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The World
Ukraine strikes Russian naval vessel in first attack on oil exports: Ukraine attacked the oil export infrastructure that helps fund Moscow’s invasion for the first time, using a drone strike to damage a Russian naval vessel outside the port of Novorossiysk. Ukraine’s security services, in collaboration with the country’s navy, carried out Friday’s sea drone strikes outside the port, according to two Ukrainian sources with knowledge of the operation. Novorossiysk is a major navy base and oil-exporting port located east of Crimea, which Russia annexed in 2014. Videos posted on social media, which could not be verified, showed a naval vessel tilted to its side being towed by tug boats back to port. Separate videos released by Ukraine’s armed forces showed footage from a camera mounted on a sea drone as it approached a vessel at night. (Financial Times)
Majority of Americans oppose more US aid for Ukraine in war with Russia. (CNN)
The U.S. and Europe have a $300 billion problem — what to do with the Russian central bank assets that Western governments froze back in February 2022. Western leaders are under enormous pressure to redeploy these funds for the benefit of Ukraine — but concerns that such a move is legally dubious under both domestic and international law have prevented any action so far. At stake is Ukraine's ability to rebuild its shattered cities and resurrect an economy that Russia's army has destroyed. Meanwhile, the decisions Western leaders make will shape their credibility on the global stage as defenders of the rule of law and democracy — issues at the core of their support for Ukraine in the first place. (Axios Markets)
The clock is ticking down to a deadline for junta leaders in Niger to reinstate the democratically elected president ousted last week in a coup. A group of West African states known as ECOWAS and led by Nigeria said that it would be willing to intervene – including militarily – if the junta doesn’t reinstate President Mohamed Bazoum, who is now under arrest at the presidential palace. Bazoum was elected in 2021 in the country’s first democratic polls. But coup leader General Abdourahamane Tchiani has so far dismissed the threat, calling on supporters to be ready to defend their cause. (GZERO Media)
American travelers are shunning the U.S. for Europe: The allure of international travel has travelers swapping out shorter trips within the U.S. or to some nearby destinations in favor of longer journeys this summer, a pivot that is cutting into revenue for some U.S.-focused airlines. Airline executives say demand hasn’t built to the heights it reached last summer, and they are debating how long the shift might last. To cope, carriers are rejiggering schedules and trying out new routes to better match the emerging patterns. (Wall Street Journal)
California’s iconic Joshua trees are burning. They may be impossible to replace. A light rain fell on the Mojave National Preserve on Wednesday, where firefighters continued their nearly week-long battle against an unusual desert wildfire that is searing through Joshua trees and threatening to irrevocably alter the desert landscape. But in many ways, the damage has already been done. The fire is now the largest to burn through the eastern Mojave in recorded history, surpassing the 71,000-acre Hackberry complex fire of 2005 and singeing a delicate ecosystem already strained by invasive species and human-caused climate change. (Los Angeles Times)
Clinical fields with more women and people of color paid the least: An analysis of nearly 800,000 medical trainees published yesterday in JAMA found that specialties with the most trainees who were women or from groups underrepresented in medicine earned the least in jobs in academic medicine. The highest paychecks went to those in surgical specialties, which had the least racial and gender diversity. The authors found the biggest gap in pay between general pediatrics, where an assistant professor earned $200,860 and a full professor earned $641,300, and neurosurgery, where an assistant professor earned $278,300 and a full professor earned $831,900 annually. The authors suggest that more investigation is needed to understand the discrimination, attrition, and “specialty culture” that may be impeding more diversity in higher-paying fields. (STAT News)
Clean energy investment is supercharging demand for green metals: The surge in global investment into clean technologies is bolstering demand for the commodities needed to build electric vehicles, renewable power tech, and energy storage. Green metals — aluminum, copper, nickel, lithium, and cobalt — are poised to benefit from the trend throughout the decade and likely beyond, according to Goldman Sachs Research. Adding to the momentum now is the rise in strategic industrial competition between China, Europe, and the U.S. as they race to attract clean-tech capital, with policy support in one region — such as the Inflation Reduction Act in the U.S. — triggering additional subsidies elsewhere. Should policy continue to converge around a “net-zero emissions” path, the world would need an additional 54% of copper by 2030 on top of our analysts' base case, an amount equivalent to the last 10 years' aggregate copper mine supply. (Goldman Sachs)
Economy
Soft US Payrolls Growth Offset by Wage Gains, Unemployment Drop: US adds 187,000 jobs, trailing economist estimates; unemployment rate drops to 3.5% while wage gains heat up. Labor participation rate unchanged at 62.6%. (Bloomberg)
September is traditionally the weakest month for U.S. stocks, and there are warning signs that this year’s rally could lose steam. The 10-year Treasury yield is at its highest level in nearly a year, making it less attractive to hold stocks instead of bonds. On the borrowing front, some worry that the repercussions of high interest rates have yet to take full effect in the economy. On top of that, valuations are above their recent norms, which can make a decline more severe. In U.S. trading Thursday, the S&P 500 fell 0.3%, the Dow industrials 0.2% and the Nasdaq Composite 0.1%. (Wall Street Journal)
The Bank of England raised its main interest rate Thursday to a fresh 15-year high and indicated it would stay high for some time to bring down persistently high inflation — another potential blow for those seeing their rents and mortgages rise during a cost-of-living crisis. The widely anticipated quarter-percentage point increase, to 5.25%, was the central bank’s 14th hike in a row. (Associated Press)
Why the U.K.'s high inflation has global implications: A “confluence of shocks” ranging from constrained labor supply to an energy supply shock have pushed inflation levels in the U.K. to their highest levels in years, says Jari Stehn, chief European economist in Goldman Sachs Research, on the latest episode of Goldman Sachs Exchanges. So is the country's latest inflation data — which came in lower than expected — a sign that inflation is starting to ease? While it's likely “the start of a more pronounced disinflation process,” Stehn says, “I would say the composition remains worrying.” Energy and core goods prices are starting to ease, but still-strong services and wage growth are likely to keep inflation close to 6% by the end of the year — which is well above levels in the U.S. and the Euro area, he says. The U.K.'s inflation problem has spillover effects on other global bond markets, says George Cole, head of European rates strategy of Goldman Sachs Research. “The U.K. does stand out as having among the worst inflation problems in the G10,” he tells Exchanges host Allison Nathan. “If we do indeed find that inflation problem is lessening, it's coming under control — both by the central bank's action and then finally through some of the disinflation that's been long awaited in energy and food prices and so on — I think that will go some ways to calm worries in other markets as well about runaway inflation.” (Goldman Sachs)
Germany has been in a technical recession since the beginning of 2023. It currently has the second-lowest growth rate among EU countries, and with the decline being driven by lackluster domestic demand combined with depressed demand for exports in key markets like China, that doesn’t look set to change anytime soon. The once-strong manufacturing sector is being crippled by high energy prices together with high labor costs, which is pushing companies to relocate overseas in droves. After two consecutive quarters of decline, Eurasia Group analyst Jan Techau, the former head of speechwriting in Defense Minister Boris Pistorius’ office, worries that the downswing could be structural rather than just cyclical. “Germany has missed the boat on future technologies, such as AI and genetic engineering. The aging society suffers from bad demographics and a lack of skilled labor … it is clear that this country, after almost two decades of carefree living, has big economic reform, if not upheaval, in front of it.” (GZERO Media)
Oil prices were on track for a sixth week of gains after Saudi Arabia and Russia pledged to cut output through September. Saudi Arabia extended a voluntary oil production cut of 1 million barrels per day to the end of September, while Russia has also elected to reduce its oil exports by 300,000 bpd next month. (Reuters)
Technology
Apple Sales Fall While Profit Rises on Services Shift: Apple’s revenues fell 1%, but growth in its high-margin internet services business lifted the company’s profit 2%. In the fiscal third quarter ended July 1, Apple said its revenue fell to $81.8 billion from $82.96 billion in the same period a year ago as sales of its largest hardware products—iPhones, iPads and Macs—slowed across the board. The only exception was the product category that includes its Apple Watch and AirPod products, which grew 2% to $8.28 billion. (The Information)
Apple now has over one billion paying subscribers: Tim Cook’s push to expand from hardware to subscription services seems to be paying off. (Quartz)
What’s next for China’s digital currency? China’s digital yuan was seemingly born out of a desire to centralize a tech giant-dominated payment system. According to its central bank, the digital currency, also known as the e-CNY, is both a risk-free alternative to commercial platforms and a replacement for physical cash, which is becoming obsolete. Almost three years into the pilot, though, it seems the government is still struggling to find compelling applications for it, and adoption has been minimal. Now the goal may be shifting. China appears to be charging ahead with plans to use the e-CNY outside its borders, for international trade. (MIT Technology Review)
Why ChatGPT is getting dumber at basic math: Artificial-intelligence tools have generated fear that they will inexorably improve and threaten humanity, but new research has revealed a fundamental challenge in developing AI: ChatGPT has become worse at performing certain basic math operations. Researchers at Stanford University and the University of California, Berkeley, said the deterioration is an example of a phenomenon known to AI developers as drift, where attempts to improve one part of the enormously complex AI models make other parts of the models perform worse. (Wall Street Journal)
Smart Links
Poll: More Americans support striking actors and writers than studios. (Los Angeles Times)
Meta’s Ray-Ban smart glasses struggle to catch on. (Wall Street Journal)
Disney’s ESPN is looking for potential strategic partners as it plots its streaming future. (Wall Street Journal)
Adidas’s decision to sell Yeezys again has paid off. (Wall Street Journal)
Google is making it easier to remove your private info from Search. (Engadget)