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Morgan Stanley warns tariff escalation remains a ‘meaningful risk’

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President Donald Trump meets with China’s President Xi Jinping at the start of their bilateral meeting at the G20 leaders summit in Osaka, Japan, June 29, 2019.

Kevin Lemarque | Reuters

Morgan Stanley says President Donald Trump’s partial trade deal with China is an “uncertain” arrangement at best and there does not appear to be viable path to reduce existing tariffs at the moment. 

The U.S. agreed to suspend a tariff increase on at least $250 billion in Chinese goods to 30% from 25% set for Tuesday, but a tariff hike implemented in September was not rolled back and plans for another hike just before the the Christmas holiday on Dec. 15 remain in place.

Without a durable dispute settlement mechanism in place, another round of tariff increases cannot be ruled out, 
according to Morgan Stanley. 

“There is not yet a viable path to existing tariffs declining, and tariff escalation remains a meaningful risk,” the bank said in a note. “Thus, we do not yet expect a meaningful rebound in corporate behavior that would drive global growth expectations higher.”

The president said that the first phase of the trade deal will be written over the next three weeks. As part of phase one, China will purchase between $40 billion and $50 billion in U.S. agricultural products.

Evercore wrote that the first phase of the U.S.-China trade deal doesn’t clear the air for global corporations to decide on where to invest, produce hire or source. If the U.S. maintains a “stop the China rise” mentality perspective, the trade war will continue, the firm wrote.

“Trump’s statement that ‘We are near the end of the trade war’ is not plausible to us,” Evercore wrote in a note. “We do not expect tariff cuts in 2020 – but are ready to be favorably surprised.

“And as long as such punitive tariffs remain, we would describe US-China economic relations as bad, not good.”

Goldman Sachs sees a 60% chance that the announced 15% tariffs will take effect, but expects a delay until early 2020 as opposed to the current deadline of Dec. 15. Evercore said it expects a delay and no additional tariff hikes in 2020.

In the past year, the U.S. has set tariffs on billions of dollars worth of Chinese products, and China has retaliated with its own levies, igniting concern over slower global economic growth and weaker corporate earnings.

JP Morgan said the first phase of the deal is a positive development after months of trade escalation, but that the outcome is not a surprise for the market. It expects that US-China tension could escalate again, especially during the 2020 presidential election.

“Investors had high hopes for some form of mini-deal in the weeks before the meeting, and Friday’s announcement has at least been partially, if not fully, priced in,” the firm wrote.

Macro impact of the mini deal removes some downside risk in the next quarters, but does not affect the economic slowdown trend, JP Morgan wrote. The bank’s growth forecasts are 6.2% in 2019 and 5.9% in 2020.

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Hacked Disney Plus accounts said to be on sale, according to reports

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In this photo illustration, the Disney + logo is displayed on the screen of an Apple MacBook Pro computer on November 08, 2019 in Paris, France.

Chesnot | Getty Images

Thousands of Disney+ user accounts have been stolen by hackers and put up for sale on the dark web, according to multiple reports.

Disney+ is the new subscription-based streaming service from Disney that was officially launched last Tuesday.

Just hours after the service was rolled out, hackers hijacked user accounts and were either offering them for free on hacking forums or selling them for prices between $3 to $11, according to investigations by news site ZDNet.

Users said hackers were accessing their Disney+ accounts, logging them out of their devices and then changing the email and password associated with that account, according to ZDNet.

The BBC also reported that it found hacked customer accounts for sale on the dark web.

A spokesperson for Disney told CNBC the company “takes the privacy and security of our users’ data very seriously and there is no indication of a security breach on Disney+.”

It is likely that some users may have used the same email and password for multiple sites, including Disney+, and their credentials could’ve been stolen during previous security breaches at other companies.

But, ZDNet reported users who have used unique passwords also had their accounts compromised.

Disney+ is currently available in a few selected countries including the United States and Canada. It touts an expansive library of content from Disney shows and movies, Pixar, Marvel, Lucasfilm as well as new original shows being produced for the service, such as the “Star Wars” spin-off series “The Mandalorian.”

It is the latest addition in an increasingly crowded streaming landscape, with the likes of Netflix, Hulu, Amazon Prime, and others.

Read ZDNet’s full investigation about stolen Disney+ accounts here.

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A.I. helps in early detection of ovarian cancer, says CEO of health tech firm

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Artificial Intelligence (AI) is helping oncologists in the U.K. detect ovarian cancer in patients much earlier than was previously possible, according to the CEO of TPP, a company that provides health-care related software to doctors and nurses.

“So, our AI can now spot (ovarian cancer) in more than 50% of cases up to two years before the doctor,” Frank Hester told CNBC’s Christine Tan at the East Tech West conference in the Nansha district of Guangzhou, China. “The average doctor in a 40-year career sees four or five cases of ovarian cancer.”

By the time a woman finds out she has ovarian cancer, it is usually too late, but late detection can now be eliminated thanks to advancement in health care technology, according to Hester, whose company works with the U.K.’s National Health Service (NHS) which provides majority of health care in England.

TPP has access to more than 50 million medical records of NHS patients. Using that data, the company has built AI programs and the first of it focuses on early detection of ovarian cancer, Hester said.

The Horsforth-based company shares patients’ medical records electronically with doctors and nurses, Hester said, highlighting that they have checks and balances in place to cover for cyber security breaches.

“We pay companies to attack us every year. We actually pay… in every country that we’re working in,” Hester said, referring to ethical hackers — sometimes called “white hats” — who are hired by companies to help boost their defenses against hackers and keep their networks secure.

Countries around the world are relying on digital medical records of patients and using AI in health care for early detection and accuracy of diagnosis, or for administrative tasks such as scheduling patients appointments and staffing tasks, according to a global study done in Singapore by Royal Philips’ annual Future Health Index.

According to the study, health care professionals in China are significantly more likely to recommend patients use digital health technology or mobile health apps to track key health indicators.

“China is absolutely leading the world in AI,” said Hester. “I’ve seen a change over the past 5 years… it’s almost the policy now to do business with foreigners, which is great,” Hester said.

TPP’s health care technology has been used in China since 2013, he added.

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US, China could sign phase one trade deal before Christmas, Pimco says

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John Studzinski, managing director and vice chairman of Pimco, speaks with CNBC’s Geoff at the East Tech West conference in Nansha, Guangzhou.

Dave Zhong | Getty Images for CNBC

A “phase one” trade deal between the U.S. and China could be finalized and signed before Christmas this year, according to an executive from bond investment giant Pimco.

Optimism that such an agreement could be reached between the two countries faded in recent days following reports that Washington and Beijing remained far apart on several issues. A Chinese government source told CNBC’s Eunice Yoon on Monday that China is troubled after U.S. President Donald Trump said he hasn’t agreed to roll back tariffs.

But John Studzinski, managing director and vice chairman of Pimco, said on Tuesday that he still thinks the two sides would reach a partial deal.

“There are obviously issues remaining about agricultural purchase targets, forced technology (transfer) and broader enforcement issues. But I think the view would be to try to resolve something … by the beginning of December and sign it before Christmas,” he told CNBC’s Geoff Cutmore at the East Tech West conference in the Nansha district of Guangzhou city, China.

“And I think Trump sees this as important. He’s gotten a lot of endorsement from American CEOs who want to see some type of stabilization and anchor in this broader relationship and trade dialogue between China and America,” he added.

US and China are ‘complementary’

The two largest economies in the world are in the second year of a trade war that has hurt investor and business sentiment, and slowed down global economic activity. Both the U.S. and China have slapped tariffs worth billions of dollars on each other’s products — with potentially more to come if talks between them break down.

But reaching a “phase one” deal will not resolve all issues between the two economic giants, noted Studzinski.

“Whether we like it or not, we are all witnessing a major event — the first major event, really — since World War II with the need for these two formidable cultures, countries, independent countries to rethink their relationship,” he said. “The world will be a much stronger and stable place if they can find ways to align their interests, rather than trying to compete.”

Studzinski explained that in many ways, the U.S. and China are “complementary.”

Citing the technology sector as an example, he said the U.S. has had three to four generations of Silicon Valley-trained technologists, while China has “fantastic” expertise and acumen to manufacture “very complicated” components. Those two areas of expertise would work well together to benefit economies worldwide, he added.

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