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Global Affairs

Breakfast Briefing: McKinsey Elections Begin, Hammond Under Pressure, and Google in China

 4 min read / 

McKinsey to Elect New Head

The world’s pre-eminent consultancy firm has commenced its unique election procedure.

Editor’s Remarks: Last week, over 500 of McKinsey’s partners descended upon the Grosvenor House Hotel in London to begin the process of electing their new managing partner. Outgoing head, Dominic Barton, has led the firm since his initial appointment in 2009 and was uncontested in both 2012 and 2015. Firm insiders report that McKinsey is caught between pursuing a more entrepreneurial vision that seeks to diversify its business by straying into digital and analytics services, and remaining true to its traditional focus on consulting. Unlike other firms, McKinsey does not allow formal candidates, manifestos or campaigning for the top role. Instead, partners simply vote for whoever they want to install and names are whittled down in several rounds of voting.

Bitcoin Surges After Announcement

The world’s largest exchange operator, CME Group, has said it intends to offer bitcoin futures.

Editor’s Remarks: Bitcoin came within a hair’s breadth of $6300 on the news, following a recent rally that saw it shatter its previous high of $5000. The latest surge means that bitcoin has gained 809% this year, and shows no sign of slowing despite repeated warnings of an asset bubble. The prospect of hedging bitcoin’s enormous price fluctuations through futures contracts offers institutions, who have so far been wary of entering the digital currency space, a considerable opportunity to mitigate risk. For retail investors, the prospect of bitcoin futures is also enticing because it might open up the possibility of crypto-ETFs.

Google Aims to Re-enter China

Seven years after leaving China, Google intends to return to the country with an AI offering.

Editor’s Remarks: Google’s TensorFlow is a piece of software that makes it easier to build AI systems. The US tech behemoth wants to market the software principally to Chinese academics and local rivals Baidu, Tencent and Sina with the aim of making a return to the world’s largest internet market. However, there is no guarantee that Google will succeed in this endeavour, even if demand proves buoyant. Currently, Google’s cloud-computing business is blocked by the country’s Great Firewall and prohibited by laws against foreign internet giants. Yet, over the past month, Google has held three TensorFlow developer events in China in the hope that it will find support at the ground-level, which will permeate upwards.

Puigdemont Flees to Brussels

The Spanish government has taken over the Catalan police force and government ministries.

Editor’s Remarks: The Spanish government faced virtually no opposition from Catalan separatists as it asserted its rule over the region. Spanish prosecutors have also brought charges of misuse of public funds, sedition and rebellion against the province’s former politicians, who were removed from office over the weekend. Carles Puigdemont has travelled to Brussels, though he denies he is seeking asylum and is willing to return to Spain once he receives guarantees for his presumed trial. In response to the peaceful takeover, Spanish stocks and bonds rose handsomely with yields on Spain’s 10-year bonds falling to a seven-week low.

Philip Hammond Under Pressure

The chancellor is being pressured to depart from his fiscal targets amid calls for more NHS funding.

Editor’s Remarks: The Institute for Fiscal Studies has argued in a new report that the Chancellor of the Exchequer is stuck between either abandoning his deficit reduction targets or ignoring calls for greater public spending. Currently, the government intends to continue reducing public spending for the next four years, but weak productivity is leading to expectations of greater public borrowing amid a weakening outlook for the UK economy. Despite the Conservatives’ image of fiscal responsibility, many are wondering whether it is indeed irresponsible to further slash spending at this juncture. So far, Hammond has stated that he will not give in to Cabinet pressure and break his fiscal rules.

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