'Cooling Economy'
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The World
Economy Shows Signs of Cooling as Bank Troubles Spread: A drop in retail sales and easing price pressures in February offered preliminary signs of a cooling economy as the spread of financial turmoil on Wall Street called into question whether the Federal Reserve would continue raising interest rates. (Wall Street Journal)
Investors have rapidly increased bets that the Fed will cut US interest rates this year in a frenzied day of trading that strained the functioning of markets. The turbulence was such that the main US futures exchange temporarily halted trading in certain interest rate contracts. Traders backing away from risk widened the gap between prices offered and bid for US Treasury securities. Deals in the $22tn Treasury market — the deepest and most liquid in the world — took longer and were more expensive to execute. The market moves came a week before the Fed is scheduled to decide on interest rate levels at its next monetary policy meeting after months of increases in the past year. (Financial Times)
Tons of uranium missing from Libyan site, IAEA tells member states: U.N. nuclear watchdog inspectors have found that roughly 2.5 tons of natural uranium have gone missing from a Libyan site that is not under government control, the watchdog told member states in a statement seen by Reuters. The finding is the result of an inspection originally planned for last year that "had to be postponed because of the security situation in the region" and was finally carried out on Tuesday, according to the confidential statement by International Atomic Energy Agency chief Rafael Grossi. (Reuters)
North Korea fired a suspected ICBM into the sea between the Korean Peninsula and Japan on Thursday, hours before South Korea's president was due to fly to Tokyo for a summit expected to discuss ways to counter the nuclear-armed North. North Korea has conducted multiple missile launches this week amid ongoing joint South Korea-U.S. military drills that Pyongyang condemns as hostile actions. (Nikkei Asia Review)
Leaders of Japan and South Korea hold first summit in 12 years: South Korean President Yoon Suk Yeol will meet with Japanese Prime Minister Fumio Kishida on Thursday in Tokyo, the first such summit in 12 years as the two biggest U.S. allies in Asia make cautious steps toward rapprochement after years of bitter lows in the relationship. The summit is a reflection of South Korea’s new priority of overcoming historical differences and strengthening security and diplomatic cooperation with Japan and the United States as the three seek to unite against increasing threats from North Korea and China. (Washington Post)
Mexican President Andres Manuel Lopez Obrador proposed putting an end to medicinal use of fentanyl. Critics of Mexico's counter-narcotics strategy say Lopez Obrador has not done enough to prevent trafficking of fentanyl, and some Republican lawmakers have urged Washington to authorize the use of military force to bring Mexico's drug gangs to heel. (Reuters)
Massive three-day LAUSD teacher and staff strike set for Tuesday, closing all schools: A three-day strike that would shut down Los Angeles public schools is scheduled to start Tuesday, union leaders announced during a massive downtown rally by the district’s two largest employee groups. L.A. schools Supt. Alberto Carvalho on Wednesday urged union leadership to negotiate “around the clock” to avert the strike, which he said would further harm more than 420,000 students trying to recover academically and emotionally from the COVID-19 pandemic, which forced them into remote learning for more than year. Union leaders responded that they are looking out for the long-term interest of students as well as workers through their demands for higher pay and improved working and learning conditions. (Los Angeles Times)
U.S. Airlines Expect Strong Demand as Travelers Find Postpandemic Routines: Executives from major U.S. airlines said they were optimistic about travel demand for the rest of the year, shaking off worries about creeping operating costs and fears of ebbing demand. Consumers’ habits are settling into postpandemic patterns, but executives say demand is still strong from leisure travelers and those mixing business with vacation, known as “bleisure.” (Wall Street Journal)
Hundreds of travelers stranded at Hong Kong airport amid computer breakdown: Check-in services at aisles primarily serving flag carrier Cathay Pacific affected. (South China Morning Post)
International Travel Bounced Back Strongly in 2022. (Statista)
Economy
Oil caught up in banking fears as US crude drops below $70 a barrel: Oil prices have tumbled to their lowest levels in more than a year as crises in the banking sector unsettled financial markets and stoked fears for the broader economy. Commodity traders fretted that contagion in financial markets would feed into the physical economy, cutting consumer spending and knocking oil demand. “This is related to concerns about the economic growth outlook following from the stress you see on the financial sector,” said Greg Sharenow, a portfolio manager at Pimco. “That has been the catalyst and the spark.” (Financial Times)
G-7 Opposes Lowering Russian Crude Price Cap From $60 a Barrel. (Wall Street Journal)
How Goldman’s Plan to Shore Up Silicon Valley Bank Crumbled: Silicon Valley Bank executives went to Goldman Sachs in late February looking for advice: They needed to raise money but weren’t exactly sure how to do it. The conversations—held over the course of about 10 days—culminated in a March 8 announcement of a nearly $2 billion loss and a planned stock sale that badly spooked investors. SVB Financial Group shares tanked the next morning. Startup and venture-capital customers with big uninsured balances panicked, attempting to pull $42 billion out of the bank in a single day. While few could have predicted the market’s violent reaction to the SVB disclosures, Goldman’s plan for the bank had a fatal flaw. It underestimated the danger that a deluge of bad news could spark a crisis of confidence, a development that can quickly fell a bank. (Wall Street Journal)
SVB’s $9.5 Billion Venture Unit Included Large Investments in Andreessen, Sequoia. (The Information)
Credit Suisse said it would exercise its option to raise as much as 50 billion Swiss francs, equivalent to $53.7 billion, from the Swiss National Bank in a bid to stanch liquidity concerns. The firm, based in Zurich, called the decision a “decisive action to pre-emptively strengthen its liquidity.” Credit Suisse added that the move “would support Credit Suisse’s core businesses and clients as Credit Suisse takes the necessary steps to create a simpler and more focused bank built around client needs.” (Wall Street Journal)
Plan to Allow 69-Hour Work Week Upsets Gen Zs, Millennials in South Korea: South Korea will reconsider its plan to raise the maximum weekly work hours to 69 after its “MZ Generation” of millennials and Generation Z members balked at the idea many saw as destroying a healthy work-life balance. The office of President Yoon Suk Yeol instructed relevant agencies to reconsider plans to revise the current cap of 52 hours and “communicate better with the public, especially with Generation Z and millennials,” press secretary Kim Eun-hye said. (Bloomberg)
Technology
The Biden administration is demanding that TikTok’s Chinese owners sell their stakes in the video-sharing app or face a possible U.S. ban of the app, according to people familiar with the matter. The move represents a major shift in policy on the part of the administration, which has been under fire from some Republicans who say it hasn’t taken a tough enough stance to address the perceived security threat from TikTok, owned by Beijing-based ByteDance Ltd. (Wall Street Journal)
Snap and Meta stocks rise on report that Biden may ban TikTok. (CNBC)
Interview with OpenAI’s Greg Brockman: GPT-4 isn’t perfect, but neither are you: To get a better handle on GPT-4’s development cycle and its capabilities, as well as its limitations, TechCrunch spoke with Greg Brockman, one of the co-founders of OpenAI and its president. Asked to compare GPT-4 to GPT-3, Brockman had one word: Different. “It’s just different,” he told TechCrunch. “There’s still a lot of problems and mistakes that [the model] makes … but you can really see the jump in skill in things like calculus or law, where it went from being really bad at certain domains to actually quite good relative to humans.” (TechCrunch)
LinkedIn adds AI-powered writing suggestions, initially for writing profiles, using OpenAI's GPT-4, and for recruiters writing job descriptions, using GPT-3.5. (TechCrunch)
OpenAI partners with Stripe to take payments and subscriptions for ChatGPT and DALL-E; Stripe plans to integrate OpenAI's tools into its products and services. (Bloomberg)
Digital payments firm Stripe on Wednesday announced that it has raised more than $6.5 billion at a $50 billion valuation. This is much more than the company had expected to raise, albeit at a lower price. All proceeds will be used to help Stripe employees cover tax obligations related to the pending expiration of restricted stock units, plus to fund a new stock tender offer for current and former employees. No proceeds will be used to fund Stripe's own tax obligations tied to the RSUs. The stock tender is voluntary, with employees eligible to sell as few or as many vested shares as they want (i.e. zero-100%). Stripe had considered letting employees get liquidity via a public stock offering, but ultimately decided that the private transaction would be faster and give the company more flexibility. (Axios)
Smart Links
Branson's Virgin Orbit to pause ops, furlough nearly all employees. (Reuters)
Singapore Snatches Back ‘World’s Best Airport’ Crown From Qatar. (Bloomberg)
Lake Tahoe’s Emerald Bay completely freezes over for the first time in 30 years. (The Guardian)
BMW to stop raising car prices after years of increases. (Financial Times)
How Norway became the world’s electric car capital. (Next City)
Exiled Chinese businessman Guo Wengui arrested on US fraud charges. (Financial Times)
NBA Wants Billions More in Sports Deals: Media and Tech Firms Are Resistant. (The Information)