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Daily briefing - 05 September 2019

Warren Buffett has been making piles of money for years by backing the biggest banks and cards networks in the US. What's so hard about that, said Masa Son, the Japanese mystic who has persuaded the world's mightiest monarchs to sink billions into businesses that rent cars and cubicles by the hour. "One could argue that the world's greatest financial performance artist is no longer in his most prolific form after a string of masterworks dabbling in mediums like WeWork, Uber and cryptocurrencies," notes Dealbreaker. "But that would be a dumb argument because Masa Son's art is not just about investing absurd sums at ludicrous valuations, it's also about losing tons of money in the long term on those investments." Softbank's $7.65 billion investment is currently worth about $7 billion, and there's still WeWork to come this year as investment bankers thrust another turkey into the maw of the markets. "Half a billion is a pittance compared to the kind of money that Masa usually uses in his work," notes Dealbreaker, "but is it not thrilling to watch any artist confront the organic evolution of his art?" Softbank actually makes some money by investing in formidable businesses such as Oak North, while shredding those same investments via Uber and WeWork.

The chief executives of Deutsche Bank and UBS yesterday warned about the danger signals for banks as the ECB prepares to increase negative interest rates further because it doesn't know what else to do. We're now closing in on almost five years of negative rates and Sewing is close to snapping, now that he's promised to invest big chunks of his own salary in Deutsche shares, a strategy that would get most financial analysts fired. The ears of sympathetic listeners all across the world tuned in as Christian Sewing explained, not unreasonably, that after half a decade of negative rates, central bankers have no more tools left. "What's really worrisome: central banks have hardly any tools left to effectively mitigate a real economic crisis," Sewing said, according to Bloomberg. "They have already cranked open the money tap - most of all the European Central Bank." The UBS CEO Sergio Ermotti "struck a similar note, arguing negative rates are hurting social systems and savings rates". Ermotti said negative interest rates have created an "absurd situation" in which banks don't want to hold deposits. The day the bank doesn't want your money is surely worth examining. Both chief executives point to the positive impact this has on state borrowings: this is after all a political strategy by the ECB.

As we predicted, RuPay is now planning to issue a credit card through State Bank of India. "SBI Card has announced that it is going to launch RuPay credit cards soon," writes Financial Express. "The move will give a boost to the homegrown payment network in this fast-growing segment. RuPay, developed by the National Payments Corporation of India (NPCI) -- an umbrella organization for operating retail payments and settlement systems, is the first-of-its-kind domestic debit and credit card payment network of India. Currently, in India, the credit card segment is dominated by the US-based payment gateways like Visa and MasterCard." RuPay partners with international networks including Discover, JCB and Union Pay International for international acceptance of the card. (SBI Card is a joint venture between State Bank of India and the Carlyle Group.) What kind of benefits will a RuPay credit card have for small businesses - and will it provide credit that would otherwise flow from Alipay or Amazon? This is one to watch.

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