June 30 marked the day where the yield curve was inverted for a full quarter -- triggering a recession forecast.

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Today's Articles

1)  Uber Eats invades restaurants with Dine-In option

2)  Germany fines Facebook for under-reporting complaints

3)  IMF’s Christine Lagarde nominated for top job at European Central Bank

4)  This is now the longest US economic expansion in history

5)  IT'S OFFICIAL: THE YIELD CURVE IS TRIGGERED. DOES A RECESSION LOOM ON THE HORIZON?

 

Uber Eats invades restaurants with Dine-In option

Article

A new option in some cities lets you order your food ahead of time, go to the restaurant, then sit down inside to eat, a tipster from competing dine-in app Allset tells us.

Adding Dine-In lets Uber Eats insert itself into more food transactions, expand to restaurants that care about presentation and don’t do delivery and avoid paying drivers while earning low-overhead revenue.

Uber’s Dine-In option is now available in some cities, including Austin, Dallas, Phoenix and San Diego, where it could save diners time and fees while helping restaurants fill empty tables and waiters earn tips.

Uber confirmed the existence of the Dine-In option, telling me, “We’re always thinking about new ways to enhance the Eats experience.” They also verified there are no delivery or service fees, and restaurants get 100% of tips left in-app by users.

However, we found some items were silently marked up from restaurants’ listed prices in both Uber Eats Delivery and Dine-In options, which could help it make some money directly from these purchases.

Last year we reported that Uber Eats was giving restaurants prominence in a Featured section of the app to drive up demand if they offered discounts to customers.

Instead of trying to own a single use case that might only appeal to certain demographics in certain situations, Uber Eats’ strategy is crystallizing: be the app you open whenever you’re hungry.

 

Germany fines Facebook for under-reporting complaints

Article

In a statement on Tuesday, Germany’s Federal Office of Justice said that by tallying only certain categories of complaints, the web giant had created a skewed picture of the extent of violations on its platform.

Faced with a global backlash over the role its platform played in election campaigns from the United States and Britain to the Philippines, Facebook has been on a public relations drive to improve its image.

Under Germany’s network transparency law, social media platforms are required to report the number of complaints of illegal content they have received.

The charge that Facebook did not report the full extent of the complaints it received could undermine its efforts to burnish its reputation.

In 2018, Facebook said it had received 1,048 complaints relating to illegal content on its platform over the second half of that year, according to its transparency report.

“We want to remove hate speech as quickly and effectively as possible and work hard to do so,” said a Facebook spokesman in response to the fine.

Reporting by Reuters TV and Thomas Escritt; Editing by Michelle Martin and Mark Potter

 

IMF’s Christine Lagarde nominated for top job at European Central Bank

Article

Lagarde's nomination now passes to a vote at the broader European Parliament as well as between the euro zone finance ministers.

European Council President Donald Tusk, who chairs the EU summits between the 28 heads of state, told CNBC that Lagarde's past as a finance minister does not put at risk the independence of the ECB.

Dutch Prime Minister Mark Rutte told CNBC in Brussels that Lagarde is a "tough lady."

"Lagarde would be expected to lean broadly dovish on monetary policy while pressing fiscal authorities to play a more active role in promoting eurozone growth," Krishna Guha, head of global policy and central bank strategy at Evercore ISI, said in a note.

"Specifically we think she would back what we expect will be one last big dovish play from Draghi in September: an easing package that includes both a 10-15 bp rate cut and a new QE program at around €30bn a month of purchases."

The council also nominated Ursula von der Leyen, Germany's defense minister, for the European Commission presidency.

However, the center-right European People's Party, which had been a powerful force driving EU politics over the last four decades, lost quite a lot of support from the previous election.

 

This is now the longest US economic expansion in history

Article

This cycle, starting in June 2009, breaks the record of 120 months of economic growth from March 1991 to March 2001, according to the National Bureau of Economic Research.

Perhaps because of the overhang of the housing crisis, this run has been weaker than past expansions in total.

The cumulative total of quarterly GDP growth figures equals 25%, far lower than previous booms.

While the unemployment rate has dropped from a peak of 10% in October 2009 to 3.6% in May, the lowest since 1969 , job growth has been relatively slower than during other postwar recoveries.

But despite some internal weakness, this expansion keeps trucking along, getting its latest boost from the Trump tax cut of 2018 along with a relaxation in business regulations, according to economists.

The CNBC's Rapid Update survey puts the GDP tracking estimate at 1.8%.

All eyes will be on the jobs report on Friday for the state of the economy.

Economists expect that 158,000 jobs were created in June, up sharply from the disappointing 75,000 in May, according to Refinitiv.

Some believe the Federal Reserve will save the day through cutting interest rates, while some think additional stimulus cannot combat the looming downturn or that the Fed won't be aggressive enough to stave it off.

"We still do not see a recession, but we continue to worry more about downside risks than upside risks to the outlook," said Torsten Slok, Deutsche Bank's chief economist, in an email.

"To counter the ongoing slowdown in the data and the uncertainty of how much longer the trade war will continue, we see the Fed cutting rates in July, September, and December."

IT'S OFFICIAL: THE YIELD CURVE IS TRIGGERED. DOES A RECESSION LOOM ON THE HORIZON?

Article

In the three recessions that followed his dissertation, the yield curve again inverted before each one –including the 2008 global financial crisis.

June 30 marked the day where the yield curve was inverted for a full quarter -- triggering a recession forecast.

It is correct but it has a lot of false signals,” said Harvey, now a finance professor at Duke University’s Fuqua School of Business.

The rates at different maturities are called the yield curve or the ‘term structure.’

So a normal yield curve is positive, meaning longer maturity at a higher rate.

Harvey : Flat or inverted yield curves are historically associated with slow economic growth or recessions.

Yield curve inversions preceded each of the next three recessions, including the important global financial crisis.

Harvey : There are many different ways to understand why the yield curve is a useful forecasting tool.

So think of the yield curve as an indicator of sentiment about the future of the economy and the risks we face.

When you buy a bond, the cash flows come in the future in the form of interest payments and principal.

However, the yield curve was put in the spotlight after the successful forecast of the global financial crisis.

After noticing the track record of this model and given the yield curve is now inverted, some companies potentially cut back on investment and hiring – contributing to a slowdown.

Suppose you are a company thinking of making a major investment in a new plant and you have to borrow a lot to do that.

With a better forecasting tool, companies can make decisions that maximize the chances that they can ride out bad economic news with minimal impact to their stakeholders.

Suppose you are planning that family vacation to Orlando and you will have to run your credit card up to pay for it.

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