Theresa May approves Huawei for UK 5G in snub to US


Video commentary for April 25th 2019



Eoin Treacy's view

A link to today's video is posted in the Subscriber's Area. 

Some of the topics discussed include: Fed adjusting inflation measures as a future justification for stimulus, Wall Street pauses, Tech continues to outperform, oil eases, Dollar, Yen firm, gold steady.



Fed Seems Resigned to Bubble Risk in Effort to Extend Expansion

This article by Rich Miller for Bloomberg may be of interest to subscribers. Here is a section:

But that monetary stance could store up trouble down the road should the financial threats materialize.

Such talk has since faded. “There doesn’t seem to be the same idea of having tighter monetary policy so as to lessen the risk of asset bubbles developing,” Wright said.

Perhaps that’s not surprising given the shakeout that occurred in financial markets at the end of last year and Trump’s preoccupation with the performance of stock prices.

The strong bounce-back in markets this year means that financial conditions are still accommodative, though not quite as loose as they were before the end-2018 sell-off, according to the IMF.

“There are reasons for fearing the economic consequences of very low’’ rates, former Treasury Secretary Lawrence Summers said in an April 15 presentation at the Peterson Institute for International Economics in Washington.

“These include a greater propensity to asset bubbles’’ and “incentives to substantially increase leverage,’’ the Harvard University professor said.


Eoin Treacy's view

The immortal words of Chuck Prince “as long as the music is playing, you've got to get up and dance” seem appropriate to ruminate on at this juncture. Wall Street is back testing or exceeding all-time highs, the Dollar is reasserting its uptrend against an increasingly large number of currencies and the Fed is on hold.



Theresa May approves Huawei for UK 5G in snub to US

This article by for the Financial Times may be of interest to subscribers. Here is a section:

The controversial decision, taken on Tuesday at the National Security Council, comes as Philip Hammond, chancellor, prepares to travel to China to promote Britain’s participation in Beijing’s Belt and Road Initiative.

The decision to give Huawei limited access to the development of Britain’s 5G network, first reported in the Daily Telegraph, was taken despite the concerns of some ministers, including Gavin Williamson, defence secretary, over the impact on the UK’s relationship with Washington.

In February, Mike Pompeo, the US secretary of state, warned: “If a country adopts this [Huawei] and puts it in some of their critical information systems, we won’t be able to share information with them, we won’t be able to work alongside them.”

“In some cases there’s risk — we won’t even be able to co-locate American resources, an American embassy, an American military outpost.” US officials have lobbied their British counterparts against approving Huawei as a supplier.

The UK is part of the Five Eyes security alliance alongside the US, Canada, Australia and New Zealand. But while Australia and New Zealand have agreed to block or restrict Huawei, the UK has been more equivocal.

Those close to the NSC meeting say the decision was signed off collectively and that security concerns were reflected in the restrictions limiting Huawei’s involvement to non-core parts of the 5G project.

The core infrastructure is where sensitive information such as billing and customer details are stored. The non-core elements are the aerials and base stations on masts and rooftops and transmission equipment, which telecoms companies argue are passive in that data merely passes through and cannot be compromised.


Eoin Treacy's view

The question of Huawei security is as much about the real as the imagined threat. This article from ARS Technica highlights the risks of using any hardware solution, not just Huawei’s. Here is a section: 



Musk Reopens Door to Tesla Capital Raise After Big Cash Setback

This article by Dana Hull and David Welch for Bloomberg may be of interest to subscribers. Here is a section: 

The company is planning as much as $2.5 billion in capital expenditures this year as it develops new vehicles including the Model Y crossover and Semi truck. That’s more than the $2.2 billion in cash and equivalents that were on the balance sheet at the end of March.

“$2.2 billion in cash is a lot of money, but not when you’re making the kinds of investments Tesla is making,” Rebecca Lindland, a longtime auto-industry analyst and founder of the car-review website RebeccaDrives.com, said on Bloomberg Television. “I’m definitely concerned about some of their

In addition to operating cash flow worsening relative to the previous quarter, a February debt payment -- the company’s largest ever -- drained $920 million from its coffers. The company has another $566 million of convertible bonds coming due in November.

While the results were largely worse than anticipated, investors appeared to be split on what to make of them. The shares fell as much as 3.1 percent and rose as much as 2.8 percent in post-market trading before ending the session little changed. The stock was already down 22 percent this year.

The halving of a federal tax incentive for Tesla purchases starting in January dragged on U.S. demand in the quarter, and Tesla struggled to offset that drop by starting deliveries of the Model 3 in Europe and China.


Eoin Treacy's view

Tesla is the most shorted stock in the market so it is safe to assume a lot of bad news is in the price. Tesla has at least demonstrated it is capable of reaching profitability for a couple of quarters which is a lot better than a good many other companies currently coming up for their IPOs. The big question outstanding is how well it can sustain profitability in the face of rising competition from other auto companies.


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