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Low interest rates and high liquidity have also generated collateral damages. A recent study by the National Bureau of Economic Research concludes that aggressive monetary policies lead to “rising market concentration, reduced dynamism, a widening productivity-gap between industry leaders and followers, and slower productivity growth.”

Another negative side effect is the rise of zombie companies, those that cannot cover interest expenses with operating profits for an extended period of time. According to Ryan Banerjee, an economist at the Bank of International Settlements, the percentage of zombie firms has risen to multi-year highs.

We must also understand that the concerns about liquidity created a large impact in global markets, as investors worried about central banks normalizing policy. 2018 was the first year in which global money supply fell after years of exceptionally high growth. Central banks have changed their communication to a more dovish tone, but this is not necessarily going to prevent a change of economic cycle, rather the opposite. Failure to normalize sends a message of deteriorating economic signals.

These issues are unlikely to end due to a trade deal. Cycles change. China’s slowdown was inevitable and a reduction in U.S. growth estimates is logical after the longest expansion in history.

Remember that the same reason why tariffs had a relatively small impact on the global economy shows why a new trade agreement is unlikely to change the current trend. Those tariffs affected a relatively small proportion of the global economy.

A new trade deal will probably have a marginal effect on the Chinese and U.S. economies.

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Nearly 200 CEOs say shareholder value is no longer a main objective



Jamie Dimon, CEO, JP Morgan Chase, speaking at the Business Roundtable CEO Innovation Summit, December 6, 2018.

Janhvi Bhojwani | CNBC

Shareholder value is no longer the main focus of some of America’s top business leaders.

The Business Roundtable, a group of chief executive officers from major U.S. corporations, issued a statement Monday with a new definition of the “purpose of a corporation.”

The reimagined idea of a corporation drops the age-old notion that corporations function first and foremost to serve their shareholders and maximize profits. Rather, investing in employees, delivering value to customers, dealing ethically with suppliers and supporting outside communities are now at the forefront of American business goals, according to the statement.

“While each of our individual companies serves its own corporate purpose, we share a fundamental commitment to all of our stakeholders,” said the statement signed by 181 CEOs. “We commit to deliver value to all of them, for the future success of our companies, our communities and our country.”

The conscience of Wall Street has been at the forefront of American business and politics recently as issues about economic equality and fair business practices dominate the 2020 election stage and the overall news cycle.

The Business Roundtable,  founded in 1972, has put out many statements on the principles of corporate governance since the late 1970s. It said this new definition “supersedes” past statements and outlines a “modern standard for corporate responsibility.”

“The American dream is alive, but fraying,” Jamie Dimon, chairman and CEO of J.P. Morgan Chase and chairman of Business Roundtable, said in a press release.

Along with Dimon, the statement received signatures from chiefs including Amazon’s Jeff Bezos, Apple’s Tim Cook, Bank of America’s Brian Moynihan, Dennis A. Muilenburg of Boeing and GM’s Mary Barra.

“Major employers are investing in their workers and communities because they know it is the only way to be successful over the long term. These modernized principles reflect the business community’s unwavering commitment to continue to push for an economy that serves all Americans,” said Dimon.

Another one of the signatures is from BlackRock chief Larry Fink, who has previously called on CEOs to reevaluate the purpose of a corporation, specifically the “inextricable link” between purpose and profit.

“Purpose is not the sole pursuit of profits but the animating force for achieving them,” Fink wrote in his 2019 annual letter to shareholders. “As divisions continue to deepen, companies must demonstrate their commitment to the countries, regions, and communities where they operate, particularly on issues central to the world’s future prosperity.”

Fink said that fundamental economic changes and the failure of the U.S. government to provide lasting solutions has forced society to look to companies for guidance on social and economic issues, such as environmental safety and gender and racial equality.

Here is the full Business Roundtable statement.

Statement on the Purpose of a Corporation

Americans deserve an economy that allows each person to succeed through hard work and creativity and to lead a life of meaning and dignity. We believe the free-market system is the best means of generating good jobs, a strong and sustainable economy, innovation, a healthy environment and economic opportunity for all.

Businesses play a vital role in the economy by creating jobs, fostering innovation and providing essential goods and services. Businesses make and sell consumer products; manufacture equipment and vehicles; support the national defense; grow and produce food; provide health care; generate and deliver energy; and offer financial, communications and other services that underpin economic growth.

While each of our individual companies serves its own corporate purpose, we share a fundamental commitment to all of our stakeholders. We commit to:

  • Delivering value to our customers. We will further the tradition of American companies leading the way in meeting or exceeding customer expectations.
  • Investing in our employees. This starts with compensating them fairly and providing important benefits. It also includes supporting them through training and education that help develop new skills for a rapidly changing world. We foster diversity and inclusion, dignity and respect.
  • Dealing fairly and ethically with our suppliers. We are dedicated to serving as good partners to the other companies, large and small, that help us meet our missions.
  • Supporting the communities in which we work. We respect the people in our communities and protect the environment by embracing sustainable practices across our businesses.
  • Generating long-term value for shareholders, who provide the capital that allows companies to invest, grow and innovate. We are committed to transparency and effective engagement with shareholders.

Each of our stakeholders is essential. We commit to deliver value to all of them, for the future success of our companies, our communities and our country.

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US grants Huawei another 90 days to buy from American suppliers: Ross



Commerce Secretary Wilbur Ross (R) and other Trump Administration officials sit down with Chinese vice ministers and senior officials for trade negotiations in the Diplomatic Room at the Eisenhower Executive Office Building January 30, 2019 in Washington, DC.

Chip Somodevilla | Getty Images

U.S. Commerce Secretary Wilbur Ross said Monday the U.S. government will extend a reprieve given to Huawei Technologies that permits the Chinese firm to buy supplies from U.S. companies so that it can service existing customers, even as nearly 50 of its units were being added to a U.S. economic blacklist.

The “temporary general license,” due to expire on Monday, will be extended for Huawei for 90 days, he told Fox Business Network Monday, confirming an expected decision first reported Friday by Reuters. He also said he was adding 46 Huawei affiliates to the Entity List, raising the total number to more than 100 Huawei entities that are covered by the restrictions.

Ross said the extension was to aid U.S. customers, many of which operate networks in rural America.

“We’re giving them a little more time to wean themselves off,” Ross said.

Shortly after blacklisting the company in May, the Commerce Department initially allowed Huawei to purchase some American-made goods in a move aimed at minimizing disruption for its customers.

Huawei did not immediately comment Monday.

The extension, through Nov. 19, renews an agreement continuing the Chinese company’s ability to maintain existing telecommunications networks and provide software updates to Huawei handsets.

Asked what will happen in November to U.S. companies, Ross said: “Everybody has had plenty of notice of it, there have been plenty of discussions with the president.”

When the Commerce Department blocked Huawei from buying U.S. goods earlier this year, it was seen as a major escalation in the war.

The U.S. government blacklisted Huawei, alleging the Chinese company is involved in activities contrary to national security or foreign policy interests.

As an example, the blacklisting order cited a pending federal criminal case concerning allegations Huawei violated U.S. sanctions against Iran. Huawei has pleaded not guilty in the case.

The order noted that the indictment also accused Huawei of deceptive and obstructive acts.

At the same time the United States says Huawei’s smartphones and network equipment could be used by China to spy on Americans, allegations the company has repeatedly denied.

Huawei, the world’s largest telecommunications equipment maker, is still prohibited from buying American parts and components to manufacture new products without additional special licenses.

Many Huawei suppliers have requested the special licenses to sell to the firm. Ross told reporters late last month he had received more than 50 applications, and that he expected to receive more. He said on Monday that there were no “specific licenses being granted for anything.”

Out of $70 billion that Huawei spent buying components in 2018, some $11 billion went to U.S. companies including Qualcomm, Intel, and Micron Technology. Intel declined to comment on Monday.

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France’s Macron meets Russia’s Putin to discuss ongoing war in Ukraine



France’s President Emmanuel Macron (R) and Russia’s President Vladimir Putin attend a bilateral meeting on the sidelines of the G20 Summit in Osaka on June 28, 2019.

LUDOVIC MARIN | AFP | Getty Images

French President Emmanuel Macron is hosting his Russian counterpart Vladimir Putin for talks on Monday in the hope he can persuade Russia to return to peace talks over Ukraine. Some experts are doubtful as to just how much Macron can achieve.

The meeting, which comes before the Group of Seven (G-7) industrialized nations attend a summit in Biarritz next weekend, has proved controversial given Russia’s turbulent relations with other global powers and Putin’s recent crackdown on protesters in his own country.

Hosting talks at a presidential residence at the Fort of Brégançon on the Mediterranean coast on Monday, Macron and Putin are expected to talk about the delicate political situations in Ukraine, Libya and Syria. A press conference was due to begin at 10:00 a.m. ET.

Ukraine is of particular importance for Macron given that France and Germany tried to broker a peace deal, known as the Minsk agreements, between Russia and Ukraine following Moscow’s annexation of Crimea. Putin’s government is also seen as fomenting a pro-Russian uprising in the Donbass region in the east of Ukraine which led to two areas in the Donbass region (Donetsk and Luhansk) declaring themselves as separate republics.

Despite attempts at a ceasefire, both Russia and Ukraine have accused each other of flouting conditions set out in the Minsk peace accords and skirmishes continue. In total, the armed conflict between separatists and Ukrainian forces in the Donbass has caused as many as 13,000 deaths, according to the United Nations.

Relations between the neighbors remain tense and skirmishes in east Ukraine happen often, with the death of four Ukrainian soldiers in early August prompting new Ukrainian President Volodymyr Zelensky to call for a resumption of peace talks with Russia.

A subsequent phone call held between the presidents led to the Kremlin signaling a potential for further talks, noting that the leaders had discussed “future contacts in the Normandy Format”– the name given to the diplomatic group of senior representatives of Germany, France, Russia and Ukraine involved in previous talks.

No-win situation

Russia used to be part of the Group of Eight (G-8) but it was kicked out of the group in 2014 following its annexation of Crimea. Western sanctions are also in place, causing frosty relations between Russia and its neighbor Europe. Russia has retaliated with its own counter-sanctions on agricultural imports from the EU; In June, Putin signed a decree extending the Russian ban on food imports from the EU until the end of 2020.

The lifting of restrictions on Russia’s economic activity has been tied to it making progress on its peace agreement with Ukraine.

But experts in Russian foreign policy have little confidence that Macron will be able to persuade Putin to make concessions on Ukraine, although they note that Russia has a vested interest in remaining engaged on Ukraine.

“My sense is that Macron isn’t the key interlocutor here. The issue is how Putin shapes up to the new administration in Ukraine and President Zelensky,” Daragh McDowell, the principal Russia analysts at Eurasia Group, told CNBC on Monday.

“I wouldn’t envisage there will be any concessions on Ukraine at this point. I don’t think Putin will want to signal any readiness that he’s willing to back down. He doesn’t want to signal any weakness to Zelenksy.”

Even if peace talks are pushed for by Macron, and the offer taken up by Putin, that is only the start of a process, McDowell noted. “there is some potential for peace talks to reopen but the question is, what would actually be accomplished by those talks?” He added that the situation was something of a no-win one for the Kremlin in that the conflict in Ukraine was a drain on resources but to back down would equate to a loss of face for Russia, particularly among nationalist groups.

AKE Senior Political Risk Analyst Max Hess told CNBC that Moscow “sees the meeting as an opportunity to show that it is not wholly isolated from the international stage.”

“However, no progress should be expected in resolving the Ukraine crisis – France does not have the diplomatic capital to get this process going on its own, and it is clear the so-called Normandy Format that also involves Germany is dead, with no meeting under its auspices in the last two years.”

“There have been some talk about getting these restarted, which I think is the most success we can hope for. The meeting may see Macron and Putin agree new measures to expand French business in Russia – French energy firm Total has been among the largest Western investors in recent years – but Moscow’s agricultural sanctions, which particularly affected France when they were introduced, will not be lifted. The situation in Iran and Syria will be on the table as well, and while it is possible this will include some bilateral efforts to “take the initiative,” I also think we are unlikely to get anything game-changing,” Hess said.

Macron’s “immaturity”

Some analysts went further in their cynicism regarding the high-profile meeting. James Nixey, head of the Russia and Eurasia Programme at Chatham House, said Macron’s invitation to Putin smacked of immaturity, telling CNBC’s “Squawk Box Europe” on Monday that “there is still an immaturity in Macron whereby he believes he can do things that other leaders are incapable of.” He also believed that France was driven by commercial interests in repairing relations with Russia.

Nixey believed that France’s approach to Russia was one of a “business first relationship” rather than one focused on the ethical arguments for sanctions. “The French’s relationship (with Russia) has been a more industry-driven relationship than say, the U.K.’s or Scandinavia’s relationship with Russia, by comparison.”

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