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Paul Krugman warns of a possible global recession this year or in 2020

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Lecture by Nobel Prize winner economist Paul Krugman in Athens, Greece on Friday, April 17, 2015.

Panayiotis Tzamaros | ullstein bild via Getty Images

Lecture by Nobel Prize winner economist Paul Krugman in Athens, Greece on Friday, April 17, 2015.

There is a decent chance the world economy is headed for a recession in 2019, according to Nobel Prize-winning economist Paul Krugman.

Market participants are increasingly worried about the prospect of a serious economic downturn over the coming months, with a long-running U.S.-China trade war souring business and consumer sentiment.

Most economists, as well as some the world’s business elite, agree that economic growth is slowing but policymakers have expressed some hope for a soft landing rather than an outright recession.

Speaking at the World Government Summit in Dubai, United Arab Emirates on Sunday, Paul Krugman said there are good reasons to be skeptical about this scenario.

When asked whether investors should expect to see a recession over the coming months, Krugman replied: “I think that there is a quite good chance that we will have a recession late this year (or) next year.”

Paul Krugman is a renowned American economist and professor emeritus of Princeton University’s Woodrow Wilson School. He won the Nobel Prize in 2008 for his work on economic geography and identifying international trade patterns.

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Netflix is falling on concerns of competition from Disney+

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Netflix tumbled more than 4% on Friday after Disney unveiled its Disney+ streaming service and pricing for the first time. The drop shed about $7 billion from Netflix’s market value, though it is up about 14% over the past 12 months.

While some analysts seem less concerned that competition from Disney+ will be a significant hit to Netflix’s business, investors may still be uneasy with the entrance of a cheaper service with a huge library of time-tested content. Disney+ subscriptions will give consumers access to exclusive content for $6.99 per month or $69.99 for a full year, compared with Netflix’s standard plan offering of $13 per month, recently raised from $11. Shares of Disney soared 9% Friday.

Disney+ and Netflix could certainly coexist in consumers’ library of streaming services. Disney CEO Bob Iger made clear that the new service is aimed at kids, saying that other offerings like sports and adult content are available on their other services like ESPN+ and Hulu.

“Bottom-line, Disney+ features family content, while NFLX offers a much broader range of content with the majority of the most-searched content on the platform.” analysts from SunTrust wrote in a note Friday. “As such, we do not view Disney+ as a strong alternative to NFLX.”

The analysts added that in a recent survey conducted by the firm, only 8% of existing Netflix subscribers who responded expect to switch to Disney+, while 59% expected to continue to subscribe only to Netflix. Twenty-four percent of respondents expected to subscribe to both services, according to the survey.

Disney+ could actually be a positive for Netflix, the analysts wrote, since the entrance of a new streaming player could further “accelerate cord-cutting.”

Still, other analysts see a significant threat in Disney’s offering. Mark Mahaney of RBC Capital Markets told CNBC on Friday that Disney has a “major advantage” over Netflix because it does not need to spend much to build up its already-full content library.

“There is going to be pressure here on Netflix to continue to differentiate their service with more and more original content spend, that’s the major advantage … that Disney has — they’ve got a back catalog,” he said. Still, Mahaney said he still believes consumers will be willing to sign up for both services if they’re both robust.

“We did our survey work here, we think the vast majority of consumers are perfectly willing to sign up for more than one service,” Mahaney said.

— CNBC’s
Eustance Huang
contributed to this report.

Disclosure: Comcast, which owns CNBC parent NBCUniversal, is a co-owner of Hulu.

Subscribe to CNBC on YouTube.

Watch: Disney’s Bob Iger: I believe Disney+ is going to be successful

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a race ‘America must win’

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President Donald Trump and the FCC on Friday announced several initiatives to spur 5G network growth in the U.S.

“The race to 5G is on and America must win,” President Trump said, noting that 92 5G markets will be ready by the end of the year, outpacing South Korea, which is on pace to have 48 markets live by the end of 2019.

“It’s race our great companies are now involved in,” President Trump said. “According to some estimates, the wireless industry plans to invest $275 billion in 5G networks, creating 3 million American jobs quickly, and adding $500 billion to our economy.”

5G is the next-generation of wireless network that will enable faster data speeds. Unlike 4G LTE, which mainly targeted mobile phones, tablets and computers, 5G is also expected to enable more reliable connections on self-driving vehicles that will need a constant data connection, and smart cities that use “Internet of Things” devices, such as connected street lamps, traffic lights and more.

AT&T and Verizon already have fledgling 5G networks in the United States, and T-Mobile and Sprint plan to activate their networks in 2019. Only one phone from Motorola, offered on Verizon, supports 5G in the U.S. right now.

“To accelerate and incentivize these investments, my administration is freeing up as much wireless spectrum as needed,” President Trump said. “[We’re] removing regularity barriers to the buildout of networks.The FCC is taking very bold action, bolder than they’ve ever taken before, to make wireless spectrum available.

Spectrum is the airwaves networks use to provide internet to devices.

President Trump’s comments come in tandem with announcements the FCC made on Friday. The FCC said that starting on Dec. 10, it will offer “the largest spectrum auction in our nation’s history,” allow carriers bid on 3,400MHz of new spectrum in the Upper 37GHz, 39GHz and 47GHz spectrum bands. The additional spectrum would “promote the development of 5G, the Internet of Things, and other advanced spectrum-based services,” the FCC said.

Additionally, the FCC proposed new new rules that allow “Fixed Satellite Service operators to provide faster, more advanced services to their customers” using 50GHz spectrum. It also said that current rules “impair the ability of users to deploy small, next-generation networking devices on their own property,” particularly in rural areas, and proposed changes that would allow people to install” “hub and relay antennas” on their property to help spur 5G networks.

“The FCC aims to create a $20.4 billion Rural Digital Opportunity fund,” to “extend high-speed broadband to up to 4 million homes and high-speed businesses in rural America,” FCC chairman Ajit Pai said.

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Jamie Dimon says the US economic expansion ‘could go on for years’

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“It could go on for years,” he added. “There’s no law that says it has to stop. We do make lists, and look at all the other things: geopolitical issues, lower liquidity. There may be a confluence of events that somehow causes a recession, but it may not be in 2019, 2020, 2021.”

Fears that a recession is on the horizon spiked last month, when bond markets gave signals that economic confidence is dimming the further you look out. A segment of the yield curve inverted, meaning that short-term debt yielded more than longer-term bonds, a phenomenon which often precedes recessions.

But that signal isn’t a perfect predictor, and Federal Reserve officials recently left open the possibility that improving economic conditions could warrant a rate increase.

If a recession did happen in the short term, the most likely cause would be a breakdown in trade negotiations between the U.S. and China, Dimon said. But overall, the game of recession prediction is fool’s play, he said.

“Some confluence of events at some point in the future will cause a recession,” Dimon told reporters during a separate media call. “I don’t know what those are, nobody knows what those are, and nobody will ever know what they are. If you knew what they were, you would be unbelievably rich.”

WATCH: Jamie Dimon weighs in on JPM’s minimum wage

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