Bloomberg
“Global Debt Hits Record $233 Trillion.”
Global debt rose to a record $233 trillion in the third quarter of 2017, more than $16 trillion higher from end-2016, according to an analysis by the Institute of International Finance. Private non-financial sector debt hit all-time highs in Canada, France, Hong Kong, South Korea, Switzerland and Turkey.
At the same time, though, the ratio of debt-to-gross domestic product fell for the fourth consecutive quarter as economic growth accelerated. The ratio is now around 318 percent, 3 percentage points below a high set in the third quarter of 2016, according to the IIF.
«A combination of factors including synchronized above-potential global growth, rising inflation (China, Turkey), and efforts to prevent a destabilizing build-up of debt (China, Canada) have all contributed to the decline,» IIF analysts wrote in a note.
The United Nations calculates the global population is 7.6 billion, suggesting the world’s per capita debt is more than $30,000.
The debt pile could end up acting as a brake on central banks trying to raise interest rates, given worries about the debt servicing capacity of highly indebted firms and government, the IIF analysts wrote.
Reuters
“U.S. job growth cools as labor market nears full employment; wages rise.”
U.S. job growth slowed more than expected in December amid a decline in retail employment, but a pick-up in monthly wage gains pointed to labor market strength that could pave the way for the Federal Reserve to increase interest rates in March.
The unemployment rate was unchanged at a 17-year low of 4.1 percent. Economists polled by Reuters had forecast payrolls rising by 190,000 in December. The economy needs to create 75,000 to 100,000 jobs per month to keep up with growth in the working-age population.
Job growth surged in October and November after being held back in September by back-to-back hurricanes, which destroyed infrastructure and homes and temporarily dislocated some workers in Texas and Florida.
Taking some sting out of the moderation in job gains, average hourly earnings rose 9 cents, or 0.3 percent, in December after gaining 0.1 percent in the prior month. That lifted the annual increase in wages to 2.5 percent from 2.4 percent in November.
U.S. short-term interest rate futures and prices of U.S. Treasuries rose after the data while the dollar pared gains against the yen and fell against the euro. U.S. stock index futures briefly pared gains.
Employment gains in December were below the monthly average of 204,000 over the past three months. Job growth is slowing as the labor market nears full employment, but could get a temporary boost from a $1.5 trillion package of tax cuts passed by the Republican-controlled U.S. Congress and signed into law by President Donald Trump last month.
The lift from the fiscal stimulus, which includes a sharp reduction in the corporate income tax rate to 21 percent from 35 percent, is likely to be modest as the stimulus is occurring with the economy operating almost at capacity. There are also concerns the economy could overheat.
Economists believe the jobless rate could drop to 3.5 percent by the end of this year. That could potentially unleash a faster pace of wage growth and translate into a much stronger increase in inflation than currently anticipated. That, according to economists, would force the Fed to push through four interest rate increases this year instead of the three it has penciled in. The U.S. central bank raised borrowing costs three times in 2017.
BBC News
“Meltdown and Spectre: All Macs, iPhones and iPads affected.”
Apple has said that all iPhones, iPads and Mac computers are affected by two major flaws in computer chips. It emerged this week that tech companies have been racing to fix the Meltdown and Spectre bugs, that could allow hackers to steal data.
Billions of PCs, smartphones and tablets around the world are affected – Apple has now confirmed its products are too. The firm has released some patches to mitigate the Meltdown flaw. It said there was no evidence that either vulnerability had been exploited yet, but advised downloading software only from trusted sources to avoid «malicious» apps.
The Meltdown and Spectre flaws are found in many modern computer processing units – or microchips – made by Intel and ARM, and together the firms supply almost the entire global computer market.
«All Mac systems and iOS devices are affected, but there are no known exploits impacting customers at this time,» Apple said in blog post on the issue. «These issues apply to all modern processors and affect nearly all computing devices and operating systems.»
Apple said it had already released «mitigations» against Meltdown in its latest iPhones and iPad operating system update – iOS 11.2 and the macOS 10.13.2 for its MacBooks and iMacs. Meltdown does not affect the Apple Watch, it said. Patches against Spectre, in the form of an update to web browser Safari, will be released «in the coming days».
Google and Microsoft have already issued statements telling users which products are affected by the bugs. Google said its Android phones – which make up more than 80% of the global market – were protected if users had the latest security updates. And Microsoft has already released fixes for many of its services.
Windows users should be aware that third-party anti-virus software may need to be updated before applying operating system patches. Security researcher Kevin Beaumont is maintaining an online list of anti-virus products that have been updated.
Bloomberg
“Stock Pickers Beat Hedge-Fund Titans.”
After years of mediocre returns, the hedge-fund industry is on the comeback trail.
Booming equity markets helped the industry achieve its highest returns in four years in 2017, led by stock pickers and macro traders focused on emerging markets. However, that masks the fact that some of the largest funds betting on economic trends in developed markets had another miserable year.
Money pools at firms such as Marshall Wace LLP and Lansdowne Partners LP bounced back as their long bets on stocks paid off. For their part, Pharo Management (UK) LLP and Adar Capital Partners posted double-digit gains by investing in markets from Asia to Latin America.
On average, hedge funds had returns of about 8 percent last year, almost double the previous year’s figure, according to Eurekahedge. Boosted by the global bull market in shares, the Eurekahedge Long Short Equities Hedge Fund Index rose about 12 percent. Still, that lagged behind the 22 percent jump in the S&P 500 with dividends reinvested, because hedge funds can bet for or against the market.
Investors have regained their appetite for hedge funds. They allocated about $40 billion to the industry through November last year, after pulling $112 billion in 2016, according to eVestment data. Equity funds proved to be the most popular, attracting $16 billion.