PETER SCHIFF: LATEST FOMC MINUTES ACTUALLY SAY NOTHING ABOUT RATES INCREASE

According to Bloomberg, market players believe there is a 74% chance that the Fed will hike rates at its next week's meeting, as they refer to hawkish comments by the policy-makers, as well as the most recent FOMC minutes. The 74%, however, does not include Peter Schiff, the head of Euro Pacific Capital.

In an interview below he is sharing his view on how the Fed might proceed with raising borrowing costs and the talk largely repeats a series of earlier attacks against the central bank, which he has criticized for mismanaging monetary policy.

Schiff suggests that in the minutes from the FOMC October meeting, the committee only said that a majority of the members believe that the conditions may be right for hiking in December, but they are not sure, as it will depend on the data.

He supposes the 0.25% increase might come, but is still inclined to believe it won't happen, as there can be a market selloff, or jobs data may disappoint, or October jobs data may be revised down... But anyhow, if the officials were so confident the economy is robust, why would they reassure the hikes would be tiny and gradual?

As for the impact on the economy, Schiff believes that a 4% increase won't come soon. Moreover, long before the Fed gets to just 1%, the economy will be back in official recession or close enough to it, that the central bank will again have to stimulate...

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APPLE KEEPS BETTING ON ASIA: THE TECH BEHEMOTH PLANS TO LAUNCH APPLE PAY IN CHINA BY FEBRUARY

Apple Inc. is planning to launch its new Apple Pay electronic-payment service in China by early February, says the Wall Street Journal referring to people familiar with the matter. But the U.S. tech giant risks being eaten by local sharks.

Apple's stock was down 1.3% at $117.75 as of 7:59 pm EST on November 23.

The move will bring Apple to a vibrant but highly competitive market for digital money. The tech giant has struck deals recently with China’s big four state-run banks, the WSJ said. The agreements will allow potential Apple Pay users to connect the service to their local bank accounts.

The move could still face regulatory obstacles in China, where banking and e-commerce are monitored by a number of regulators. But the Cali-based behemoth still expects to start its service before China’s Spring Festival holiday on February 8.

It is also unclear how much Apple would charge for purchases carried out through Apple Pay. In the U.S., Apple gets 0.15% of all credit card transactions and 0.5 cents per debit transaction.

The people familiar with the matter said to the WSJ that the amount Apple would make off such transactions has been an impediment in negotiations.

Apple Pay works on the latest iPhone models - the iPhone 6 and iPhone 6S. It is based on near-field communication technology, which allows users to tap their devices on readers at store sales counters and complete purchases by scanning their fingerprints.

The most popular Apple product in China is iPhone. The company’s sales to greater China, which includes Hong Kong and Taiwan, rose 99% to $12.5 billion in the quarter ended September 26.

But obviously, Tim Cook thinks the Chinese will find his e-payment system as enchanting as his phones.

Local sharks

The biggest obstacle is not regulators, however. Apple Pay is trying to enter the market where electronic payments are blooming and which is also dominated by its rivals.

State-run China UnionPay Co. holds a monopoly on credit- and debit-card payment processing, effectively pushing aside MasterCard and Visa. In the private sector, electronic payments are dominated by Alipay, a service run by an affiliate of Alibaba Group Holding, and WeChat, a chat-and-services app run by Tencent Holdings.

Moreover, one of Apple's fiercest rivals Samsung, is set to launch its payment platform in the UK, China and Spain by the first half of 2016, while an imminent LG G Pay app will debut in December.

For comparison, Android Pay and Apple Pay are based on NFC-based technologies while Samsung Pay prefers its magnetic secure transmission (MST) technology. But LG G Pay hasn’t yet decided what it will use. LG, however, is likely to use a highly flexible technology for its payment platform, said Tech Times. The competition will only grow more intense, as polls show people still are reluctant to drop conventional payment methods.

According to a survey from Accenture, 67% of people use cash, 59% of people use debit cards and 50% use credit. Apple Pay usage? 8%. A September survey of 3,000 credit card users by Phoenix Marketing International shows 14% of credit card users adopting Apple Pay.

However, as Samantha Sharf from Forbes noted, it is impossible to ignore the 48 million people who bought iPhones – largely the 6 – in Q4. We can’t know precisely what convinced they to buy but the 1% bump in sales from Q3 presents an opportunity for Apple Pay. So, a success in China is quite likely.

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THE BANK OF CANADA IS READY TO NEGATIVE INTEREST RATES

Recently Stephen Poloz said that THE BANK OF CANADA IS READY TO NEGATIVE INTEREST RATES Canadian central bank expands its emergency kit to defend the economy against major shocks - it can use lower interest rates in the event of a crisis. But Governor stressed that it does not mean the bank is preparing to use any of these measures (although the collapse in the price of oil and other commodities). “We don’t need unconventional policies now, and we don’t expect to use them. However, it’s prudent to be prepared for every eventuality,” Governor Poloz said yesterday.

If the crisis begins, the Bank could implement unconventional monetary policy measures: for example, stimulating the economy through quantitative easing or moving its policy rate below zero. Furthermore, the Bank would use whatever combination of these measures it judged appropriate under the circumstances. “Regardless of the situation, the Bank will keep its primary focus on achieving the inflation target,” Governor Poloz said.

And all this is taking place just days before the Federal Reserve looks likely to raise its key interest rate next week for the first time since the Great Recession. Most of the world’s central banks, including Canada’s, have been cutting rates. A Fed hike will mark a major divergence in global interest rates that is already sending tremors through the world’s stock, bond, commodity and currency markets. Canadian dollar fell to 1.3623 against US dollar yesterday, but now USD/CAD trades near 1.359.

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