Good morning from the financial times. Today is Tuesday, October 20th. This is your ft news briefing.
Stocks live yesterday is the state of us fiscal stimulus package remains uncertain and one of the world's largest independent oil producers makes a huge bet on us. Shale companies are watching into the semiconductor industry. What is the influx enough to offset text pressure from the United States and work Filipino? Here's the news you need the starter deck.
Yesterday started off with a lot of optimism China's economy expanded 4.9% year-on-year in the third quarter that figure was lower than the five and a half percent GDP expectations. It was still a sign that things are moving in the right direction for China and it was a sign that economies can recover from the pandemic if a country can get the virus under control, but over the course of Monday the Shine from China's solid GDP numbers War off investors started to focus on some less-than-stellar news the S&P 500 dropped a little more than one and a half percent yesterday and the NASDAQ Composite about to say it was the fourth fall in the past five days a coronavirus cases in the US and Europe have made many people nervous with new lockdown restrictions sweeping through Europe plus the clock keeps ticking on us fiscal stimulus deadlines that by Democratic Speaker of the House Nancy Pelosi Pelosi set a deal needs to be struck by the end of today in order for it to be passed by the u.s. Presidential election, which is just
Two weeks away Democratic Congressional aide said yesterday that negotiating teams for Pelosi and treasury secretary. Steven mnuchin were working around the clock to try and strike a deal.
The world's largest independent oil producer is taking a gamble ConocoPhillips is set to buy Concho resources in a deal Worth close to 10 billion dollars. Now, it might seem like an odd time to go big on you I shall consider a Hot Wheels done this year was just a few months ago that West Texas intermediate price has went negative. But are you as energy editor Derek Brower says this might be exactly the right time for deals like this one before we get into ConocoPhillips is going after a Concho resources. Tell me a little bit about the size of this deal. It's really big and an oil and gas producer in the world who produced 1.5 million barrels a day and it's about a tenth of what the US produces know that it that sell oil is international going to call has assets and then so on but this is a big deal as in particular a lot of acreage in the Permian in Texas and New Mexico's most prolific oil field in the world. And Conoco has spark control because country
The specialist in apartment. So it's a Gamblin oil to doubling down by ConocoPhillips on what it sees as an important sector which is boil. Conoco is taking this gamble the oil industry still struggling because we're in the middle of this pandemic and some players in the oil industry or even typing away from oil and moving out of green energy. I guess. I'm wondering why are they taking this gamble at 1 why are they doing it right now? But Conoco yesterday when they were talkin through with analysts that the rationale for the deal made sure. They mentioned that you know, they were also focused on ESG environment social and governance issues that investors are so focused on as well so that you don't have to get that out of the way first they do say that they are paying attention to this stuff, but you're right one Bigelow preserve BP Lexi pie introduces its production and here we have a big American priests and doubling down on the well, I think that's because Conoco like
Exxon Mobil in like a bunch of other big oil producers in the US they believe that even if the world starts to move away from fossil fuels there's going to be a little oil consumed over the next couple of decades and so they are specialists in drilling and producing oil and they're going to stick with it. It says it's a it's a it's a bit of a gamble on the future of oil probably less of a gamble simply because Inn, Crestview, it won't prices low and so they're able to pick up these assets if you believe in oil if you believe the oil has a future if you believe that after your business is not what you invest his want you to do then this is a pretty good time to go out shopping for oil assets and buy a bigger position in oil and that's what Conoco is done.
Derek Bauer is the ft's US Energy editor. Thank you, Derek.
Telecoms medical equipment cars in consumer electronics all high-tech industries that ReliOn micro processors and Chip design is regarded as the key to winning the race for Global Leadership in technology. Now President Donald Trump's been pushing to decouple the US economy from China and it's led to top restrictions, especially when it comes to how the components used in chip-making are sold two leading Chinese companies and all eyes are on Beijing approach to the chip industry channel. Will announce its next Five-Year Plan at the end of October Catherine Hill are greater China correspondent has been following. The new trade war is on the line with me. Now. He Catherine how dependent is trying to the import of semiconductors and the components used to make them dependent. If you look at the past three years for example has been importing semiconductors was around three hundred billion US dollars a year China, as you know has been the factory of the world for
Gadgets that we use elsewhere going into those and China uses about double the amount of semiconductors. It produces. It says so you can see it's very very dependent on Imports. So I want to go back to long before the trade tensions with you. I started China was investing billions and it's homegrown industry how far is it to exceeded in creating a competitive microchip industry develop a Chinese homegrown chip industry and the part of the chip in to see where the Chinese have been most successful is Chip design because the entry threshold is lower because you don't need costly machine just need large numbers of bright people and young Engineers. So trying to know has quite large number of quite strong chip design houses the part of the industry where they've been less than
Play is manufacturing to do with the fact that nowadays A molten chip fabrication plant cost a lot of money. And then also the manufacturing industry is already globally highly concentrated more than half of contract manufacturing of chips is in the hands of one Taiwanese company. That means that the temple is also quite concentrated and it would be very difficult for any Chinese company to find the right people. They they need to build like advanced technology notes for production. And of course the u.s. Is restricting technology trade with China. How is that impacting the industry to Quality or Affiliates that were made using any us technology that requires a special license the chip design tools. Those are dominated by just a few.
U.s. Software company, so that means basically if the US government handles this in a strip mine, it will be close to impossible for the long-term to get home. I need to report a lot on a flood of new companies entering the chip manufacturing industry in China. What exactly is behind this behind? This is the expectation that they will be even more government money available for chip companies in the future. You already mentioned that the Communist Party leadership is looking at the next Five-Year Plan for the country's economy and that Five-Year Plan will include new programs probably for the semiconductor industry. So now there's the u.s. Is trying to contain China and its technology developments. The Chinese government has said we need to try even harder to promote self sufficiency. So the expectation is that means they will give out.
Subsidies. Yeah, you know, it seems like a lot of these companies are we are kind of new to the game. What's the impact of having such companies take on this goal? I would say almost certainly disastrous even in past rounds of Chinese industrial policy in the chips after we've seen a lot of waste a lot of Fraud and the loss of saying you can find companies that previously used to be in seafood and now say that they will be something after companies and if we're talkin about manufacturing chips, I would be almost certain that such kind of projects would be doomed to fail. Did you say seafood seafood? Yes indeed.
Well, we'll just have to see how that turns out Catherine Hill is our greater China correspondent. Thank you very much, Katherine.
You can read more on all of the stories at ft.com.
This is been your daily ft news Roofing. Make sure you check back tomorrow for the latest business news.