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Daily Intelligence Briefing
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Identifying Change-Driven Investment Themes – Five sections, explained here.
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We bring you our Daily Intelligence Briefing courtesy of McAlinden Research Partners. The report is provided to Hedge Connection members for free. Below is snapshot, login to view the full report. Not a member? Join today. McAlinden Research Partners is offering a complimentary one-month subscription to receive the Daily Intelligence Briefing – to Hedge Connection clients/friends. Activate yours by contacting Rob@mcalindenresearch.com and mentioning “Sent by Hedge Connection”
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I. Today’s Thematic Investment Idea
A deep dive into a market driver with alpha generating potential.
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These 7 Companies Have the Strongest Positioning in the Global 5G Market→
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After about a decade of planning and development, the first 5G networks are finally coming on line around the world. New companies will be born of this technology to become the market leaders of tomorrow. For now, the early beneficiaries are a select group of vendors serving the telecom industry. Today’s report covers who they are, and which countries are making progress in the 5G race. Read more +
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II. Updates of Themes on MRP’s Radar
Follow-up analysis of key market drivers monitored by MRP.
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Bonds: Dark Future for Euro Area as Nearly All Swiss Corporate Yields Go Negative
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Stocks: Energy Stocks Make Utilities Look Exciting
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Trade War: A beef over pork: How farm goods give Beijing an edge in the trade war
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Regional Banks: Wall Street spent years fighting the Volcker Rule, but small banks win the most relief in Trump regulatory rewrite
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Quantum: A super-secure quantum internet just took another step closer to reality
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EVs: The three largest public EV charging networks are now working together
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Refiners LONG: Asian refiner profits hammered by free-fall in fuel oil margins
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Crops LONG: The Trade War Is Creating a Windfall for Rivals of U.S. Soy in China
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Renewables: Hydrogen’s Plunging Price Boosts Role as Climate Solution
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Monetary Policy: Central Banks Race to Bottom with Big August Rate Cuts
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IV. Active Thematic Ideas
MRP’s active long and short themes, with an archive of follow-up reports.
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See Them Here →
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V. Macroeconomic Indicators
Key data releases relevant to MRP’s Active Thematic Ideas.
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See Them Here →
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These 7 Companies Have the Strongest Positioning in the Global 5G Market
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After about a decade of planning and development, the first 5G networks are finally coming on line around the world. New companies will be born of this technology to become the market leaders of tomorrow. For now, the early beneficiaries are a select group of vendors serving the telecom industry. Today’s report covers who they are, and which countries are making progress in the 5G race.
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The year 2020 will mark the widespread commercial debut of 5G around the world. But, even in these early days, when most of the world is unaware of its potential or existence, the technology is already proving to be transformational for some industries.
Healthcare provides an interesting example of this. The first 5G remote surgery was performed this year, when a doctor in China inserted a stimulation device in the brain of a Parkinson’s patient from nearly 1,900 miles away. Until now, remote surgery using wireless networks had been impossible because the lag time between input and output — 0.25 seconds or longer — could be harmful or even fatal to a patient. With 5G, latency can be reduced to an almost instantaneous 2 milliseconds between devices, allowing surgeons to conduct procedures as if they were right next to the patient.
The point of this story is that, 5G will enable living beings and machines to do things that were previously unimaginable. New companies, services, and systems will be born of this technology, to become the market leaders of tomorrow. For now though, the early beneficiaries are some old-school vendors in the tech and telecom industries.
World’s Top 5G Vendors
Until now, the industry has been undergoing a large-scale testing and trial period for all involved technologies. Several key vendors have taken part in this trial phase, essentially defining the pieces of the ultimate 5G puzzle.
For 5G to become a reality for consumers, two structural transitions have to take place.
First, mobile operators have to upgrade their networks with 5G gear. Four companies account for two-thirds of the global market for telecom equipment. They are Sweden’s Ericsson (ERIC), Finland’s Nokia (NOK) and China’s Huawei and ZTE (ZTCOY). China will represent 40% of global 5G connections by 2025, per GSMA estimates. That’s a potential windfall for a company like Huawei which is expected to land most of the 5G business with the country’s operators.
Second, phone makers need to make handsets with built-in 5G radios ready to hook up to network. US-based Qualcomm (QCOM) is the dominant player in smartphone communications chips, making half of all core baseband radio chips in smartphones. Most other baseband chips come from Asian companies such as Taiwan-based MediaTek (MDTKF), South Korea’s Samsung Electronics (SSNLF), and China’s Huawei. MediaTek holds about one quarter of the market, whereas smartphone makers Samsung and Huawei both develop chips for their own devices.
Those seven companies – Huawei, ZTE, Ericsson, Nokia, Qualcomm, MediaTek and Samsung – are the top vendors supplying the 5G market right now. Intel (INTC) stands to benefit indirectly as well because its chips are ideal to support the exponential data growth and new AI, computing and storage demands that will coincide with the onset of 5G. Apple is also reportedly making its own 5G chips, which could be ready as soon as 2022.
Even after a person buys a phone that supports 5G, they would still need access to a network that offers it. That’s where telecom providers come in.
How quickly telcos are able to move forward depends on several factors, including which 5G track they follow. Non-standalone (NSA) and standalone (SA) are two 5G tracks that communication service providers can opt for when transitioning to the next-generation of mobile technology. In general, NSA offers the faster path toward 5G deployment. That’s because the NSA track allows 5G networks to function on upgraded versions of existing 4G infrastructure.
The United States and South Korea are two countries that have chosen the non-standalone track, which is why 5G is already being rolled out in those markets. In contrast, China aims to build a standalone 5G network. While those are more powerful than the ones based on upgrades of existing 4G networks, they are also costlier.
China Progress
The capital expenditure for a standalone 5G network is so heavy that China’s top mobile operators are weighing the idea of a shared 5G infrastructure that they would build and own together to reduce capex and operating costs. There’s a precedence here, as the three rivals – China Mobile (CHL), China Telecom (CHA), and China Unicom (CHUFF) – share ownership of China Tower Corp. (CHWRF), the world’s biggest operator of telecom towers.
In the meantime, China’s three major telcos have been granted licenses for full commercial deployment and are racing to roll out 5G services in more than 50 cities later this year. The nation is on track to install 150,000 5G base stations in 2019 – that’s 50% higher than what was expected at the beginning of the year. Moreover, full deployment of 5G networks in a country with almost 1.6 billion wireless phone subscriptions is expected to generate 2.9 trillion yuan ($408 billion) in economic value, add 8 million jobs, and contribute 6% percent of China’s GDP by 2030, according to the China Academy of Information and Communications Technology.
South Korea Progress
From a market penetration perspective, countries like the US and South Korea should theoretically be able to move faster with their domestic rollouts since they follow the non-standalone 5G track. The pace has certainly been faster in South Korea, where a combination of wider 5G network availability and hyper-aggressive pricing has led to unexpectedly strong demand for new 5G smartphones and services over the past several months. Three South Korean carriers collectively reached the 1 million 5G customer mark in only 69 days, and SK Telecom (SKM), the nation’s largest provider, individually reached the 1 million 5G subscriber mark just last week, less than five months after commencing service. In each case, the 5G uptake has been markedly faster than with 4G.
Although South Korea is a tiny market in comparison to China, India, the US and Europe, the country’s early foray into 5G offers some interesting insights on what we may see in those other markets later on. If South Korea’s experience is anything to go by, people will use at least 50% more data once they make the switch from 4G and LTE to 5G. The fact that South Korea’s 5G subscribers almost instantly transitioned to using 65% more data has significant implications for networks, carriers, and content providers, as it suggests that 5G will change media consumption, entertainment, and likely also remote working habits around the world.
US Progress
US carriers Verizon (VZ), AT&T (T), Sprint (S), and T-Mobile (TMUS) have not released any firm subscriber numbers for their 5G networks, so there’s not much visibility on their progress. One can venture to guess, however, that the 5G uptake has been slower in the US due to certain disadvantages faced by US telecom providers in their market.
One disadvantage is that, in the Unites States, local and municipal governments hold zoning authority over cell towers and base stations. That alone can slow down authorization and therefore the buildout of America’s 5G infrastructure which, after all, requires a dense network of small cells. Second, barely any US companies manufacture the technology’s most critical components, so US carriers must rely on 5G gear from foreign suppliers. As noted earlier in this report, Ericsson, Nokia, Huawei and ZTE, account for two-thirds of the global market for telecom equipment. The latter two are restricted from doing business in the US due to security concerns, which leaves an even shorter list of suppliers for US operators to source from. Lastly, high US prices for 5G devices— upwards of $1,000 — have dampened initial interest for the technology’s rollout at a time when smartphone unit sales are already sluggish.
It is little wonder then that 5G is barely out of the pilot stage in the United States, with fewer than a dozen cities running the technology commercially. The good news for these telcos is that, it is only a matter of time before demand for 5G devices picks up. That alone should shorten the US smartphone replacement cycle, which currently stands at 33 months.
Europe Progress
While 5G services have already launched in Switzerland and Finland, overall progress in the European market is almost as slow as in the United States. But the UK, France, Germany, Spain, and Sweden have all announced plans to accelerate 5G network building through 2020, so things will ramp up next year. It is also worth noting that, of the 50 commercial contracts for 5G that Huawei has already secured globally, 28 (that is, 60%) are from operators in Europe.
Although Europe has its own suppliers of 5G equipment and could simply shut Chinese vendors like Huawei out of the market, such a move is unnecessary. That’s because Huawei provides just one part of the mobile network in many European countries. This is in contrast to the US market which relies on 5G gear sourced from outside the country. The oversize influence that Huawei would have held over American carriers is one reason the Trump administration is making it difficult for the Chinese company to do business in the US.
Global 5G Infrastructure Revenue to Double in 2020 and Beyond
Gartner estimates that 7% of communications service providers (CSPs) worldwide have already deployed 5G infrastructure in their networks. Gartner also predicts that worldwide 5G wireless network infrastructure revenue will reach $4.2 billion in 2020, almost double 2019’s revenue of $2.2 billion.
At the moment, consumers represent the main segment driving 5G development, but CSPs will increasingly aim 5G services at enterprises — where the real value resides. 5G networks are expected to expand the mobile ecosystem to cover new industries such as the smart factory, autonomous transportation, remote healthcare, agriculture and retail sectors, as well as enable private networks for industrial users.
How to Gain Exposure to the Early Stage of the 5G Boom
The First Trust Indxx NextG ETF (NXTG) tracks the performance of companies dedicated to the development and application of 5G and next generation digital cellular technologies as they emerge. The fund holds 97 stocks from ten countries, with the US representing the largest geographical weight (54%). Four of the other nine countries are emerging markets. Over 21% of NXTG’s holdings are semiconductor stocks while a combined 15% are specialty REITs and telecommunications equipment providers. The 5G ETF (FIVG) which debuted in March 2019 also provides exposure to the 5G market and serves as an alternative to NXTG.
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5G vs Technology Sector vs S&P 500
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Source material for today’s market insight…
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5G
China telcos weigh sharing 5G network to cut costs, potentially hurting Huawei
China Telecom said on Thursday it is ready to build a 5G mobile network with its rivals in order to reduce costs, a proposal that is likely to cut multi-billion dollar equipment orders for vendors such as Huawei Technologies.
China’s big three state telcos are racing to roll out 5G services in more than 50 cities this year, following countries like South Korea and the United States which have already started the service that promises to support new technologies such as autonomous driving.
While the gradual rollout of 5G services globally is a boon to telecoms gear makers, tie-ups by mobile operators in China, the world’s biggest smartphone market, to build the network together threaten to cut the size of the overall 5G infrastructure spending.
The proposal also comes as Huawei is fighting a trade ban from Washington that has hurt its business since May and could cut off its access to essential U.S. suppliers.
China Telecom Chairman Ke Ruiwen said on Thursday the company had reached a tentative agreement with rival China Unicom to jointly build a 5G network where they would share part of the infrastructure, after China Unicom expressed interest in that last week.
Read the full article from Reuters +
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5G
Global First: Korea’s SK Telecom Breaks 1 Million 5G Subscriber Mark
SK Telecom in South Korea announced today that it has surpassed one million 5G subscribers in just 140 days after launching service. That’s twice as fast as its LTE uptake in 2011.
SK Telecom is a global leader in 5g, according to Moor Insights. SK also signed up the first 5 subscribers to 5G — K-pop stars and athletes — back in April. The company now has over 30,000 5G base stations, a significant number in relatively small nation. Overall, SK says that it has 28 million subscribers. 3.5% of them have now upgraded to 5G.
“Many carriers are talking about 5G but it’s clear who is leading globally in terms of subscribers and that’s SK,” says Patrick Moorhead, founder and president of Moor Insights and Strategy.
Read the full article from Forbes +
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5G
High prices and 5G extend the U.S. smartphone replacement cycle to 33 months
If smartphone sales have indeed plateaued over the past year or so, the reason is becoming increasingly clear: More U.S. users are hanging onto their devices for nearly three full years rather than upgrading on an annual or biannual basis. That’s the key takeaway from a new Strategy Analytics survey today, which appears to confirm anecdotal reports from Apple and other smartphone vendors of slowing upgrades — an issue attributed in part to rising prices and the dawn of the 5G era.
According to the research firm’s SVP David Kerr, consumers believe that there’s been too little major innovation between prior flagship device generations, reducing the need to upgrade more frequently. “At the same time,” Kerr says, we’ve “seen smartphone prices rising towards and above $1,000. Prices for 5G phones will be a key barrier despite 1 in 4 recognizing it as being important for their next device.”
As a result of these issues, older users are increasingly delaying smartphone upgrades for three or more years, and the average iPhone has already been in use for 18 months, versus 16.5 months for Samsung. Strategy Analytics notes that it used a “U.S. nationally representative sampling” of 2,500 smartphone owners aged 18 to 64, and that premium customers — those spending $1,000 or more on phones — represented a fairly small 7% of the survey.
Read the full article from Venture Beat +
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5G
5G global revenues to double by 2020, report says
IT research firm Gartner released a forecast Thursday projecting revenues from worldwide 5G network infrastructure will reach $4.2 billion by 2020. That would amount to an 89% revenue hike from the firm’s 2019 projections of $2.2 billion. The firm expects overall 4G revenues to dip from $19.32 billion in 2019 to $18.28 billion in 2020, with similar drops in 3G and 2G revenues.
“It’s still early days for the 5G private-network opportunity, but vendors, regulators and standards bodies have preparations in place,” senior Gartner researcher Sylvain Fabre said in a release.
5G ubiquity is still pretty far away, but networks are starting to sprout up all around the world. The next-generation technology promises super fast mobile speeds, and it’s poised to boost areas like self-driving cars and virtual reality. All four major US carriers — Verizon, AT&T, T-Mobile and Sprint — have turned on their 5G networks, though in limited areas so far, and more 5G-capable devices are set to launch this year.
Gartner estimates 7% of providers have deployed 5G network infrastructure so far, and projects that overall provider investment in 5G networks will double from 6% in 2019 to 12% in 2020. The firm also cautions that to maintain 4G coverage during an extended rollout period from 2019 to 2021, service providers will need to upgrade existing 4G infrastructure.
Otherwise, “a less robust 4G legacy layer adjoining 5G cells could lead to real or perceived performance issues as users move from 5G to 4G/LTE Advanced Pro,” Fabre said. By 2021, Gartner projects, 5G infrastructure revenues will climb to $6.8 billion.
Read the full article from CNET +
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5G
The Murky Status of Russian 5G
Russia will not reserve its 3.5GHz spectrum band for telecom operators building 5G networks, but instead leave it with the military. This decision matters because 3.5GHz has previously stood more chance than any other band of becoming a global 5G option. Interest in it should drive down costs and make rollout more affordable. Russia could be shut out of that ecosystem.
Reportedly worried about trailing in 5G, Russia’s communications ministry has instead proposed using the 4.4-4.99GHz band to support 5G services. This would align Russia with two large Asian countries that are also considering this band as a 5G option: China and Japan.
Russia’s goal, reports Kommersant, is to cultivate domestic manufacturers that can develop expertise in 4.4-4.99GHz-based 5G technology. The trade ministry is already said to be creating a consortium that will include hardware manufacturers, components specialists and software developers. A Russian company called Rostec will take the lead in developing 5G network equipment, says the newspaper report.
Read the full article from Light Reading +
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Select a theme to see when and why we added it. Also included is a link to all recent Market Insight reports we’ve written about that theme, allowing you to track its progress.
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Week Ahead
This week the second estimate of US Q2 GDP growth will be keenly watched, alongside personal income and outlays, PCE price index, durable goods orders, and pending home sales. Elsewhere, important releases include: UK Gfk consumer confidence and monetary indicators; Eurozone flash inflation, business survey and jobless rate; Germany retail trade, business and consumer morale; Japan consumer confidence, industrial output, and retail sales; China NBS PMI survey; Australia building permits and private sector credit; and Canada and India Q2 GDP growth rates.
Click here to access the data +
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Fed to Act as Appropriate to Support Growth
The Federal Reserve will act as appropriate to sustain the expansion with a strong labor market and inflation near its 2 percent objective, Chair Jerome H. Powell said on Friday at the central bank’s annual Jackson Hole symposium. The chairman noted that the US economy continues to perform well, but faces significant risks due to ongoing trade tensions; global economic slowdown, notably in Germany and China; and geopolitical uncertainty, including the growing possibility of a hard Brexit, rising tensions in Hong Kong, and the dissolution of the Italian government.
Click here to access the data +
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US Yield Curve Ends Inverted for 1st Time Since 2007
The 10-year US Treasury note yield fell 9bps to 1.523% on Friday, its lowest close since August of 2016 and the 2-year Treasury note dropped 7.8bps to 1.528%. It is the first time that the yield curve closes inverted since 2007. At the same time, the 30-year bond yield tumbled 8.8bps to 2.018%.
Click here to access the data +
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US New Home Sales Tumble in July
Sales of new single-family houses in the United States slumped 12.8 percent from the previous month to a seasonally adjusted annual rate of 635 thousand in July 2019, following an upwardly revised 20.9 percent jump in June and compared to market expectations of a 0.2 percent decrease. That was the biggest monthly decline since July 2013.
Click here to access the data +
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Dollar Falls amid Trade Concerns
The Dollar index dropped nearly 0.5% on Friday, on escalated trade tensions between the world’s two largest economies after US President Trump demanded companies to look for an alternative to China. This comes after Beijing announced it will impose additional tariffs on US imports worth about $75 billion and despite US Chair Jerome Powel said the Fed would act as appropriate to keep the current economic expansion.
Click here to access the data +
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European Shares Rebound after US President Remarks
European stock markets reversed early losses and traded in the green on Monday, after US President Donald Trump said China has called and want to return to trade talks. The DAX 30 rose 0.2%; the CAC 40 gained 0.6%; the IBEX 35 added 0.3%; and the FTSE MIB went up 0.7% around 10:15 am London time. Markets in the UK are close due to a bank holiday.
Click here to access the data +
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MARKET INSIGHT UPDATES: SUMMARIES
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Bonds
Dark Future for Euro Area as Nearly All Swiss Corporate Yields Go Negative
If you think credit markets in Europe couldn’t look more forbidding, think again. Just look at Switzerland. Companies there entered the $16 trillion labyrinth of global negative yielding debt back in 2015. With almost all high-grade corporate bonds in Swiss francs now offering below-zero yields, the nation offers a cautionary tale for the euro zone.
The lesson: the stockpile of notes likely to impose losses for many buy-and-hold investors can expand fast — ensnaring portfolios with interest-rate risk along the way. “I like drawing comparisons between the Swiss market and what could happen in Europe,” said Johan Nebel, head of research at Bridport & Cie SA in Geneva. “What happened in a small country was maybe a first experiment and now could happen in a bigger market.”
Around 94% of senior Swiss franc corporate bonds have negative yields, according to data compiled by Bloomberg. Just five months ago, that amount stood closer to 50% — a level the euro market is at today. While the average euro high-grade yield remains positive at about 0.25%, their Swiss counterparts are trading at -0.35% after turning below zero two months ago, Bloomberg Barclays data show. That includes a Novartis AG note with almost 16 years left to maturity now quoted at 17 basis points below nothing.
Even analysts who reckon the ECB is under less pressure to ease than the Swiss National Bank, at least from a currency standpoint, say the single-currency bloc can become more Swiss-like. “It is uncharted territory but I don’t see any technical reason why it should not be trading more negative than it is already,” according to Dominik Meyer, head of credit research at Vontobel in Zurich, referring to company bonds in euros.
Read the full article from Bloomberg +
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Stocks
Energy Stocks Make Utilities Look Exciting
Since 2000, global electricity consumption has been rising about two-thirds faster than overall energy consumption and it now competes (at the margin) in oil’s chief market, transportation. Investment in power infrastructure is now higher than for oil and gas, having overtaken it in 2016, according to the International Energy Agency. There’s a reason Royal Dutch Shell Plc, among other majors, is dipping a toe or two into the current, including this week’s bid for Australian electricity retailer ERM Power Ltd.
As Maarten Wetselaar, who runs Shell’s integrated gas and new energies business, put it earlier this year: We are not interested in the power business because we like what we saw in the last 20 years; we are interested because we think we like what we see in the next 20 years.
The upshot is that money has moved into utilities, attracted by the dividends, yes, but also the promise of growth. With their own growth narrative having ebbed, oil and gas producers must pay investors to hold their stocks.
Read the full article from Bloomberg +
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Trade War
A beef over pork: How farm goods give Beijing an edge in the trade war
Peter Huang Ming-tuan, CEO of Sun Art Retail Group, China’s largest supermarket chain and operator of the RT-Mart and Auchan brands, told Nikkei that although revenues did fall 6% in the first six months of the year, sales of seafood and meats other than pork have cushioned the blow, as a slow, but long-term, shift in Chinese diets accelerates. “Pork has become replaceable,” Huang said. “Now that Chinese consumers have more cash to spend, more and more people are eating beef.”
Some companies are benefiting from higher prices. Shenzhen-listed Shandong Delisi Food, a swine butcher and seller of pork products, announced on Aug. 20 that its January-to-June net profits rose by 57%, mainly due to a rise in the number of pigs it has processed and sold. Another Shenzhen-listed processor, Zhejiang Huatong Meat Products, said that its half-year net profit will rise by up to 10% on last year.
And the ability of Chinese importers to substitute American goods with those from other producers lends it an advantage in the trade war — an imbalance that further undermines the White House’s reported belief that it can hold out longer than Beijing, and cut a better deal after the 2020 election.
Agricultural commodities are relatively fungible, and while the process of finding new sources of supply is not trivial, it is considerably more straightforward than uprooting the vastly complex supply chains that meet in China to assemble an iPhone for shipment to the U.S.
Read the full article from Nikkei Asian Review +
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Regional Banks
Wall Street spent years fighting the Volcker Rule, but small banks win the most relief in Trump regulatory rewrite
The biggest Wall Street banks are finally getting some relief from the Trump administration on the heavily protested Volcker Rule, but smaller banks are really the big winners. Federal regulators approved the rewrite of a cluster of Obama-era reforms meant to prevent a repeat of the 2008 financial panic, but they’re largely leaving intact the most controversial provision that bans big banks from making risky trades with federally-insured deposits.
The new changes appear to offer the biggest benefits to smaller banks by creating a tiered regulatory framework that exempts them from the most stringent requirements of Volcker Rule, named after the former chairman of the Federal Reserve who lent his name to the cause of reform.
The Federal Deposit Insurance Corporation and the Comptroller of the Currency earlier this week approved the changes. The remaining three regulators, including the Fed and the Securities and Exchange Commission, are expected to follow suit in the next few weeks.
The new changes “simplify the rule in a common sense way that preserves the safety and soundness of the federal banking system and eliminates unintended negative consequences of the prior rule,” said Joseph Otting, the Comptroller of the Currency.
Read the full article from Market Watch +
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5G
China telcos weigh sharing 5G network to cut costs, potentially hurting Huawei
China Telecom said on Thursday it is ready to build a 5G mobile network with its rivals in order to reduce costs, a proposal that is likely to cut multi-billion dollar equipment orders for vendors such as Huawei Technologies.
China’s big three state telcos are racing to roll out 5G services in more than 50 cities this year, following countries like South Korea and the United States which have already started the service that promises to support new technologies such as autonomous driving.
While the gradual rollout of 5G services globally is a boon to telecoms gear makers, tie-ups by mobile operators in China, the world’s biggest smartphone market, to build the network together threaten to cut the size of the overall 5G infrastructure spending.
The proposal also comes as Huawei is fighting a trade ban from Washington that has hurt its business since May and could cut off its access to essential U.S. suppliers.
China Telecom Chairman Ke Ruiwen said on Thursday the company had reached a tentative agreement with rival China Unicom to jointly build a 5G network where they would share part of the infrastructure, after China Unicom expressed interest in that last week.
Read the full article from Reuters +
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5G
Global First: Korea’s SK Telecom Breaks 1 Million 5G Subscriber Mark
SK Telecom in South Korea announced today that it has surpassed one million 5G subscribers in just 140 days after launching service. That’s twice as fast as its LTE uptake in 2011.
SK Telecom is a global leader in 5g, according to Moor Insights. SK also signed up the first 5 subscribers to 5G — K-pop stars and athletes — back in April. The company now has over 30,000 5G base stations, a significant number in relatively small nation. Overall, SK says that it has 28 million subscribers. 3.5% of them have now upgraded to 5G.
“Many carriers are talking about 5G but it’s clear who is leading globally in terms of subscribers and that’s SK,” says Patrick Moorhead, founder and president of Moor Insights and Strategy.
Read the full article from Forbes +
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5G
High prices and 5G extend the U.S. smartphone replacement cycle to 33 months
If smartphone sales have indeed plateaued over the past year or so, the reason is becoming increasingly clear: More U.S. users are hanging onto their devices for nearly three full years rather than upgrading on an annual or biannual basis. That’s the key takeaway from a new Strategy Analytics survey today, which appears to confirm anecdotal reports from Apple and other smartphone vendors of slowing upgrades — an issue attributed in part to rising prices and the dawn of the 5G era.
According to the research firm’s SVP David Kerr, consumers believe that there’s been too little major innovation between prior flagship device generations, reducing the need to upgrade more frequently. “At the same time,” Kerr says, we’ve “seen smartphone prices rising towards and above $1,000. Prices for 5G phones will be a key barrier despite 1 in 4 recognizing it as being important for their next device.”
As a result of these issues, older users are increasingly delaying smartphone upgrades for three or more years, and the average iPhone has already been in use for 18 months, versus 16.5 months for Samsung. Strategy Analytics notes that it used a “U.S. nationally representative sampling” of 2,500 smartphone owners aged 18 to 64, and that premium customers — those spending $1,000 or more on phones — represented a fairly small 7% of the survey.
Read the full article from Venture Beat +
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5G
5G global revenues to double by 2020, report says
IT research firm Gartner released a forecast Thursday projecting revenues from worldwide 5G network infrastructure will reach $4.2 billion by 2020. That would amount to an 89% revenue hike from the firm’s 2019 projections of $2.2 billion. The firm expects overall 4G revenues to dip from $19.32 billion in 2019 to $18.28 billion in 2020, with similar drops in 3G and 2G revenues.
“It’s still early days for the 5G private-network opportunity, but vendors, regulators and standards bodies have preparations in place,” senior Gartner researcher Sylvain Fabre said in a release.
5G ubiquity is still pretty far away, but networks are starting to sprout up all around the world. The next-generation technology promises super fast mobile speeds, and it’s poised to boost areas like self-driving cars and virtual reality. All four major US carriers — Verizon, AT&T, T-Mobile and Sprint — have turned on their 5G networks, though in limited areas so far, and more 5G-capable devices are set to launch this year.
Gartner estimates 7% of providers have deployed 5G network infrastructure so far, and projects that overall provider investment in 5G networks will double from 6% in 2019 to 12% in 2020. The firm also cautions that to maintain 4G coverage during an extended rollout period from 2019 to 2021, service providers will need to upgrade existing 4G infrastructure.
Otherwise, “a less robust 4G legacy layer adjoining 5G cells could lead to real or perceived performance issues as users move from 5G to 4G/LTE Advanced Pro,” Fabre said. By 2021, Gartner projects, 5G infrastructure revenues will climb to $6.8 billion.
Read the full article from CNET +
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5G
The Murky Status of Russian 5G
Russia will not reserve its 3.5GHz spectrum band for telecom operators building 5G networks, but instead leave it with the military. This decision matters because 3.5GHz has previously stood more chance than any other band of becoming a global 5G option. Interest in it should drive down costs and make rollout more affordable. Russia could be shut out of that ecosystem.
Reportedly worried about trailing in 5G, Russia’s communications ministry has instead proposed using the 4.4-4.99GHz band to support 5G services. This would align Russia with two large Asian countries that are also considering this band as a 5G option: China and Japan.
Russia’s goal, reports Kommersant, is to cultivate domestic manufacturers that can develop expertise in 4.4-4.99GHz-based 5G technology. The trade ministry is already said to be creating a consortium that will include hardware manufacturers, components specialists and software developers. A Russian company called Rostec will take the lead in developing 5G network equipment, says the newspaper report.
Read the full article from Light Reading +
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Quantum
A super-secure quantum internet just took another step closer to reality
Quantum tech promises to allow data to be sent securely over long distances. Scientists have already shown it’s possible to transmit information both on land and via satellites using quantum bits, or qubits. Now physicists at the University of Science and Technology of China and the University of Vienna in Austria have found a way to ship even more data using something called quantum trits, or qutrits.
Conventional bits used to encode everything from financial records to YouTube videos are streams of electrical or photonic pulses than can represent either a 1 or a 0. Qubits, which are typically electrons or photons, can carry more information because they can be polarized in two directions at once, so they can represent both a 1 and a 0 at the same time. Qutrits, which can be polarized in three different dimensions simultaneously, can carry even more information. In theory, this can then be transmitted using quantum teleportation.
Getting this to work with qubits isn’t easy—and harnessing qutrits is even harder because of that extra dimension. But the researchers, who include Jian-Wei Pan, a Chinese pioneer of quantum communication, say they have cracked the problem by tweaking the first part of the teleportation process so that senders have more measurement information to pass on to receivers. This will make it easier for the latter to work out what data has been teleported over.
This might seem rather esoteric, but it has huge implications for cybersecurity. Hackers can snoop on conventional bits flowing across the internet without leaving a trace. But interfering with quantum units of information causes them to lose their delicate quantum state, leaving a telltale sign of hacking. If qutrits can be harnessed at scale, they could form the backbone of an ultra-secure quantum internet that could be used to send highly sensitive government and commercial data.
Read the full article from MIT Technology Review +
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