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Final version of mega Pacific trade deal dumps rules the US wanted

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The 11 remaining nations, led by Japan, finalized a revised trade pact in January, called the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). It is expected to be signed in Chile on March 8.

The deal will reduce tariffs in economies that together amount to more than 13 percent of the global GDP — a total of $10 trillion. With the U.S., it would have represented 40 percent.

“The big changes with TPP 11 are the suspension of a whole lot of the provisions of the agreement. They have suspended many of the controversial ones, particularly around pharmaceuticals,” said Kimberlee Weatherall, professor of law at the University of Sydney.

Many of these changes had been inserted into the original TPP 12 at the demand of U.S. negotiators, such as rules ramping up intellectual property protection of pharmaceuticals, which
some governments and activists worried would raise the costs of medicine.

The success of the deal has been touted by officials in Japan and other member countries as an antidote to counter growing U.S. protectionism, and with the hope that Washington would eventually sign back up.

“CPTPP has become more important because of the growing threats to the effective operation of the World Trade Organisation rules,” New Zealand Trade Minister David Parker said on Wednesday.

Last month, Trump told the World Economic Forum in Switzerland that it was possible Washington might return to the pact if it got a better deal.

However, Parker said on Wednesday that the prospect of the U.S. joining in the next couple of years was “very unlikely” and that even if Washington expressed a willingness to join CPTPP,
there was no guarantee that the members would lift all the suspensions.

Parker said the deal would likely come into force at the end of 2018 or the first half of 2019.

Governments were quick to tout the economic benefits of the agreement.

“The TPP-11 will help create new Australian jobs across all sectors — agriculture, manufacturing, mining, services — as it creates new opportunities in a free trade area that spans the Americas and Asia,” said Steven Ciobo, Australia’s minister for trade in an emailed statement.

New Zealand’s government expected the CPTPP to boost the island nation’s economy by between NZ$1.2 billion ($881.40 million) to NZ$4 billion a year, with beef and kiwifruit
exporters among the top beneficiaries of the deal.

The 11 member countries are Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam.

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Health experts are deeply concerned

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A passenger using a face mask shows her passport and boarding pass to an employee in a security checkpoint at El Dorado International Airport in Bogota on September 1, 2020.

DANIEL MUNOZ | AFP | Getty Images

LONDON — Public health officials and civil liberty organizations are urging policymakers to resist calls for coronavirus vaccine passports, at a time when many countries are in the process of reviewing whether to introduce digital passes.

The U.S., U.K. and European Union are among those considering whether to introduce a digital passport that will allow citizens to show they have been vaccinated against Covid-19.

The certificate system could be used for traveling abroad, as well as to grant access to venues such as restaurants and bars.

It is thought a digital passport could help stimulate an economic recovery as countries prepare to relax public health measures over the coming weeks. The ailing airline industry, hit particularly hard by the spread of the virus last year, is among those calling for governments to usher in legislation that supports Covid vaccine passports.

Physicians and rights groups, however, are deeply concerned.

Dr. Deepti Gurdasani, clinical epidemiologist at Queen Mary University of London, told CNBC via telephone that vaccine passports could inadvertently be used to provide “false assurances” to holidaymakers.

“I can see that they might be useful in the longer term, but I have several concerns about them being considered at this point in time when I think the scientific evidence doesn’t support them. And there are lots of ethical concerns about them that I think are legitimate,” Gurdasani said on Thursday.

Among those scientific concerns, Gurdasani said it is clear the protection coronavirus vaccines offer is “very far” from complete and “we know very little about the effectiveness of vaccines in preventing infection or even asymptomatic disease against several variants circulating in different countries.”

In addition, most countries do not have sufficient access to vaccines in order to immunize their populations, and Gurdasani warned a certificate system akin to vaccine passports would discriminate against those populations “even further.”

Vacation plans

President Joe Biden, on his first full day in office last month, outlined a 200-page national coronavirus pandemic strategy. The plan included a directive for multiple government agencies to “assess the feasibility” of linking Covid shots to international vaccination certificates and producing digital versions of them.

U.K. Prime Minister Boris Johnson has also ordered a review of vaccine passports, while the European Council is due to meet on Thursday to discuss the next steps of the EU’s vaccine rollout and movement across the 27-nation bloc.

Prime Minister Boris Johnson meets Year 11 students during a visit to the Accrington Academy on February 25, 2021 in Lancaster, England. (Photo by Anthony Devlin – WPA Pool/Getty Images)

Anthony Devlin | WPA Pool | Getty Images News | Getty Images

The International Air Travel Association, which represents some 290 airlines from around the world, has seen an increasing number of airlines sign up for its so-called IATA Travel Pass. The initiative is designed to help passengers manage their travel plans and provide airlines and governments with proof that they have been vaccinated or tested for Covid-19.

In a letter seen by EURACTIV, the IATA reportedly called on EU leaders meeting on Thursday to approve vaccine passports and come to an agreement “on the crucial role of secure digital solutions, such as the IATA Travel Pass.” IATA was not immediately available to comment when contacted by CNBC on Thursday.

The World Health Organization is not currently keen on vaccine passports. In a statement published on Jan. 28, WHO officials said governments should “not introduce requirements of proof of vaccination or immunity for international travel as a condition of entry” at present.

The United Nations health agency added: “There are still critical unknowns regarding the efficacy of vaccination in reducing transmission and limited availability of vaccines.”

‘What happens to everyone else?’

A report published by the Economist Intelligence Unit last month projected that the bulk of the adult population of advanced economies would be vaccinated by the middle of next year. In contrast, this timeline extends to early 2023 for many middle-income countries and even as far out as 2024 for some low-income countries.

It underscores the stark divide between high-income and low-income countries when it comes to vaccine access.

“These so-called passports claim they would ensure those who can prove they have coronavirus immunity can start to return to normal life. Which raises the question — what happens to everyone else?” Liberty, the U.K.’s largest civil liberties organization, said in a press release earlier this month.

Airport workers unload a shipment of Covid-19 vaccines from the Covax global Covid-19 vaccination programme, at the Kotoka International Airport in Accra, on February 24, 2021.

NIPAH DENNIS | AFP | Getty Images

“Countless suggestions for immunity passports have circulated. Some suggest their use would be limited to international travel — others are less specific. Meanwhile a variety of technologies have been floated, from QR codes to apps or even physical cards,” the statement continued.

“One thing every suggestion has missed is that it’s impossible to have immunity passports which do not result in human rights abuses.”

Big Brother Watch, a U.K.-based rights and democracy group, has also warned against the use of vaccine passports, citing implications on privacy and free movement, among other issues.

What happens next?

In a report published on Feb. 14 by the Science in Emergencies Tasking: Covid-19 (SET-C) group at the Royal Society, the U.K.’s national academy of sciences, university professors outlined 12 issues that would need to be satisfied in order to deliver a vaccine passport.

These included: accommodating for the differences between vaccines in their effectiveness and changes in efficacy against emerging Covid variants, be internationally standardized, be secure for personal data, meet legal standards and meet ethical standards.

“Understanding what a vaccine passport could be used for is a fundamental question — is it literally a passport to allow international travel or could it be used domestically to allow holders greater freedoms?” Professor Melinda Mills, director of the Leverhulme Centre for Demographic Science at the University of Oxford, said in the report.

“We need a broader discussion about multiple aspects of a vaccine passport, from the science of immunity through to data privacy, technical challenges and the ethics and legality of how it might be used,” Mills said.

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HP (HPQ) earnings Q1 2021

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Enrique Lores, CEO, HP

Scott Mlyn | CNBC

HP shares rose and were halted before the company issued its fiscal first-quarter earnings statement that showed the PC maker performing better than analysts had expected. The company had planned to announce the results after market close. Shares are now up more 3% after trading resumed .

Here’s how the company did:

  • Earnings: 92 cents per share, adjusted, vs. 66 cents per share as expected by analysts, according to Refinitiv.
  • Revenue: $15.65 billion. vs. $14.97 billion as expected by analysts, according to Refinitiv.

Revenue grew 7%, with a 34% increase in consumer devices in the company’s Personal Systems category, according to a statement. In the previous quarter HP’s revenue had declined 1%.

With respect to guidance for the 2021 fiscal year, HP said it sees $3.15 to $3.25 in adjusted earnings per share, well above the $2.65 consensus among analysts polled by Refinitiv.

Execuitives will discuss the results on a conference call at 4:30 Eastern time.

WATCH: HP CEO Enrique Lores reflects on the importance of accountability

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Why stock investors are starting to really worry about rising bond yields

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Federal Reserve Chairman Jerome Powell testifies before the Senate Banking Committee hearing on “The Quarterly CARES Act Report to Congress” on Capitol Hill in Washington, December 1, 2020.

Susan Walsh | Pool | Reuters

Stock investors are trying desperately to interpret what a rise in bond yields means for the stock market.

Since February 10th, 10-year Treasury yields — which are not inflation adjusted — have moved from 1.13% to as high as 1.61%, a rise of 48 basis points, the highest level in a year. (One basis point equals 0.01%)

Fear of inflation is causing investors to speculate the Federal Reserve may have to shift policy sooner than expected, by either reducing bond purchases or even raising rates at some point. That would be a negative for stocks. At last count on Thursday, the Dow was down 500 points.

Peter Tchir from Academy Securities says the recent rise in 10-year bond yields represents a perception about inflation, but not necessarily the reality:  “The rise in 10-year bond yields does not reflect an actual rise in inflation, it reflects that investors anticipate there will be a rise in inflation,” he told me.

Tchir notes that Federal Reserve Chairman Jerome Powell has been pushing back against the idea that over-the-top inflation is coming, noting in his testimony that broad signs of inflation have not been present in the real world, and that if they do occur any such rises would be “transitory.”

Who’s right on inflation?

Bond investors are getting worried about the potential for inflation.  Powell says to stop worrying about it.  Who’s right?

It depends on who you ask, and what you are looking at.

Do we see inflation in the real world?  We do in commodities: Oil is approaching the highest since 2018, for example, and copper is at an almost 10-year high.

But signs of consumer inflation, for example, have been muted, with inflation at or below 2% for many years.

Bulls like Tchir insist that, in this case, the rise in bond yields is not a negative for stocks: “This time the rise in yields is coming from economic growth, stimulus, and infrastructure.  All of that is good for stocks.  That’s why this rise doesn’t scare me too much.”

He says the rise in commodity prices can be easily absorbed, and believes that much of that rise is just a temporary condition reflecting the reopening, and that prices will revert back to “normal” levels over time.

Hans Mikkelsen, credit strategist at Bank of America, is not so sure.  He agrees with Tchir on economic growth, but thinks it will be much stronger than anticipated and that will push inflation up:  “Since the summer of 2020 economists have consistently underestimated economic growth to an extent never seen before. There appears a real risk the Fed is not going to be able to sound dovish much longer and that transition could see wider credit spreads.”

Stocks on edge

The key to the game, Tchir insists, is whether Powell can stick to his guns:  “If the Fed remains committed to keeping short-term yields low, that will give people comfort we will not get a ‘taper tantrum,’ where rates suddenly skyrocket.   Powell has told us he is comfortable with inflation and he is not going to react to short-term movements.  I believe he is going to stick to his guns.”

There’s another issue:  Because stock prices are so high there is no room for error.  Small shifts in yields could cause tech investors in particular to take profits, under the assumption that this is as good as it gets.

Veteran stock commentator Michael Farr from Farr, Miller & Washington has already told clients that even this relatively modest rise in rates is a signal:  “The days of simply piling into the market leaders regardless of valuation may be drawing to a close.  Investors must now recognize that there are alternative opportunities out there, including both heretofore underperforming stocks as well as incrementally more attractive bonds.  A powerful economic rebound combined with rising interest rates and higher inflation, if that indeed transpires, will change the investment backdrop in a meaningful way.”

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