I watched the vice presidential debate last night in hopes that these two sober and centrist politicians might have an intelligent conversation about economic policy. No such luck. Instead, they both spent most of their time attacking the top of the other ticket. If you missed it, consider that 90 minutes better spent. You can get a sufficient taste by watching our two-minute version here.
Meanwhile, Google yesterday made its entry into the voice-controlled smart device sweepstakes, unveiling Google Home, a $129 circular device intended to compete with Amazon’s Echo. You can start your day by asking the device to tell you what’s on your calendar, what’s in your email box, what sort of weather or traffic you can expect, or to give you a news briefing from a source of your choice. Both Google and Amazon are betting such voice-activated assistants, backed by ever-improving artificial intelligence, will be the tech wave of the future, eventually replacing mobile phones in their dominance.
“Computing will be universally available, it will be everywhere in the context of the user’s daily life,” Google CEO Sundar Pichai said. “People will be able to interact with it more naturally and seamlessly than ever before. And above all else, it will be intelligent.”
More news below.
• ECB Taper Talk Takes Froth Off Markets…
Global markets have opened in more sober mood Tuesday on concerns that the European Central Bank may taper its buying of bonds earlier than expected. Bloomberg reported Monday that an informal consensus was building to rein in quantitative easing, although a closer look at the story suggested no real change to the ECB’s publicly-stated position of buying 80 billion euros of bonds a month until at least the end of March. The Eurozone’s composite PMI for September, out today, didn’t improve the case for tapering earlier, as it fell to a 20-month low (due largely to a softening German economy). The murmurs of rate hikes from Federal Reserve officials also continued Tuesday, unsurprisingly, in view of the stronger-than-expected ISM survey on Monday. Bloomberg
• …But the Oil Party Goes On
One market that isn’t in any mood to end its party is crude oil, where U.S. futures are fast closing in on the $50/barrel mark for the first time since June. The latest leg up is reportedly due to speculative positioning ahead of weekly reports on U.S. crude and gasoline stocks, with traders betting on further draw-downs from record highs in the summer. OPEC’s tentative willingness to end its price-war strategy has taken some of the risk out of such bets. Separately, a little-known exploration company, Caelus Energy LLC, said Tuesday it had discovered up to 2.4 billion barrels in recoverable reserves in Alaska, a find that could considerably extend the productive life of the North Slope—if it can overcome the inevitable environmentalist opposition. The discovery is around 100 miles from existing pipeline infrastructure around Prudhoe Bay. WSJ, subscription required
• Yahoo Spied on Millions of Its Own Clients
Yahoo last year secretly built a custom software program to search all of its customers’ incoming emails for specific information provided by U.S. intelligence officials, Reuters reported. The company appears to have scanned hundreds of millions of Yahoo Mail accounts at the behest of the National Security Agency or FBI, snooping of a different order of magnitude to normal requests to examine stored messages or scan a small number of accounts in real time. The NSA or FBI may well have approached other Internet companies with the same demand, since they evidently did not know what email accounts were being used by the target. It’s not clear what information the snoops were after, but the company’s decision appears to have caused chief information security officer Alex Stamos to jump ship to Facebook in June 2015. It’s another dubious footnote to Marissa Mayer’s stewardship of the company in the wake of recent reports of a massive security breach, and will also entrench opposition in Europe to cooperation on data transfers as part of any broader liberalization of trade between the U.S. and EU. Fortune
• J&J Warns Over Insulin Pumps
Johnson & Johnson warned patients that it one of its insulin pumps—the Animas OneTouch Ping--had a cyber security bug that hackers could possibly exploit to deliberately administer overdoses of the drug to its users. It appears to be the first time that a medical equipment company has ever issued such a cybersecurity warning. Executives told Reuters they weren’t aware of any actual cases where the flaw had been exploited in the manner described, and J&J also said the Animas Vibe line of pumps didn’t have the same flaw. The warning comes just a month after a prominent short seller and cyber security research firm went public with allegations of potentially life-threatening cyber vulnerabilities in heart devices from St. Jude Medical (which disputed the allegations). Fortune
• CORRECTION: Our news summary yesterday inadvertently confused Bernard Arnault (CEO of LVMH) with his son Alexandre (now joint-CEO of Romiwa). Alexandre’s rise isn’t quite as stellar as our article implied…
Around the Water Cooler
• Regulators Probe F-150 Brake Problem
Vehicle safety regulators have opened an investigation into complaints of brake problems in the F-150 pickup trucks, the best-selling vehicle in the U.S. and the model that has been chiefly responsible for the upturn in Ford’s fortunes in the last couple of years. The National Highway Traffic Safety Administration said it had had 25 consumer complaints about the 2015- and 2016-year models that include “a sudden and complete loss of brakes.” No injuries or accidents have yet been reported, it added. The probe affects some 228,000 trucks. Fortune
• IMF Cuts Forecasts as Anti-Globalization Fears Deepen
Another factor weighing on markets is that ‘Brexit’ may be bad for more than just the British economy. The IMF warned of another subpar year for growth yesterday (it cut its forecasts for U.S. GDP), saying slow growth and rising inequality around the rich world have “made advanced economies a locus of policy uncertainty…with political repercussions that are likely to depress global growth further.” That’s a clear nod to the varying degrees of protectionism likely to stamp the next U.S. administration. The U.K., whose Brexit démarche embodies the anti-globalization trend, appears to be going further down the path of isolation, with top ministers promising drastic curbs on immigration and onerous new requirements on U.K.-based firms to favor British workers. The pound fell to a new 31-low of $1.2686 this morning, after a new study by consultants Oliver Wyman said a “Hard Brexit” could cost 75,000 jobs (mainly among London’s financial services) and 10 billion pounds a year in tax revenue. Fortune
• Endurance Finds A Japanese Sugar Daddy
Endurance Specialty Holdings, a U.S.-focused but Bermuda-based insurance company, has agreed to be bought by Japan’s Sompo Holdings for $6.3 billion, the latest in a string of deals by Japanese firms looking to make up for a shrinking home market by seeking growth abroad. Endurance specializes in property and casualty insurance, while Sompo is essentially a casualty insurer. John Charman will carry on as CEO of Endurance for at least the next five years. It’s the second-largest acquisition ever for a Japanese insurer, after Tokio Marine Life’s move for HCC Insurance Holdings last year, and is being done at a 40% premium to where Endurance’s stocks were trading at the start of the week. WSJ, subscription required
• Wells Fargo Scandal ‘Extended to Business Clients’
Wells Fargo’s phony account scandal may go beyond its consumer banking operation. Louisiana Senator David Vitter told the bank’s chief executive in a letter that thousands of small business owners were also affected by Wells Fargo’s practices Vitter claimed in a letter to CEO John Stumpf (according to Reuters). Around 10,000 small business accounts were affected by improper Wells practices, people familiar with the matter said. Vitter is chair of the Senate’s small business committee. The bank hasn’t confirmed the contents of the letter, but if its allegations are upheld, it will add to evidence of systematic cultural flaws at the fallen angel of California’s financial sector. Fortune
Summaries compiled by Geoffrey Smith email@example.com