Fed Cuts Interest Rates, US-China Trade War Heats Up After Trump's Tweets, Rajya Sabha passes National Medical Commission Bill

US Federal Reserve cuts interest rate by 25bp. US-China trade war heats up again after Trump tweets that US will impose 10% additional tariffs on Chinese imports. Lok Sabha passes the Code on Wages Bill, 2019. Parliament passes Bill to establish international arbitration body in India. After Lok Sabha, Rajya Sabha passes National Medical Commission Bill amidst nation-wide protest. Amazon is in talks to acquire stake in Reliance Retail, may acquire Uber Eats India business. Coffee Day Enterprises appoints SV Ranganath as interim Chairman following demise of Founder V G Siddhartha. Capital One discloses data breach affecting over 106 million individuals across the US and Canada. 

 

Moving on to the top Business news of the week. 

 

 US RATE CUT 

 

US Federal Reserve cuts interest rate by 25bp. Sensex and Nifty fall after Fed eases policy.

 

It’s A Cut: As expected by a majority of economists, the Federal Reserve moved to cut interest rates on Wednesday by 25bp.

 

The interest rate is now 2.25% and Chairman Jerome Powell suggested that the Central Bank was not committed to continue lowering rates. This means this was merely an insurance cut made to offset possible economic doldrums.

 

Washington Sneezed And Delhi Caught a Cold: You’d expect America’s first rate cut in over a decade to be welcomed by markets with open arms and teary eyes. Instead, the Dow Jones Industrial Average and S&P 500 both lost over 1% after Powell’s press conference. Halfway across the world, Sensex ended the day 463 points down while Nifty was below 11,000.

 

This was most likely because Powell termed the cut a “mid-cycle adjustment to policy”, killing hopes that the Fed would begin a rate-cutting cycle from this month.

 

 TRADE WAR 

 

US-China trade war heats up again after Trump tweets that US will impose 10% additional tariffs on Chinese imports. Global markets plunge.

 

Wake Me Up When September Begins: On September 1, America will impose a “small additional tariff of 10%” on the remaining $300bn of Chinese imports, President Donald Trump tweeted. More than two months after the last set of tariffs, the US-China trade war is brewing again.

 

Onerous in Osaka: During the recent G20 summit in Osaka, Trump and Xi had agreed to restart trade talks. Trump consented to withhold imposing new tariffs and pull back his anti-Huawei campaign while Xi agreed to buy more agricultural products from America. Trump has accused Beijing of not keeping its promise.

 

Trump Sneezes and the World Catches a Cold: Global stock markets plunged on Friday after Trump’s tweets on additional Chinese tariffs. London lost 2% and Frankfurt fell 2.5% while markets in Shanghai, Sydney, Paris and Hong Kong climbed down. Markets in India and New Zealand, meanwhile, edged slightly higher.

 

 

 CAPITAL ONE 

 

Capital One discloses data breach affecting over 106 million individuals across the US and Canada. 

 

The Big Hack: Financial services firm Capital One has revealed a data breach, first identified on 19 July, affecting the personal details of about 106 million individuals across the US and Canada. 

 

Strike One: The financial services firm said about 140,000 social security numbers and 80,000 linked bank account numbers were compromised in the US.

 

Strike Two: In Canada, about one million social insurance numbers belonging to Capital One credit card customers were compromised.

 

However, the hacker did not gain access to credit card account numbers, assured the firm. 

 

Belling the Cat: The alleged hacker, Paige Thompson, was arrested on Monday after reportedly boasting about the breach online.

 

 RULES 

 

Lok Sabha passes the Code on Wages Bill, 2019. Parliament passes Bill to establish international arbitration body in India. After Lok Sabha, Rajya Sabha passes National Medical Commission Bill amidst nation-wide protest.

 

For the Common Good: The Lok Sabha, on Tuesday, passed the Code on Wages Bill, 2019.

 

The Bill aims to extend provisions of minimum wage and timely payments to employees across all sectors. This would also ensure that workers of unorganised sectors receive timely payments. 

 

Read more about the Code on Wages Bill, 2019 here

 

Both Houses of Parliament have passed a Bill to make India an international arbitration hub for settlement of commercial disputes.

 

Resolve Your Disputes in Incredible India: The Arbitration and Conciliation (Amendment) Bill 2019 aims to establish an Arbitration Council of India for alternative dispute resolution services through arbitration, mediation and conciliation. The ACI would hear domestic and international disputes. Its Chairperson will be appointed by the government in consultation with the Chief Justice of India.

 

With the establishment of an ACI, India would join other countries like France, UK, Singapore and US in having an internal arbitration institution. Besides making a mark on the arbitration world map, an ACI could also help in reducing the burden on courts and speed up the arbitration process.

 

Rite of Passage: Three days after the Lok Sabha passed it, the Rajya Sabha too passed the National Medical Commission (NMC) Bill 2019, albeit with two amendments. The Bill will now go back to the Lower House, which will consider the changes, and then land on the President’s desk for his assent.

 

What Does the Bill Propose?: The Bill seeks to annul the Indian Medical Council Act, 1956. It proposes to replace the Medical Council of India (MCI) with a National Medical Commission, which would be the overarching central authority regulating medical education. It also provides for a common final-year MBBS exam named National Exit Test (NEXT). More on the Bill and its provisions here.

 

Opposition to the Bill: While the government touted it as a “major reform”, the Opposition decried it as being “anti-poor” and an assault on federalism. Several medical students, doctors and members of the Indian Medical Association (IMA) have taken to the streets to protest the Bill. This has caused healthcare services across the country to be disrupted.

 

 COMPANIES 

 

Amazon is in talks to acquire stake in Reliance Retail, may acquire Uber Eats India business. Coffee Day Enterprises appoints SV Ranganath as interim Chairman following demise of Founder V G Siddhartha. 

 

The What: As per reports, ecommerce giant Amazon is in preliminary talks to acquire up to 26% in Reliance Retail.

 

The news comes shortly after Reliance's negotiations with China's Alibaba Group to sell a stake in the retail entity fell through due to differences over valuation.

 

Tread Cautiously: With discussions ongoing Amazon will have to tread carefully, ensuring that any deal between the two giants complies with the revised FDI norms for ecommerce that came into effect in February.

 

What’s the Plan?: The move is in line with Amazon’s attempts to gather stakes in existing retailers instead of investing in its own stores as it seeks to fortify its offline presence. It is also reportedly in talks with Kishore Biyani’s Future Group. 

 

Amazon May Eat With Uber: Ecommerce giant Amazon is reportedly in talks to acquire the Indian arm of Uber Eats, which is the food delivery vertical of global ride-hailing company Uber. 

 

The acquisition talks are in the initial stages and can also result in a strategic partnership, according to sources. 

 

As per reports, Amazon believes that the food delivery business can restore customers to its Prime App more frequently than shopping for fashion, electronics or grocery.

 

The What: Coffee Day Enterprises has appointed Non-Executive Independent Director SV Ranganath as the company’s interim Chairman following the demise of Founder V G Siddhartha. 

 

Nitin Bagmane, a Director on the Board of Tanglin Developments, a subsidiary of Coffee Day Enterprises has been appointed as the company’s interim Chief Operating Officer.

 

Also This: The company has also announced that its Board has initiated a probe into past transactions made by the company and Siddhartha following allegations made by Siddhartha relating to financial transactions outside the knowledge of the senior management, auditors and the board.

 

As per reports, body of Cafe Coffee Day founder V G Siddhartha was found from the Nethravathi river after he was reported missing on Monday night.

 

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