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Home » Daily Briefing » Daily Briefing - 5 January 2017

Daily Briefing - 5 January 2017

One of the words of the year for 2016 (alongside Brexit) was 'post-truth'. The word suggested that, as one pollster put it, "objective facts are less influential than emotion and feeling". In December 2016, some clever folks at the Financial Times ran an online quiz of sorts, asking readers 'How well do you know your own country?' The questions were offered for 21 different countries, and the questions included 'What percentage of total household wealth do you think the least 70 percent wealthy own?' The results were published last weekend. The results showed that FT readers had a better grasp on objective reality than the general public. However, amid this self-congratulation was a stark message.

FT Quiz Shot copy

FT readers, for instance, wildly overestimated the household wealth of the least wealthy, while the general public were miles off. Take the 'least wealthy' question. The US general public estimated that the least wealthy 70 percent owned about 26 percent of the wealth. US FT readers estimated that the least wealthy 70 percent owned about 15 percent of the wealth. The actual figure? Around seven percent. In Poland, the general public and FT readers guessed similar figures around 30 percent. The actual figure was 15 percent. Broadly, the figures show that both the general public and the likely wealthier FT readers think the least wealthy parts of their populations are far wealthier than they are in reality.

What's the real story behind Apple's latest investment? Could Donald Trump have anything to do with it? Apple confirmed on Wednesday that it will invest $1 billion into the SoftBank Vision fund, joining the original investors of Saudi Arabia's Public Investment Fund and SoftBank itself, which says it will put $25 billion into the fund. The Abu Dhabi sovereign wealth fund is also reported to be considering an investment. Apple's move is unusual in that the company is not given to investing in other funds, although it does not run its own investment fund. Despite the relative success of the iPhone 7, Apple is casting around for its next breakthrough product after its much-heralded smartphone launch was met with a global shrug. "We believe their new fund will speed the development of technologies which may be strategically important to Apple," company spokesman Josh Rosenstock told Reuters. SoftBank's vision fund could throw billions at this not-yet-arrived technology. Apple's manufacturer Foxconn and chipmaker Qualcomm have also confirmed they will invest in SoftBank, which is run by Japanese businessman Masayoshi Son. Mr Son met Donald Trump in early December, with Trump claiming he engineered SoftBank's planned $50 billion investment in American start-ups. That may incline the president-elect to lay off poor old Apple for a while.

The UK's Competition and Markets Authority has given Vocalink and Mastercard one week to come up with answers to its charge that the merger of the two groups would reduce the number of suppliers who can provide the payments infrastructure behind the UK's cash machines. The LINK ATM network, which is currently supported by Vocalink, connects ATMs with banks and building societies and supports the 70,000 cash machines in the UK. ""The Link ATM network provides an essential service for millions of customers," said Andrea Coscelli, acting chief executive of the CMA, the Telegraph reports.

"It's important that Link has a good choice of providers when it comes to supplying the necessary infrastructure so it can take advantage of the opening up of payment systems to competition. These concerns warrant a closer investigation in the event that MasterCard cannot address them at this stage." The CMA said that market participants had raised concerns that as Vocalink and Mastercard are two of the three credible providers of infrastructure to the payments networks, a merger diminishes competition to provide those services. According to the Telegraph, the CMA has given Mastercard and Vocalink one week to respond. An unsatisfactory response will result in the opening of an in-depth investigation. Mastercard acquired Vocalink for £700 million last year.

The OECD reports that property prices have once again climbed to dangerously high levels in several advanced economies, according to the Telegraph. A chart based on the OECD figures, and prepared by the highcharts.com (which features here in the Telegraph story) shows property prices in several former Commonwealth countries climbing rapidly above their pre-crisis highs. Even a country such as Germany, which traditionally has had low home ownership levels, has witnessed soaring house prices as German savers look to underpriced cities such as Berlin in order to generate earnings. Meanwhile, as reported yesterday, German and Swedish banks reacted with alarm to Basel III proposals on a floor to risk-weighted assets, as they have traditionally claimed that their mortgage markets are safer than any other mortgage markets.

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