Housing market

Housing market is a very interesting topic, because I think housing market is a very unique market. You can see it as an investment market, because houses can generate profits for their owners. However, houses can also be seen as necessity, because people need somewhere to live (they can either buy a house or rent a house); especially in some cultures, buying a house is almost a must for getting married. I think maybe the latter factor makes housing actually good investment. Moreover, some cities have rapidly increasing housing prices, this will stimulate an even faster rise of housing prices. In addition, since it is a necessity for many people, which means there is a safe net for housing investors. 

Furthermore, buying a house (or a flat) is always a big decision for most people, as it will consumes a significant proportion of an ordinary person’s income. Therefore, housing price does affect individuals’ wealth, thus affecting their daily consumption decisions. And this can explain why the housing market is possible to affect the entire economy.

Of course, the importance of housing market can be reduced. For example, aging population and low birth rate can reduce the demand for housing. Moreover, better public transportation can reduce the population densities in some major cities, thus reducing the housing price in these major cities.

Is Netflix failing?

Okay, the news is not new actually that Netflix’s Q2 report was released almost two weeks ago. This report was not very impressive at all that the performance did not beat the expectation and the subscription number in the US dropped and the worldwide subscription additions were significantly behind the forecast. Why was the performance this bad? Netflix gave its explanations that it believed the bad performance was caused by the price change and the quality of its contents.

Based on the results of the Emmy Award, HBO won more awards than Netflix. This result could potentially show that the Netflix contents may not be as competitive as previously. This does not necessarily mean that the contents of Netflix are no longer good, it means there are more competitions in this industry. Moreover, more and more companies are joining in content creation, including Apple and Alphabet. Why is content creation so hot? It is because good contents can make profits and more crucially can help their customers stick to their products.

Then when there are more platforms and more good contents across various platforms, consumers gain more power and have more options. Under such circumstance, it is not wise for Netflix to raise its subscription fee. When the users continuously pay a certain level of subscription fees, they get used to this and stick to this plan without second thoughts after they initially made the decisions to pay the subscription; however, once they face a price change, they need to make the purchase decision again and realise there are so many options out there, then it is likely for them to switch to something they think is equally good but cheaper.

Therefore, I think that pricing may be a bigger problem for Netflix than as Netflix claims the contents are a bigger issue. When the competition for content creation is rising, increasing prices can affect current users’ loyalty, which should not be something that a firm wants to see.

Vision Fund II

SoftBank is a Japanese company, but what type of company it is confuses many people. It was founded in 1981 as a computer parts store, then went into the publishing industry, later entered the Internet business. SoftBank Group has been a very successful investor which holds stakes in firms across various industries, including telecommunication, finance, tech and other businesses. Many of these firms are well known, for example, Uber, Didi Chuxing, WeWork, Ele.me, Alibaba. Now SoftBank is planning to launch its Vision Fund II. Since its initial Vision Fund has made a huge success, lots of attention has been drawn to this second Vision Fund.

Mr Son’s plan for his second Vision Fund seems more ambitious than his first one, with bigger at more than $100 billion. This fund is a very exclusive fund that only a very limited number of investors are able to join this fund. However, some major investors are not included, including some sovereign wealth funds from the Middle East and Mr Son said he was in talks with these funds. Of course, we cannot use the previous performance to predict the future, which was also mentioned by SoftBank in this project. However, most people do not care, many people believe successful people will keep succeeding. And many successful people have not failed others’ expectations about them.

It is true that Vision Fund II may have a higher probability to succeed than other similar type of funds, because its size and network in the industry makes the firms it invests are able to gain access to greater resources and markets. However, there are more and more venture capital funds focusing on the tech industry, since the returns in the tech industry are significantly higher than the returns in other industries. This will be great news for tech startups, but may mean the returns for these venture capital funds can be lowered due to the increasing competition.

Personally speaking, I still think Vision Fund II can generate positive returns, but I do not think it can be as successful as the first one.

The development of IOT

IOT is a relatively hot topic for many tech companies, the founder of Huawei believes that the next major competition will occur in the IOT field. Amazon is a huge company which run successful businesses based on IOT and many people are fascinated by Amazon’s one-day prime delivery. One-day delivery cannot exist without the rapid IT development, and this is why we see Amazon as a tech company rather than a grocery firm. When the internet first appeared, people use it as a new platform for communication. Nowadays, we still use the internet to exchange information, but the contents become much more complicated. In addition, the speed of information exchange is becoming faster and faster, this allows more complicated information to be exchanged with shorter latency. IOT is built based on based on such network.

IOT is about moving goods with the help of rapid information exchange. Information exchange helps firms to monitor and control their goods transitions. When the technology is developing, firms are able to have better knowledge and control of their goods in transit. The most difficult thing to flow in IOT is not necessarily those “high tech” products, it is those which will decay rapidly with time. Although we can find imported fruits in our local stores, tons of fruits imported from other countries are thrown away because of the quality. Furthermore, when it comes to food delivery to home, consumers’ choices are much limited, and food is often delivered from consumers’ local stores to their doorsteps. Usually consumers choose the fresh food from what the local grocery stores have or will have in their storages, then when the consumers place their orders, the grocery stores pick up the ordered items from their storages and deliver the food to their consumers. This is very old fashioned in today’s standard.

I think that IOT in the agricultural industry is going to change the world and save lots of lives, because I think this will significantly reduce food wastes caused during transition and increase food supply.

My worry about technology innovation

This article aims to express my personal worry about technology innovation. I do not worry too much about the potential possibility of a battle between AI and humans. Not because I do not think it is impossible, it is possible but I think is very likely to happen in a very far future. I think that there is some immediate worry about technology innovation, inequality. 

I think technology development is likely to create a much impenetrable barrier between the wealthy and the poor (or even the ordinary); moreover, such barrier does not only lie between individuals, but also lie between companies as well. There are lots of examples showing such case. For example, Apple is reported to be in talk with Intel about buying its 5G Modem business, the reason for this potential deal is Apple wants to have the ability to produce its own 5G chips rather than relying on Qualcomm’s chips. Moreover, some potential consumers had doubts about Huawei smartphones because of the previous ban on Huawei signed by the US president. These consumers were afraid that without the software support from Google and the supply of many US chipmakers, a Huawei smartphone seemed much less reliable. Therefore, when firms build up massive technology assets, many other firms have to rely on them and are difficult to challenge them in their sectors.

For individuals, this may be a much bigger problem. Because companies are easier to employ more people and invest more money to compensate the scarcity of time than individuals, individuals are more likely to rely on more work of many others. People who have specialised skills will be much harder to be replaced by others; although people can learn and be educated to gain specialised skills, such investment can be too costly for the people who are struggling for their everyday living. Furthermore, when there is a problem which requires specific technical skills,  the wealthy people can employ other people and invest money to save time to solve this problem, but the ordinary people have to spend time on learning the skills then solve the problem. When the wealthy people can solve more problems than the ordinary people, they are more likely to become even wealthier and the wealth gap between the super wealthy and the ordinary will be widened.

Overall, inequality is my major concern about technology development and I personally believe this should be the immediate downside of rapid technology development.

Tech companies in the financial sector

The US House of Representatives Financial Services Committee held a hearing for Libra on the 17th of July and the CEO of Calibra for Facebook, David Marcus, who is one of the key people in Facebook’s Libra project, testified. It seems that the committee members focused much more on Facebook rather than the cryptocurrency. Due to previous scandal, the public trust on Facebook has been affected and these lawmakers are concerned about Facebook’s role in Libra project. The lawmakers see Libra as Facebook’s effort to break into the traditional financial sector and expect other large tech companies are also likely to make similar efforts.

There is always a worry for lawmakers that the technology is advancing so fast that the lawmakers fail to catch up with the technology development. Moreover, lawmaker will always be lagged behind technology development, because lawmaker cannot regulate something which has not happened yet. Lawmaker is always trying to eliminate happening of something bad or too risky, but because lawmaker cannot foresee what is going to happen and eliminate all the loopholes in the current system, it is impossible to eliminating the probability of something happening completely. Then although some are talking about banning tech companies from entering the financial sector, it is impossible to do so and many tech companies have already involved in the financial market, besides Facebook’s Libra. Apple is partnering with Goldman Sachs to launch its own credit card.

Tech companies have much more experience than traditional financial institutions about how to deal with enormous data by using modern technology, especially AI. Moreover, because they are newcomers, they are not afraid of “thinking differently” and we can expect we are going to see something new from these tech companies after they enter the financial market. In addition, we should be able to see increasing competition in the financial market, which is a good thing for ordinary consumers.In China, tech companies like Tencent, Alibaba, are building their IOTs, and they see an opportunities of being financial medians, and people can buy mutual funds from their platforms and many people are saving money with these tech companies rather than traditional banks.

How should you choose your accommodation at uni?

Some universities provide accommodation for all the students; however, some universities have very limited spaces, so many students need to find their own places to live during their study. No matter which circumstance, students need to make their decisions about accommodation. How should students choose their accommodation in terms of services, deposit refund and other aspects? I would like to give some advice based on my experience and economic theories.

I do not want to focus on the very specific details about how to choose the accommodation for you, I would like to focus on a rather broader issue. Which type of landlord and agent should you choose? My advice is the bigger is the better. The economies of scale also work in this sector. If an agent or a landlord only manages a very limited number of properties, the average of cost of maintaining one property is relatively high; however, if an agent or a landlord manages a large number of properties, the average of cost of maintaining one property is relatively low. What does this mean? First, if there is any damage done to the property, you will pay much less for fixing the damage if choosing a larger agent (and landlord), because it is cheaper for them to fix these things. Secondly, agents (and landlords) need to manage their risk much carefully. Often there are two ways to manage risk, either they can pass the risk to their tenants, or they will manage the risk by themselves. For very smaller agents and landlords, the only choice is to pass the risk to their tenants because the latter is too expensive for them. However, more options including insurance are open to larger agents and landlords, they can manage the risk by themselves and make their properties more attractive to potential tenants. Thirdly, because of the economies of scale, it is easier and cheaper for large agents and landlords to provide more services including cleaning and maintenance services.

Overall, because of the economies of scale, the properties owned (and/or) managed by large landlords and agents including universities in my opinions are better choices.

Expanding business boundaries

Some companies are seeking ways to expand business boundaries to grow their businesses and generate greater revenues. There are lots of reasons for why some companies want to enter other business sectors. First, some companies may reach the limits of their expansion in their current sectors. The limit does not mean there is no room for them to expand further, it is just no longer profitable for them to expand in their sectors that the costs of expansion exceeds the potential returns from further expansion. Secondly, there are better opportunities in other sectors that companies cannot resist. This is probably more common. For example, after Apple’s launch of its first generation of iPhone, many other companies also joined the smartphone sector, including Alphabet and Amazon. This is because the smartphone market is just too profitable to resist. More than a half of Apple’s revenues is generated from its iPhone business. We should not forget Apple was originally a personal computer maker and now Apple’s Mac sales are less than 10% of the total sales and even less than Apple’s revenues generated from services. Thirdly, sometimes it is tax efficient for some companies to get involved in other sectors. For example, some companies also own football clubs, because they need to keep spending money on their football clubs, the taxable profits are reduced and they can pay less tax. Moreover, in the future, if they need lots of cash, they can sell their football clubs and their previous investment in their football clubs could potentially be paid back partially or fully.

Of course, it is not easy to enter a new sector, even for large successful companies. For example, Alphabet has given up his ambition in producing tablets, they have announced they are no longer to produce tablet hardware but will continue developing tablet software. Good products or services are important for succeeding in any sector and a company’s previous record does not necessarily reflect its performance in a new sector, although its cash flow, brand and previous experience can certainly help it to succeed. Brands are sometimes very important because brand can determine how easy the company enters a new sector. Alphabet definitely has a very good brand. Despite its products’ quantities, its products always gain enormous market attention. This is very important for a company to break into a new sector. Maybe Alphabet does not successfully break into the tablet business, Alphabet’s popular brand has helped it gain incredible market attention in all sectors where it gets involved, including the driverless car industry, the smartphone industry. There is another more recent example, Facebook. Facebook is a company which was originally founded as a social media company. Recently it publicly announces the plans for its cryptocurrency, Libra. Although the cryptocurrency has received a lot of debates and criticism, it certainly gains the market attention and helped to push the prices of other cryptocurrencies higher. However, popular brands do not always mean success and some popular companies actually create new brands when they enter a new sector. For example, P&G has many brands, it uses Oral-B for its oral-hygiene products, Gillette for its men’s personal care products, Pantene for its hair care products. According to categorisation theory, consumers tend to evaluate new products based on their previous experience with the brand and the brand’s concept. Having different brands can prevent companies from containing itself in just one concept and help to gain more opportunities in more sectors. 

However, since people love the concept of high tech in general, large and successful tech companies do not need to create a different brand for entering a new sector and they can break into any sector relatively easily with the help of their brands’ popularity.

The US versus Europe

The world should be a little more relieved after the US and China have reopened the trade negotiation and the US government starts to relax the ban on Huawei, right? Wait, no. The US may start another trade war with Europe.

In Europe, lots of the US tech giants are not paying any taxes to the European governments and the Europeans governments are seeking a solution and make these giants pay their taxes in Europe. And not only just tech giants are not paying taxes, other US companies such as Starbucks are not paying their “fair” shares of taxes. France is planning to imposing digital services tax to make these tech giants including Facebook, Alphabet, Apple, Amazon and many others pay their taxes. However, it seems that such attempt angers the US. The US president, Donald Trump, has asked his officials to investigate French tax plans and his officials are considering imposing tariffs in retaliation. Governments should stand for their countries’ enterprise when their interests are hurt by unfair treatment by another country.

When it comes to fairness, the measure of fairness is rather subjective and the probability of overdoing is likely to be positively correlated with the strengthen of this country. France is not the only country which seeks for taxing the US tech giants, other European countries including the UK are also complaining the big giants are not paying “fair” shares of taxes. France is the one who first figures out a potential way to make the tech giants pay taxes, then it faces a tariff punishment from the US. The US may want to set an example for other countries which also want to tax the US giant companies.

Is paying dividends important?

There are some publicly listed companies paying their shareholders dividends every quarter, and there are some publicly listed companies which have not paid their shareholders a single penny. Not all companies are able to pay dividends, especially some companies are not fully mature yet, for example, Tesla. However, some companies have the capacity but have not done so yet. Many tech companies, including Apple, Alphabet, Amazon, Facebook and Netflix, are not paying their investors any dividends, and even those who are generating enormous cash inflows are not paying dividends either. It seems there is a tradition of not paying dividends for the tech industry and I think this is very reasonable. Tech companies require continuous investment in technology development to keep themselves always competitive in the industry. But this not paying dividend attitude does not only occur in the tech industry, there are a significant number of companies which are making profits but not paying dividends in other sectors. Some investors accept the idea of giving more cash to the companies for greater values in the future. For example, Warren Buffett's Berkshire Hathaway does not pay dividends for its investors and its investors believe that Warren Buffett can manage the cash much better and help them gain more capital returns in the future. Nowadays I think that the majority of stock investors generate their profits from stock price changes rather than receiving dividends. To many investors, in the stock market, the risk that they are bearing is too high to be compensated by just 1% to 2% dividend yields, they are looking for much greater returns. Under such circumstance, it is pointless for them to focus on the dividend yield, what they care is the market value. The market value is subjective and dividend yield can be one element among many about how we judge a company’s market value. Overall, if a company is very exciting (lots of news regarding the company's future trend), then the share price is already volatile enough to distract investors from judging the market value based on its current dividend yield; otherwise, dividend yield can be one of the important factors when valuing the company.

Are investors going to like Virgin Galactic?

Virgin Galactic has announced its plan of going public in a merge with Palihapitiya’s cash shell. Virgin Galactic was founded by Richard Branson to provide space travel for tourists. There is a space race undergoing between enterprise. Jeff Bezos’ Blue Origin, Elon Musk’s SpaceX are probably the leading companies in this space trace. Virgin Galactic’s craft is limited and the company focuses on providing consumer space travel, which is a rather difficult and narrow field in the space business.

It is difficult because Virgin Galactic wants to take human passengers to the space, and human body is very weak and fragile, keeping humans safe in the space is very expensive and faces lots of technical challenges. Maybe in the future, due to technology development, the cost can be significantly reduced, the space travel will become more appealing to a larger group of people. Furthermore, there are other businesses relating to space. Both Blue Origin and SpaceX have already sent satellites to the space and resupplied the International Space Station. Sending satellites can be very profitable with right technology (reusable rockets) and is a highly demanded service.

Because of these reasons, I do not think Virgin Galactic is going to be an attractive stock for investors, people may see it as the Aston Martin in the space business, and we all see how Aston Martin’s stock performs since its IPO.

Who is going to benefit from technology competitions on the buy side?

Yesterday, I argued that richer consumers would benefit more from technology competitions comparing with the less wealthy consumers. Richer consumers can afford more high tech products than the poorer, so they can experience more benefits brought by the rapid technology development boosted by the technology competition.

More importantly, I think we also need to consider another big party on the buy side, the enterprise. Although enterprise also makes their purchases (investment) decisions based on cost and benefit analysis, since their returns from purchases are more significant, they are more likely to appreciate expensive high tech products which helps to improve productivity and do not care about ordinary people’s “value for money”.

Apple announces its new desktop computer, Mac Pro and a professional standard display. The base model of Mac Pro is priced at $5,999, the display starts at $4,999, and the stand for the display is priced at $999. Many people criticise Apple has seen itself as a luxury brand more than a tech company, they think these products are priced stupidly high. However, these products are not designed for ordinary consumers, they are designed for enterprise, such as film studios. For film editing business, if they are able to edit one more film a year by using this expensive machines, they are going to buying these, because these machines will pay for themselves.

Therefore, if the technology competition significantly boosts the technology development for improving productivity, the enterprise will be significantly benefited, and they are very likely to update their capitals (including both hardware and software) frequently if the improvement is significant. Under such circumstance, developers and buyers mutually benefit from rapid technology development, both are able to generate greater revenues.

Overall, the benefits from technology competition can spread across the entire economy.

The benefit of technology competition

Many companies are competing in terms of technology, they invest tones of money into technology development. Why is technology competition so appealing? I did give some of my answers yesterday and I would like to add more explanation. Technology competition is uncertain and we can see companies in similar fields can end up with various results from their investment in technology. Sometimes there may be a clear winner, sometimes there is not a clear winner and all technology development has its place in the market. When there is a clear winner, it does not mean other companies will lose the market, as long as they have some certain degree of technology development capacity, they can deliver something similar to the winner and still get some market share. If there is no clear winner, then it is great for all companies as they can differentiate some products and avoid direct competition with other players in the market.

Moreover, once companies start technology competition, no companies want to go back to price competition. The fields where technology competition is more common are the fields where technology develops at a very fast rate, such as the smartphone market. Price competition may help a company win the competition for a very short period, but once there is a new technology breakthrough, this company will immediately lose the market because it does not have the technology its consumers want. Therefore, companies in these sectors will automatically prevent itself from entering a price competition. Once no company is interested in price competition, they will set prices for their products which can generate some profits. In addition, not all consumers need the latest technology, companies can generate even more profits from price discrimination.

Even more importantly, technology development can help companies to accumulate market power by building up technology barriers. Rome wasn't built in a day, so is technology. A technology company can maintain its dominant position in the market because of the technology held in its hands. Some technology companies has spent years on technology development, the experience and knowledge it has do not only help to produce its current products, but also helps to speed up future technology development. Incumbents can sell their technology to newcomers, this will further strengthen their market power. Under such circumstance, maybe the market becomes more competitive, but the large players will always win since other firms are paying for using their technology. For example, Samsung is a big smartphone player, but it also provides display panels for many other smartphone makers.

Overall, technology competition is the new fashion. Such competition may not help consumers to save their money, but will definitely deliver better products for their consumers. To some degree, I feel technology competition will benefit richer consumers than poorer consumers, since richer consumers are more likely to afford more high tech products and enjoy the benefits brought by technology competition while poorer consumers are less likely to own many high tech products and they appreciate price competition more than technology competition.

Competition in technology development

The first thing that comes to many people's mind about competitions between companies is price competition. In economics, a perfectly competitive market is where all suppliers have uniform costs and are selling their products at prices which equal to their costs. However, this is not very realistic. Suppliers often have different costs caused by various factors. For example, a local supplier may have a higher production cost but no transportation cost, and a large supplier has a lower production cost due to its mass production but a higher transportation cost, the two suppliers may have similar but not exactly same costs. Of course, these two suppliers can still compete with each other by lowering their prices, but this strategy is not sustainable and may lead to an ill competition strategy, dumping.

Price competition is not going to generate profits and may cause losses until winning the market power. I think that in the real world, especially in the technology sector, firms are competing with each other from a different aspect, technology. Competing in technology has several advantages which price competition will never have. First, technology competition does not fully prevent firms from making profits. When firms are developing new technology, they may not end with exactly same technology, so their products are differentiated, and they are not necessary to launch a direct competition with each other. Moreover, because their products are different, it is reasonable for them to set up different prices which can possible generate profits for them for their products. Secondly, technology dominance is easier to maintain. Both price competition and technology competition both aim to win more market shares, but technology is able to achieve a more dominant win. The dominated position by winning a price competition is easily broken by a technological breakthrough that significantly lowers production costs. However, the dominated position won in a technology competition is much harder to be brought down. Thirdly, technology competition can help newcomers to bring down traditional incumbents. Consumers could be surprised about new technology, and change their previous preferences, the most classical example is iPhone which has complete changed people's preferences about the mobile phone they want and brought down Nokia's position in the mobile phone sector. Fourthly, technology competition is more appealing to investors. Competition requires lots of cash, so it is important to have investors' support. Investment in technological development is more likely to gain support from investors because of the previous advantages. Moreover, investors love investing in innovative companies, investing in technology at least make companies seem to be innovative.

Overall, I think that more and more companies will participate in technology competitions, because it can generate greater profits and accumulate market power by building up technology barriers.

Activist investors

Activist investors including hedge funds are becoming more active in recent years. What activist investors are doing for making more returns from their investment is relatively straightforward. They start their project with buying a significant amount of one company's stocks to gain some influence on this company, then they will push the company for better shareholder rewarding schemes by communicating with the management board or influencing the board room; once they succeed, the share price will rise and these activist investors make profits.

Often the median size companies are more likely to be targeted by activist investors, because it is easier to gain influence in these companies' board rooms than in those large companies' board rooms. However, it does not mean the large companies are not going to be targeted. For example, Apple has known as the target of some activist investors, including Jana Partners, who has liquidated two hedge funds to  focus on activism. This is definitely a very profitable investment strategy, but is not good for the companies in the long term.

Better shareholder rewarding schemes means cash will flow from company's hands to its shareholders' hands, the company may lack cash for making necessary investment to prepare itself for possible future competition. Furthermore, not all shareholders are benefited, some shareholders are interested in the company's future and looking for returns in the future rather than immediate returns. Because of the activist investors, these shareholders have to change their previous prospects and investment strategies.

In addition, such aggressive investment is not good for the economy. The listed companies partially support the economy, such investment may make them fail in the future because their future developing abilities are weakened by the rewarding schemes, this can affect the economy to some degree. Moreover, it can prevent some good companies from being public. Companies which are making profits and have huge amount of cash are more likely to be the activist investors' targets, because it is easier for these companies to provide better shareholder schemes. These companies may prefer staying private, because they do not want to be manipulated by activist investors.

Overall, activist investors are driven by short term investment returns. When activism becomes more and more popular, it might be better for some companies to stay private.

Why sometimes it is hard to find a perfect product for you?

When we are buying some product, for example, a smartphone, we face a plenty of varieties of smartphones, but we need to spend more than what we want on something which meets all our requirements. Why is this the case? I think that the companies do understand their customers, and they are doing this intentionally. Because they understand their customers' preferences, they are able to find the "sweet spot" for their customers. However, this may not be able to let the companies make as many profits as possible, especially when the companies are not in a very competitive market.

Customers generally choose the second best product, and the companies can exploit this behaviour. Companies can produce three tiers of a product. The top tier is of course the product with the best spec and a very high price, the spec is unnecessarily high for most customers and the price is also too high for most customers. The bottom tier is the product with the lowest spec and a slightly low price, the price is low but not necessarily low enough to match the spec. Since both varieties are not attractive enough for most customers, here comes the middle tier. The middle tier has slightly higher spec than most customers need, but not high enough to match the top tier; the price is high but matches its spec better than the bottom tier. Under such circumstance, customers are likely to pay higher prices than what they initially want for the middle tier.

However, when the competition increases, such strategy will not work well, because if the preferences of customers are not served perfectly, someone will enter the market and produce something that well matches the customers' general needs.

Post G20 summit

This year's G20 summit has changed the global political and economic environment, especially the tension between China and the US has been havened. China purchased American soybeans ahead the G20 summit; after the US president, Donald Trump, met with the Chinese president, Trump seemed to soften his stance towards the Huawei ban and the two countries will resume the trade talk after the G20 summit. The gold price sinks, showing the market becomes more positive and optimistic about the global economy due to the eased trade tension.

Some hawks in the US are unhappy about Trump's shift on the Huawei ban; for example, Senator Marco Rubio tweeted "If President Trump has agreed to reverse recent sanctions against #Huawei he has made a catastrophic mistake". However, Trump's shift is a piece of very good news to the US tech companies. It means that chip makers can export their chips to Huawei; though some have found a way to get around the ban, this will still reduce the costs of exporting their chips. Google should also be very happy about Trump's shift. Without the ban, Huawei is highly likely to continue using Android as its smartphones' operating system, at least in its oversea market (in the Chinese market, Huawei may switch to using its own OS, and other Chinese smartphone makers are also likely to use this OS in their smartphones in the Chinese market).

Donald Trump only said that the US companies could continue selling to Huawei, it does not mean the US completely lifts the ban, Huawei will remain on the blacklist. Furthermore, I think that Huawei is highly likely to be excluded from the US 5G plan and the US will continue to see Huawei as a national security threat.