Fed Cuts, Ebola And TikTok Sale: A Week That Was In A Trumpian World
Global headlines spanned finance, disease, and tech, highlighting contrasts between trillion-dollar tech gains and struggling nations lacking U.S. aid.
The Gist
The US Federal Reserve has cut the Federal Funds Rate by 25 basis points.
- Unemployment has risen to 4.5%, while inflation sits at 3.1%.
- The bond market reacted positively, strengthening the dollar.
- India anticipates a boost in revenue from GST cuts, with new rates effective September 22.
The US Federal Reserve has cut the Federal Funds Rate by 25 basis points, and held out the possibility of two more rate cuts this year. The Fed finds that with unemployment rising to 4.5% and the price index, stripped of food and fuel, rising 3.1%, the risk of deterioration is greater in the case of employment than for inflation. The bond market seems to have anticipated a sharper cut, because the dollar strengthened marginally after the policy action was announced. The rupee has weakened against the dollar.
Optimism and hype continue to buoy the Indian stock market. After announcing that the expected impact on government revenues would be Rs 48,000 crore, implying that this is the amount of tax give-away via the GST rate cuts, the government now says that it expects Rs 2 lakh crore to flow into the economy as a result of the tax reform.
The new GST rates kick in next week, on 22 September. Many consumers have postponed purchases of things on which rates are slated to come down. Diwali shopping, all of trade and industry fervently hope, will start next week.
Carbon Brief reports that India’s emissions from the electricity sector have fallen, for only the second time in half a century, thanks to the brisk...
The US Federal Reserve has cut the Federal Funds Rate by 25 basis points, and held out the possibility of two more rate cuts this year. The Fed finds that with unemployment rising to 4.5% and the price index, stripped of food and fuel, rising 3.1%, the risk of deterioration is greater in the case of employment than for inflation. The bond market seems to have anticipated a sharper cut, because the dollar strengthened marginally after the policy action was announced. The rupee has weakened against the dollar.
Optimism and hype continue to buoy the Indian stock market. After announcing that the expected impact on government revenues would be Rs 48,000 crore, implying that this is the amount of tax give-away via the GST rate cuts, the government now says that it expects Rs 2 lakh crore to flow into the economy as a result of the tax reform.
The new GST rates kick in next week, on 22 September. Many consumers have postponed purchases of things on which rates are slated to come down. Diwali shopping, all of trade and industry fervently hope, will start next week.
Carbon Brief reports that India’s emissions from the electricity sector have fallen, for only the second time in half a century, thanks to the brisk addition of renewable generation capacity and the generation of renewable power. India is blamed for 40% of the world’s additional emissions of CO2 since 2019. Therefore, India’s progress in reducing emission intensity is keenly watched by the world.
Trade talks have resumed with the US, with its representatives visiting India. The optimism this has generated is at odds with president Donald Trump naming India as a major transit route for drugs.
The US government has been making much of its war on drugs, attacking a second Venezuelan boat and killing crew members, without offering any credible evidence that the boats were carrying drugs. Even if they were, it is doubtful if the penalty for that under US law is to be shot at sea.
Himalayan Disaster
Disaster proliferates in the Himalayas. Sodden mountainsides, from which the protective cover of vegetation has been ripped off, comes crashing down in heavy downpours, destroying roads, houses and parts of villages, in Himachal Pradesh and Uttarakhand.
Mark Twain is supposed to have offered this investment advice: “Buy land, they’re not making it anymore.” That is especially true of hillsides suited for human settlement. When pleasure-seeking plainspeople want to crowd such fragile settlements in ever larger numbers, and the local residents vie to accommodate them, the ground is prepared for disaster. Sensible regulation and strict enforcement of regulation constitute the only way out.
Rolls-Royce In India
Rolls-Royce has opened a Global Capability Centre in Bengaluru, where it would employ 700 people, in addition to the 3,000 already working on Rolls-Royce projects in India, about 2,000 of them engineers.
Pakistan and Saudi Arabia have signed a security pact, in which both countries agree that “any aggression against either country shall be considered an aggression against both". New Delhi probably is not quite shivering in its pants at this development. After all, Saudi Arabia has some of the most expensive military kit, and yet, its offensive against the Houthis of Yemen has fizzled out in no time. The pact has no military implications for India, but it does suggest that President Trump’s newfound patronage of Pakistan has enhanced Islamabad’s diplomatic salience.
Viruses Thrive, Budgets Die
Ebola has returned to Congo. Congo, by now, has had reasonable experience in handling the disease. What is different about the current outbreak is that it occurs at a time when President Trump, no longer scared of puny viruses, has cut the US budget on international aid and funding of the World Health Organisation. We can hope that Congo will have the resources to vaccinate those vulnerable to the disease and contain it within its borders.
The Trump administration has ordered $10 million worth of contraceptives, meant for poor countries, to help women protect themselves from unwanted births and sexually transmitted diseases, including HIV-AIDS, to be destroyed, as part of the administration’s pro-natal policies.
Trump’s former ally Elon Musk has been doing his personal best to prevent the human population from dwindling to extinction, and has fathered over a dozen children. Trump is doing his bit by preventing American dollars going to birth control products.
Musk addressed, via videolink, a massive anti-immigrant rally in the UK, organised by far-right leader Tommy Robinson. The Trump-Musk ideology seems to say, “Let there be multitudes, but let them stay in their lands that lack the institutional infrastructure to be as productive as they could be, were they to fill job vacancies in ageing developed countries.”
Meanwhile, In Big Tech…
Alphabet joined Microsoft, Apple and Nvidia in the elite club of companies to be valued over $3 trillion. Google will be 27 years old on September 27. While its dominance in search was on the verge of getting it dismembered, on competition grounds, the rise of artificial intelligence chatbots has come to its rescue. Google can now rightfully claim that people are as likely to search using Google as they are to pose that question to Chat GPT, Copilot or Perplexity.
The US claims to have reached a framework agreement on proceeding with the sale of TikTok, the hugely popular Chinese-owned short-video platform that is used for everything from selling fast fashion to conspiracy theories, to hosting budding artistes, discovering or creating new trends and celebrating communities, to an American-owned company, as the law framed by the Biden administration says it should be. The details are yet to be disclosed, including whether Beijing is on board.
Genocide Continues In Gaza
With the backing of the US, Israel has started its planned invasion of Gaza city, killing many more Palestinians. A high-powered UN Committee has pronounced that Israel is committing genocide in Gaza, based on the evidence not just of mass killings but also of the destruction of hospitals, schools, and fertility clinics, all with the pre-determined intent to destroy the people whom Hamas claims to represent. Meanwhile, Ben & Jerry’s cofounder Jerry Greenfield has left the firm protesting over Gaza.
China’s property slump continues, house prices dipping 11% below a recent peak. Retail sales and manufacturing output register weak growth. Youth unemployment is high. In the past, the government would have announced a massive infrastructure building spree. Now, it wants to boost consumption, particularly of services, including sports and cultural events, tourism and medical tourism.
