domestic budget blueprint

ü  Afghanistan: World Bank halts aid after Taliban takeover

ü  Business still has time to help Afghans - AirBnB boss

ü  UK companies 'perform better' with overseas owners

ü  Goldman Sachs mandates vaccines for US staff and visitors

ü  Can the US crack down on fake vaccination cards?

ü  Fifa awarded $201m in forfeited funds after corruption probe by US Department of Justice

ü  Amazon offers £1,000 joining bonus for new UK staff

ü  Peloton faces pandemic uncertainties as it launches latest treadmill in U.S.

ü  Analysis: Inflation vs jobs hole: A tradeoff the Fed still hopes to skirt

ü  Digital identifiers to help crypto market go mainstream

ü  Royal Bank of Canada beats quarterly profit expectations

ü  S.Korea parliament committee votes to curb Google, Apple commission dominance

ü  Global corporate profits to fall 8% in Q3 after record Q2 - data

 <mailto:info at bulls.co.zw> 

US House approves Biden's $3.5tn domestic budget blueprint

The US Congress has approved a $3.5tn (£2.54tn) budget blueprint, setting the stage for Democrats to enact President Joe Biden's ambitious economic agenda.

The rule that passed on Tuesday allows Democrats, who narrowly control both chambers, to move ahead with key policy proposals.

Mr Biden's party hopes to devote significant resources to family support, health and climate schemes.

It passed the House of Representatives 220-212, with no Republican support.

The resolution's fate was unclear as late as Tuesday morning, amid a standoff between progressive and centrist House Democrats.

The Democrats are enacting a process called budget reconciliation to approve Mr Biden's larger spending package - and passage of the budget blueprint Tuesday is the first step.

A group of 10 moderate Democratic lawmakers had threatened to withhold votes on the blueprint unless the House first approved a $1tn bipartisan infrastructure bill. That package includes funding for roads, bridges, the power grid, public transport and internet.

To win a compromise after over 24 hours of debate, top House Democrats have assured moderates that the infrastructure bill will be discussed on 27 September, when the House is back in session.

"Passing this rule paves the way for the Building Back Better plan, which will forge legislative progress unseen in 50 years," Speaker of the House Nancy Pelosi said ahead of the vote.

The top Democrat added that delays only threaten the economic plan and other bills.

Mr Biden's Build Back Better domestic plan is aimed at creating jobs and lowering costs for working families. It is largely financed with tax increases on the rich and large corporations.

Since June, Mrs Pelosi had said that that far-reaching $3.5tn infrastructure plan must move forward before the infrastructure deal.

More liberal party members said they would not support the infrastructure bill unless it was coupled with the larger economic package, which contains their key legislative priorities, like childcare programmes and taxes on the wealthy.

But the centrists demanded a vote on infrastructure first, and accused other Democrats of attempting to hold the infrastructure bill hostage.

On Monday night, the internal party debate reportedly led to a tense meeting among the Democrats. Politico reported that Mrs Pelosi told lawmakers they shouldn't "squander" the opportunity to pass the bills while Democrats hold a narrow majority in the House.

Mrs Pelosi has set a goal of passing both pieces of legislation by 1 Oct.-BBC

Afghanistan: World Bank halts aid after Taliban takeover

The World Bank has halted funding for projects in Afghanistan after the Taliban seized control of the country.

It cited concerns over how the Taliban's takeover will impact "the country's development prospects, especially for women".

The move comes just days after the International Monetary Fund (IMF) suspended payments to Afghanistan.

The Biden administration has also frozen the assets of Afghanistan's central bank that are held in the US.

"We have paused disbursements in our operations in Afghanistan and we are closely monitoring and assessing the situation in line with our internal policies and procedures," a World Bank spokesperson told the BBC.

"We will continue to consult closely with the international community and development partners. Together with our partners we are exploring ways we can remain engaged to preserve hard-won development gains and continue to support the people of Afghanistan."

What next for Afghanistan's economy?

Since 2002 the Washington-based financial institution has committed more than $5.3bn (£3.9bn) to reconstruction and development projects in Afghanistan.

On Friday, the World Bank told staff that its Kabul-based team and their immediate families had been safely evacuated from Afghanistan to Pakistan.

The decision by the World Bank to suspend payments to Afghanistan is the latest financial blow to the country's new government.

Last week, the IMF announced that Afghanistan will no longer be able to access the global lender's resources.

An IMF spokesperson said it was due to "lack of clarity within the international community" over recognising a government in Afghanistan.

Around $440m of new monetary reserves had been set to be made available to the country from 23 August.

Also in the days after the Taliban took control of Kabul, the White House said any assets that Afghanistan's central bank has in the US would not be made available to the Taliban.

Da Afghanistan Bank has reserves of roughly $9bn, most of which is held in the US.-BBC

Business still has time to help Afghans - AirBnB boss

There is still time for firms to "speak up and help" Afghans being displaced by the current humanitarian crisis, the co-founder of AirBnB has said.

It comes after the accommodation platform promised to provide free temporary lodging for 20,000 refugees.

Relatively few companies have offered help in the crisis so far, but Brian Chesky told the BBC he expected more would feel "compelled" to.

"I do think nearly every business can help in their own way," he said.

"And the time is now - it's not just helping, it's helping quickly because if people are displaced and need to be resettled, every hour counts."

The tech boss told the BBC the displacement of people fleeing the Taliban was "the greatest humanitarian crisis of our time".

However, he could not say how long refugees would be able to stay with AirBnB hosts, only that it "is really up to how long our hosts can house them and also the need".

"Most of these people aren't looking for long-term housing, they're looking for a temporary housing before they decide where they want to live," he added.

"And there's a pretty extensive protocol to work with the settlement agencies to figure out where they actually want to start their lives... but you know I want to make sure we can go as big as possible for these people."

Since Taliban militants took over Afghanistan, AirBnB has put up about 200 Afghan refugees in its listed properties, leading to questions about whether it will be able hit its 20,000 pledge.

People walking towards planes waiting at Kabul airport

But Mr Chesky said the firm had successfully offered homes to 225,000 frontline workers during the pandemic.

"We would have not made a public commitment I didn't think we could fulfil," he said.

The refugees will stay with AirBnB hosts all over the world and will be fully vetted by the firm's NGO partners, which include International Rescue Committee and Church World Service.

There have been security fears over the evacuation of Kabul after someone on the UK's no-fly list was flown into Birmingham over the weekend.

Mr Chesky urged potential hosts to embrace the opportunity, saying: "When you take someone into your home sometimes you gain as much as the person you're providing housing for.

"There's just something about that experience that we've heard is one of the most meaningful experiences in people's lives, to be able to care for a family."-BBC

UK companies 'perform better' with overseas owners

Many companies perform better with overseas ownership according to business minister Lord Grimstone, who said the UK had nothing to fear from a recent flood of private foreign takeover bids for UK-listed companies.

"It would be a sad day for Britain if we pulled down the shutters so that we weren't a mercantile entrepreneurial country," he said.

His comments came as the government announced that the UK will hold a major international investment summit in October to attract more overseas investment in post-Brexit Britain.

"All our research shows that overseas invested companies are more productive and produce more jobs," added Lord Grimstone.

"It's an extraordinary finding but what it shows is the importance of attracting overseas investment into the UK."

Recent figures show that foreign private buyers have spent more acquiring UK-listed business in the last eight months than they have in the last five years combined.

Currently, grocery company Morrisons and defence contractors Meggitt and Ultra are the subject of bidding wars between overseas investors.

Lord Grimstone, former deputy chairman of Barclays, which will be a major sponsor of the upcoming summit, said the UK was at the forefront of industries of the future, including renewable energy and the convergence of finance and technology - so-called fintech.

He also pointed to the £1bn investment in new car and battery production recently announced by Nissan.

"We intend to keep the UK as one of the most attractive destinations for foreign investment in the world," he said.

"We are in that category but I like to think of investment as one of the most globally competitive sports and we intend to win in it."

Despite the flood of recent private takeovers, overall foreign direct investment into the UK has fallen every year since the Brexit referendum in 2016, and the UK which attracted more investment than any other country in Europe for 18 years in a row, lost that title to France in both of the last two years.-BBC

Goldman Sachs mandates vaccines for US staff and visitors

Goldman Sachs has made it compulsory for its staff to be fully vaccinated against coronavirus in order to work in its US offices.

The investment bank said from 7 September all employees, along with clients and visitors, would need to be doubled jabbed to enter its buildings.

Goldman said it would also introduce mandatory once-a-week testing from the same date for staff.

Workers who are not fully vaccinated will be expected to work from home.

Goldman told the BBC the policy was being introduced in the US, where workers returned the office in July, and not at its sites around world.

Proof of vaccination status will be required via an app from October, it added.

A spokesperson said that from Wednesday face masks would also be required - regardless of vaccination status - in all common areas of its buildings, such as lobbies, lifts, hallways, restrooms and cafes, except while seated for eating and drinking.

The bank had previously ordered its US bankers to disclose their vaccine status before returning to the office but refrained from mandating them.

The announcement comes after Pfizer's two-dose vaccine received full approval from the US Food and Drug Administration (FDA). The vaccine had initially only been given emergency use authorisation.

The approval is expected to set off more vaccine mandates by employers and organisations in the US at time when infections are rising and vaccine hesitancy remains high.

Last month, Goldman announced bankers returning to its London head office would be required to wear masks in the building, despite the easing of the UK government's coronavirus restrictions.

But Richard Gnodde, the head of Goldman Sachs International, said the bank would not insist on people being vaccinated, nor would it force people to return if they felt uncomfortable doing so.

"[We will] continue to manage our exit from this in a cautious and appropriate way to make sure that our people feel comfortable," he told the BBC.

'Aberration'

Banks have been split over whether staff should come back to the office full time or work from home for some or all of the week.

Goldman Sachs' group chief executive, David Solomon, has described working from home as "an aberration", while James Gorman, the boss of rival US investment bank Morgan Stanley said: "If you can go into a restaurant in New York City, you can come into the office."

Meanwhile, NatWest has said some 55% of its workforce would adopt a hybrid model of working between the office and home.-BBC

Can the US crack down on fake vaccination cards?

As more people in the US are asked to prove they have been vaccinated in order to work, study or socialise, a flourishing black market in fake vaccination cards has sprung up. But what can be done to tackle it?

The operator behind "Covid19vaccinecardsss" took just seconds to reply. One of a slew of Instagram accounts hawking fake proof of Covid-19 vaccination cards, whoever was running the page was eager to sell, inviting the BBC to move over to an encrypted messaging app to make a deal.

For $100 (£70), the vendor would deliver a "registered" card, with either the logo of the US Centers for Diseases Control and Prevention (CDC) or Britain's National Health Service.

Payment could be made in Apple Pay or Bitcoin and delivery would be "discrete" and within 24 hours, they promised.

"Your cards will be saved into the database system," they told the BBC. "[These are] very good original vaccine cards, no worries."

As the Delta variant of coronavirus sweeps the US, businesses, universities and cities such as New York and San Francisco have introduced vaccine mandates to boost uptake of jabs.

But vaccine hesitancy remains high and a cottage industry for bogus inoculation cards has emerged to help people get around the rules.

Fakes have been sold on platforms from eBay to Whatsapp and there have been high profile busts, with warnings that counterfeiters and buyers could face jail.

Yet users, authorities and many others are sceptical that the use of false cards can be stopped.

Jennifer is head bartender at the busy Peculiar Pub in Greenwich Village, New York, where customers must show proof of vaccination in order to enter as part of a citywide mandate affecting bars, gyms and other indoor venues.

No one's raised her suspicions yet but she thinks it will be "really hard" to spot fake vaccination documents, which in New York can take the form of a paper card from the health authorities or merely a photo of that card.

"As long as it's printed and you can just write a date, how am I going to know the person that injected you and where you got it? There are hundreds and thousands of vaccination sites in the US, people can come to your home now to give you the vaccine."

Counterfeiters appear to be doing brisk business.

Last week, customs officials in Memphis, Tennessee and Anchorage, Alaska seized 6,000 false vaccination cards in separate shipments from China destined for recipients across the US.

They were printed with the CDC logo and closely resembled the genuine cards given to US citizens when they get vaccinated. However, when officials looked closer they noticed spelling mistakes and poor printing quality.

Two visitors from the mainland were arrested Sunday at Honolulu's airport for violating an Emergency Proclamation by falsifying vaccination cards to travel to Hawaiʻi. Investigators from the AG's office made the arrests after following up on a tip from a community member.

At the same time, more people who are using false documents are getting caught.

Recently, a Miami couple was arrested for allegedly trying to enter Hawaii using fake cards in breach of the state's travel laws, which require proof of vaccination or a negative test result to avoid quarantine.

Enzo Dalmazzo, 43, and Daniela Dalmazzo, 31, who travelled with their two children, are facing $8,000 (£5,000) in fines - although the maximum penalty could have been jail.

The flourishing market has prompted warnings from the FBI that unauthorised use of a government agency's seal is a crime and violators could face fines or up to five years in prison.

Chuck Schumer, the Democratic Senate majority leader, has called for a federal crackdown and national education campaign to stop counterfeiting. Why, he also asked, were people risking prosecution to get fake vaccine cards when jabs are free and plentiful in the US?

Stacey, who works at another busy Greenwich Village bar, says friends of hers are thinking of buying fake cards because they do not want to get jabbed over fears about vaccine safety.

Resistance to jabs and vaccine mandates is fierce in some parts of the US, where only 60% of the adult population is fully vaccinated, and typically driven by online disinformation and calls to protect civil liberties.

Stacey, who is vaccinated, says her friends think vaccine mandates could stop them doing everyday things if they become more common, and so fake documentation will offer a workaround.

But she adds: "It's worrisome in terms of public health. If they are choosing to come in with a fake vaccination card they are putting themselves at risk to people who are doing the same thing."

Bogus cards are easily available on social media, messaging apps and the dark web where they can be bought for anywhere between $25 (£18) and $500, according to reports.

On Instagram accounts often promote fake cards alongside images featuring anti-vaccination slogans or disinformation about vaccine safety.

Instagram shut down accounts the BBC reported but others remain on its site. Anyone buying, selling, or trading in fake, or genuine, medical documents on its platforms will be barred, the company said.

"We'll continue to identify and remove this content whenever we find it, and will disable accounts, pages or groups that repeatedly break our rules," a spokeswoman told the BBC.

Some New York businesses are concerned they could be held liable if someone is found on their premises with a fake card.

Sean, who manages Off the Wagon, another nightspot in Greenwich Village, thinks all proof-of-vaccination cards should be digital to stop fraud.

Such passes are planned or in use in the UK and Denmark, for example, but the US has no similar scheme.

Several digital vaccine apps are available within New York City, but bars like Sean's still can't access systems to scan them, which worries him.

"I am expecting [fake vaccination cards] just like I expect fake IDs for underage drinking," he tells the BBC. "But there isn't much you can do about the paper ones.

"That's why it is important to know we won't be held liable… We're at the very early stages with all of this, it's a fickle process."-BBC

Fifa awarded $201m in forfeited funds after corruption probe by US Department of Justice

Fifa will receive $201m (£146m) in forfeited funds seized during a corruption probe, the US Department of Justice has announced.

More than 50 defendants have been criminally charged since the Department of Justice unveiled its corruption probe in 2015.

Twenty-seven people and four corporate entities have pleaded guilty, with two people convicted at trial.

The repayment will begin with an initial $32.3m (£23.5m).

The money, which was seized from the bank accounts of former officials who were prosecuted for corruption, will be used by the Fifa Foundation, an independent foundation, to help finance football-related projects which, Fifa says, can "positively impact so many people across the football world, especially through youth and community programmes".

The 2015 scandal, the biggest in the sport's history, involved collusion between officials from the governing bodies and sports marketing executives, with fraud, bribery, racketeering and money laundering offences committed.

It led to the end of Sepp Blatter's 17-year reign as the governing body's president and the election of Gianni Infantino as his successor in February 2016.

Several of the defendants were ordered to forfeit assets obtained through criminal activity.

Under United States law, the Department of Justice has the authority to distribute the proceeds of forfeited assets to victims of crimes, including to the football organisations that were defrauded.

"I am delighted to see that money which was illegally siphoned out of football is now coming back to be used for its proper purposes, as it should have been in the first place," said Infantino.

"I want to sincerely thank the US Justice authorities for their efforts in this respect, for their fast and effective approach in bringing these matters to a conclusion, and also for their trust in general.

"The truth is that, thanks to their intervention back in 2015, we have been able to fundamentally change Fifa from a toxic organisation at the time, to a highly esteemed and trusted global sports governing body."

Jacquelyn M Kasulis, acting US attorney for the Eastern District of New York, said: "Today's announcement confirms that money stolen by corrupt soccer officials and sports marketing executives through fraud and greed will be returned to where it belongs and used to benefit the sport.

"From the start, this investigation and prosecution have been focused on bringing wrongdoers to justice and restoring ill-gotten gains to those who work for the benefit of the beautiful game.

"Our office, together with our law enforcement partners, will always work to compensate victims of crime."

Infantino added that Fifa's co-operation with the Department of Justice was a reflection of the "significant progress" the body had made "in terms of good governance and transparency".

"Today, they know that with the Fifa Foundation this money is in good hands and will serve the purpose it is intended for," he said Infantino.

"On behalf of all future beneficiaries around the world, I would like to thank the US authorities for the trust placed in Fifa, and we will make sure that these funds are used properly and bring tangible benefits for people who really need it."

'Fifa will view this as a line in the sand' - analysis

BBC Sport's Simon Stone

In authorising this massive payment to Fifa, the Department of Justice is acknowledging the world governing body was the wronged party in the scandal that shamed the game.

And while not everyone agrees with its decisions - most recently the Premier League over Fifa's decision to extend South America's international break - and suspicion remains over Infantino's involvement in the European Super League talks he has since distanced himself from - Fifa is, thankfully, a different organisation now than the corrupt and discredited Sepp Blatter regime.

Fifa will view this judgement as a line in the sand and its Foundation will be responsible for distributing the money, which should benefit the game worldwide.-BBC

Amazon offers £1,000 joining bonus for new UK staff

Amazon is offering new warehouse workers a £1,000 joining bonus in a bid to attract new recruits.

The online retail giant is advertising for "urgently needed" warehouse pickers and packers in the UK to meet demand, amid a growing recruitment crisis.

Candidates who take up the roles before 18 September will get the sign-on fee, according to jobs site Indeed.

It is the latest example of firms using incentives to attract staff as they struggle to recruit.

Brexit, coronavirus and the furlough scheme, which still supports millions of workers, have been blamed for the mounting recruitment challenges.

Hospitality was badly hit by the so-called "pingdemic", while companies including major supermarkets are suffering disruptions to their supply chains due to a UK-wide shortage of HGV drivers.

Tesco has offered lorry drivers a £1,000 joining bonus, while John Lewis plans to increase annual salaries for its drivers.

The meat industry has said it is hoping to recruit prisoners and former inmates to fill roles in abattoirs and processing plants.

According to official figures, UK job vacancies hit a record 953,000 in the three months to July.

Amazon is advertising its new roles at warehouses across the country, including in Darlington, Dartford, Swansea, Redditch and Coventry.

As well as the joining bonus, the company is offering an hourly rate of £11.10 an hour, with overtime rising to £22.20 an hour.

Amazon says it is offering "immediate starts with no experience needed".-BBC

Peloton faces pandemic uncertainties as it launches latest treadmill in U.S.

(Reuters) - Peloton Interactive Inc (PTON.O) investors want answers to two questions when the company reports results on Thursday: Will the Delta coronavirus variant drive a new surge in sales, and are customers ready to look past a recall by the exercise bike and treadmill makers?

When it comes to COVID, most analysts say it is too early to predict if the stay-at-home stock will get another pandemic-fueled boost as vaccines could bolster confidence to leave home to work out at gyms. The launch of its new treadmill in the United States next week comes at an opportune time.

Whether due to Delta or delays in workers returning to the office, use of independent gyms was down by 8% compared with pre-pandemic levels while interest in digital workouts and home equipment rose 21%, according to consulting firm ClubIntel.

“If the Delta variant continues to delay the return to normality -- and worse yet, if it leads to incremental gym closures come winter time -- I do think that could be a positive catalyst for Peloton,” said James Hardiman of Wedbush Securities. He added that “it's way too early to make that assessment right now.” He downgraded Peloton shares from outperform to neutral on July 14 due partly to uncertain future demand. The stock is down 34% from its high on Jan. 14.

Cowen analyst John Blackledge maintains an outperform rating, noting a survey that suggests consumer attitudes on returning to gyms worsened in July given the rise of the Delta variant, which could drive near-term demand.

Peloton’s new treadmill, analysts say, is key to its next leg of potential sales growth and putting behind a costly recall of its exercise machines over safety reasons. read more

Peloton’s shares plummeted more than 15% in May after it recalled its Tread+ treadmill. Peloton initially continued to sell the Tread+ despite multiple injuries and a child’s death in March from being pulled under the machine.

The lower-priced Tread will debut in the United States for $2,495. It had launched in Canada and the United Kingdom but was recalled in May for a manufacturing problem. Peloton announced it will be released in the United States on Aug. 30 after finding a fix for faulty screws that caused the touchscreen console on the Tread to fall off. read more

"The success of Tread could mark an inflection point, given Peloton to date has relied on the popularity of its Bike and Bike+ products, while treadmills as a category represent a larger market," Blackledge added.

Pelton is expected to report $922 million in revenue for the fourth quarter that ended June 30, up 52% from a year ago, according to an average of analyst estimates based on Refinitiv data. Net income was expected to be a loss of $137.9 million or 45 cents a share, compared with a profit of $89.1 million or 27 cents a share a year earlier.

Although Peloton has suffered some recent supply chain challenges, it may be equipped to handle a potential boost in demand after investing $100 million to expedite overseas and air shipping from its manufacturing facility in Taiwan. The company is also expected to capitalize on its acquisition of equipment manufacturer Precor and is currently building a new production plant in Ohio, which will open in 2023. read more

The company is also expected to announce plans to continue international expansion following its entry into the Australian market in July. According to Loop Capital analyst David Adam, Peloton is just scratching the surface of its possible customer base, with roughly 5.4 million total Peloton members, and 2 million being “connected fitness” subscribers who pay monthly fees in order to use the company’s video workouts and equipment.

As of 2020, the global gym industry was worth $96.7 billion with more than 184 million gym members in total, according to the International Health, Racquet and Sportsclub Association (IHRSA).

The Thomson Reuters Trust Principles.

Analysis: Inflation vs jobs hole: A tradeoff the Fed still hopes to skirt

(Reuters) - The Federal Reserve's year-old promise to drive U.S. employment to new heights came at a wrenching moment last August, with 12 million jobs still missing due to the pandemic, inflation cratering to half the central bank's target, and no clear endgame for the worst health crisis in a century.

Then came three vaccines, a steady jobs recovery, trillions more dollars in fiscal stimulus, the fastest economic growth in 40 years - and surging prices.

A steady shift in Fed rhetoric since inflation jumped in the spring has now triggered debate about how deep the Fed's new commitment to jobs truly runs, and how long it will tolerate high inflation as it waits for a "broad and inclusive" rebound in employment.

No decisions have been made. The Fed is actively talking about when to reduce its $120 billion per month emergency bond purchases, and Fed Chair Jerome Powell may discuss that in Friday remarks to a virtual iteration of its annual Jackson Hole research conference. The more consequential call over when to raise interest rates from near zero remains, in all likelihood, far down the road.

But with each successive report showing inflation above the Fed's 2% target, the tone has shifted. Fed officials now readily acknowledge inflation may be more persistent than they thought. Moreover, some are lowering expectations of a full rebound to the pre-pandemic level of jobs or labor force participation.

Reuters Graphics

The debate won't be resolved soon. But the suddenly two-sided nature of the discussion has, to some, cast the value of the Fed's new approach into doubt.

"I think they have lost their nerve," said Adam Posen, president of the Peterson Institute for International Economics and a former member of the Bank of England's Monetary Policy Committee. In recent comments, "they have not reinforced their commitment to broad and inclusive gains" in the labor market.

Richard Clarida, the Fed's influential chair, would disagree. At a recent presentation to the Peterson Institute, he said his outlook is for inflation above 2% for three years running, for unemployment so low by the end of 2022 that gains would be broadly felt and jobs returned to the pre-pandemic level, and a rate increase in 2023 "entirely consistent" with the Fed's new approach.

INFLATION VS JOBS

Arguably the last few inflation readings, the latest being almost twice the targeted 2% level, would have been confronted more aggressively by previous Feds.

Some feel a tougher approach may be needed now.

"It is getting a little old to say that this is a transitory increase in prices," said Vincent Reinhart, chief economist at Mellon, pointing to surveys showing businesses ready and able to pass through price hikes. "If firms say they are worried about prices paid and they have pricing power then...we don’t have price stability. The wheels are greased for costs to pass through."

Under the new framework, though, the Fed has pledged not to nip job growth in the bud and, to be certain inflation hits the 2% target on average, will allow it to go above that level "moderately...for some time."

When the new strategy was rolled out, however, it carried an even deeper sort of pledge. Policymakers have long seen tension between unemployment and inflation. If inflation gets too high, the Fed can tame it through rate increases, albeit it at the cost of higher unemployment. When inflation is weak or unemployment high, it can cut rates and trade more jobs for higher prices.

Over 10 years of economic expansion after the 2007-to-2009 recession, that relationship did not hold. As unemployment fell, inflation remained muted, and Fed officials concluded they could exploit that and take more inflation risk to create the type of "hot" economy and robust job market that helps the less well-off.

Reuters Graphics

Equity is not a goal addressed in the Fed's congressional mandate, but officials have given the issue more attention as the economic costs of inequality have become better appreciated.

The quandary arose when the pandemic reanimated what the Fed thought it had escaped: conflict between inflation and jobs.

In the thick of the framework debate in 2019 the Fed saw ample jobs and low inflation; now inflation is high, but with 6 million fewer people working than before the pandemic.

That has forced an earlier-than-expected reckoning over issues left unresolved in the new strategy.

What does "moderately" mean when it comes to an inflation overshoot? How fully can the economy recreate the pre-pandemic conditions where, for instance, unemployment hit record lows for African Americans and the share of adults employed or looking for work was climbing steadily?

The "labor force participation rate" hit 63.4% in January 2020. It's now 61.7%. Black unemployment hit a record low 5.2% in August of 2019, and even then was 1.8 percentage points higher than for whites. As of July it was 8.2%, compared to 4.8% for whites.

With inflation gnawing, some Fed officials have begun nipping at what to expect from the jobs recovery.

Clarida, rather than seeing a full rebound of the labor force participation rate, says it can return to an unspecified "demographic trend" dragged lower by the aging population.

Where Powell has talked about the plight of displaced workers, he also notes the number of additional people, perhaps 2 million or more, who retired during the pandemic - thus lengthening the time to get back to the pre-pandemic level of jobs, and increasing the likelihood the Fed may raise interest rates before that happens.

Reuters Graphics

Much depends on inflation. If it proves the product of global supply shocks and reopening, and recedes on its own, the potential tradeoff with the job market eases.

If not, then the Fed's priorities will be tested in ways not envisioned when the new strategy was approved.

"They set a very ambitious goal. This is year one...We don't know if it's successful for at least a couple of years," said Edward Al-Hussainy, senior rates and currency analyst for Columbia Threadneedle Investments. "The first priority is still the recovery in the labor market...People are starting to lose focus on that."

The Thomson Reuters Trust Principles.

Digital identifiers to help crypto market go mainstream

(Reuters) - Tags for identifying bitcoin, ethereum and other crypto assets will be launched in September in the latest sign of how the fast growing, unregulated market is adopting the hallmarks of mainstream investing.

The ability to monitor cryptocurrencies has become a major worry for regulators as the ballooning market, which reached a record $2 trillion capitalization in April, has experienced wild volatility and central bank warnings that investors could lose their shirts.

Individual stock and derivatives are already assigned a unique identification number to allow regulators and market participants to identify, track and quantify risks from trades.

The new digital token identifiers or DTIs will be registered at the DTI Foundation, a not-for-profit unit of Etrading Software, a fintech company that provides market infrastructure.

As the crypto assets sector grows in size, regulators and the market will need identifiers to track it better, Sassan Danesh, managing partner at Etrading Software, told Reuters.

DTIs will create a bridge between traditional securities and the new tokenised world, using norms from the global International Organization for Standardization (ISO) that are set to be finalised by the end of September.

At that time the DTI registry will formally issue identifiers for the 100 most important crypto assets and tokens which represent more than 80% of the current crypto market and include bitcoin, ethereum, Dogecoin and Ripple, Danesh said.

Identifiers will also make it easier to compare which exchanges offer the best prices for specific crypto assets, he added.

ISO based identifiers are already used for reporting securities and derivatives trades to regulators for spotting market abuses and build up of risks, and Danesh expects DTIs will lead to a similar requirement for crypto transactions.

"We absolutely see there will be regulatory mandate for reporting of digital assets and that's driven by just the size of the digital market, which now cannot be ignored by regulators," Danesh said.

Given the time needed for the DTIs to be embedded in markets, the end of 2023 would probably be the earliest practical date for introducing mandatory reporting, he added.

The IT systems of big investors already reference ISO based identifiers and adding DTIs would mean no major recalibration, making it easier to add digital assets.

"The financial institutions when they are looking to add digital assets to the scope of assets classes that they are willing to trade, the compliance officer doesn't want to come up with entirely new policies," Danesh said.

"That is where the DTI fits in, it's part of the same family of ISO standards."

The Thomson Reuters Trust Principles.

Royal Bank of Canada beats quarterly profit expectations

(Reuters) - Royal Bank of Canada (RY.TO) beat analysts' estimates for quarterly profit on Wednesday, after it released reserves set aside to cover credit losses and as the lender saw strong growth across its banking, wealth management and capital markets units.

Canada's largest lender by market value reported overall net income of C$4.3 billion ($3.41 billion), or C$2.97 per share, in the three months ended July 31, up from C$3.2 billion, or C$2.20 per share, a year ago, and compared with analysts' expectations of C$2.63 per share.

($1 = 1.2598 Canadian dollars)

The Thomson Reuters Trust Principles.

S.Korea parliament committee votes to curb Google, Apple commission dominance

(Reuters) - A South Korean parliamentary committee voted on Wednesday to recommend amending a law, a key step toward banning Google and Apple from forcibly charging software developers commissions on in-app purchases, the first such curb by a major economy.

Apple Inc (AAPL.O) and Alphabet Inc's (GOOGL.O) Google have faced global criticism because they require software developers using their app stores to use proprietary payment systems that charge commissions of up to 30%.

In a statement on Tuesday, Apple said the bill "will put users who purchase digital goods from other sources at risk of fraud, undermine their privacy protections", hurt user trust in App Store purchases and lead to fewer opportunities for South Korean developers.

Wilson White, senior director of public policy at Google, said "the rushed process hasn't allowed for enough analysis of the negative impact of this legislation on Korean consumers and app developers".

Experts said app store operators could assure security in payment systems other than their own by working with developers and other companies.

"Google and Apple aren't the only ones that can create a secure payment system," said Lee Hwang, a Korea University School of Law professor specialising in competition law.

Others noted that South Korea had some of the most robust legal protections for online transactions in the world, and said app store operators should provide advanced services to bolster profits.

"Dominant app store operators with large platforms should by now look to profit from value-added services, not just taking a cut from apps sold on its store," said Yoo Byung-joon, a Seoul National University School of Business professor who specialises in electronic commerce.

Based on South Korean parliament records, the amendment bans app store operators with dominant market positions from forcing payment systems on content providers and "inappropriately" delaying the review of, or deleting, mobile contents from app markets.

It also allows the South Korean government to require an app market operator to "prevent damage to users and protect the rights and interests of users", probe app market operators, and mediate disputes regarding payment, cancellations or refunds in the app market.

After the vote from the legislation and judiciary committee to amend the Telecommunications Business Act, dubbed the "Anti-Google law," the amendment will come to a final vote in parliament.

That vote was to come on Wednesday, but the session was provisionally delayed to Aug. 30, a parliament official told Reuters. read more

This month in the United States, a bipartisan group of senators introduced a bill that would rein in app stores of companies that they said exert too much market control, including Apple and Google. read more

The Thomson Reuters Trust Principles.

Global corporate profits to fall 8% in Q3 after record Q2 - data

(Reuters) - Global corporate profits in the third quarter are likely to fall for the first time in 18 months after record earnings in April-June, Reuters calculations showed, as the spreading COVID-19 Delta variant squeezes supply chains and raises labour costs.

Massive fiscal stimulus to support economic recovery and loosened pandemic curbs generated high consumer demand in the second quarter, and companies contending with disrupted supplies and falling inventories raised prices to offset rising input costs.

This helped boost the combined net profits of 2,542 global companies with market capitalisation of at least $1 billion to a record $734 billion in the quarter ended June, according to a Reuters analysis of Refinitiv data.

But profits are estimated to fall 8% on average to $678.2 billion in the July-September quarter.

China's factory output and retail sales growth contracted sharply in July, as new COVID-19 outbreaks and floods disrupted business operations, while U.S. business activity growth slowed for a third straight month in August.

Also, a months-long shortage of semiconductor chips that forced automakers to slash production and smartphone makers to save chips for popular models is turning into a fresh crisis as COVID-19 cases surge in Asian countries that are key to global supply chains.

"Supply chain issues, labour issues, and input price increases are all likely to dampen growth in the third quarter," said Brian Jacobson, senior investment strategist at Wells Fargo Asset Management.

"Avoiding lost sales due to supply chain issues is a more acute problem today than it has been historically. Shipping costs are high. Fading support from stimulus checks may change the composition of consumer spending."

Toyota Motor Corp (7203.T) said last week it would slash global production for September by 40% from a previous plan. Apple Inc predicted last month that growth would slow in the September quarter.

Profits at U.S. firms are estimated to decline 7.2% in the third quarter, data showed, after rising 12.4% in the second quarter.

A strong dollar could hurt U.S. exporters and a further fall in interest rates could squeeze profits at banks, said James Solloway, chief market strategist at wealth manager SEI.

Earnings at European and Asian firms are set to fall 10.3% and 9.6%, respectively.

By sector, real estate, financial and consumer discretionary sectors are expected to see a decline of 22.2%, 18.8% and 16.2% in profits, respectively.

Breakdown by country for revenue and profit growth

Average net margins at global firms are expected to drop to 10.66% in the third quarter from 11.43% in the second quarter.

Supply chain bottlenecks lead to either a lack of availability of inputs or to price increases, said Daniel Morris, chief market strategist at BNP Paribas Asset Management.

"In some instances, companies are able to pass the higher costs on to their customers, but if they are not able to, then margins are being squeezed," he said.

The Thomson Reuters Trust Principles.

INVESTORS DIARY 2021

Company

Event

Venue

Date & Time

Companies under Cautionary

ART

PPC

Dairibord

Starafrica

Fidelity

Turnall

Medtech

Zimre

Nampak Zimbabwe

 <mailto:info at bulls.co.zw> 

DISCLAIMER: This report has been prepared by Bulls ‘n Bears, a division of Faith Capital (Pvt) Ltd for general information purposes only and does not constitute an offer to sell or the solicitation of an offer to buy or subscribe for any securities. The information contained in this report has been compiled from sources believed to be reliable, but no representation or warranty is made or guarantee given as to its accuracy or completeness. All opinions expressed and recommendations made are subject to change without notice. Securities or financial instruments mentioned herein may not be suitable for all investors. Securities of emerging and mid-size growth companies typically involve a higher degree of risk and more volatility than the securities of more established companies. Neither Faith Capital nor any other member of Bulls ‘n Bears nor any other person, accepts any liability whatsoever for any loss howsoever arising from any use of this report or its contents or otherwise arising in connection therewith. Recipients of this report shall be solely responsible for making their own independent investigation into the business, financial condition and future prospects of any companies referred to in this report. Other  Indices quoted herein are for guideline purposes only and sourced from third parties.

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