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The World
China’s Trade Plunges More Than Forecast in Blow to Recovery: China’s trade plunged in July as slowing global demand clouded the outlook for exports, while domestic pressures weighed on imports in a hit to the economic recovery. Overseas shipments dropped 14.5% in dollar terms last month from a year earlier — the worst decline since February 2020 — while imports contracted 12.4%, the customs administration said Tuesday. That left a trade surplus of $80.6 billion for the month. The export and import figures were worse than what economists polled by Bloomberg had expected. (Bloomberg)
Trucking giant Yellow has filed for bankruptcy: The nearly century-old trucking company filed for bankruptcy and is closing the business, falling victim to mounting debt. Yellow’s demise means the loss of 30,000 jobs, including 22,000 positions held by the Teamsters union, and removes a major contributor to the multiemployer Central States Pension Fund. The company said it has lined up a loan to fund its stay in chapter 11, including selling assets. Yellow listed 30 unsecured creditors in its bankruptcy filing, including BNSF Railway, Amazon and Home Depot. (Wall Street Journal)
Electric bills will fall—but not as low as before: Electricity prices vary wildly with seasons, location and weather, but Americans now pay an average of nearly 25% more than before the pandemic and Russia’s invasion of Ukraine. Prices for natural gas and coal are falling, but retail rates typically lag six to nine months behind, partly because utilities often protect against price swings by buying in advance, Goldman Sachs economist Spencer Hill found. His modeling suggests cheaper fuels will drag down average electricity prices 3% to 4% from their peaks by fall. (Wall Street Journal)
The legal assault on corporate-diversity efforts begins: Having successfully challenged affirmative action by universities, conservative legal activists are now going after corporations, employing some of the same tactics progressive groups have used to advance diversity, equity and inclusion programs. In lawsuits, shareholder letters and petitions to the Equal Employment Opportunity Commission, they argue that companies are violating antidiscrimination rules, including those drawn from legislation designed to secure the rights of Black Americans. Some companies are already reconsidering their efforts. (Wall Street Journal)
July enters history books as hottest month on record: July was officially the hottest month ever recorded, surpassing the previous record set in 2019 by 0.3C, according to the European earth observation agency. Scientists at the agency said the average global temperature in July was about 1.5C warmer than that of the pre-industrial period of 1850 to 1900, before human-induced climate change began to take effect. (Financial Times)
Sea ice in the Antarctic region has fallen to a record low this year as a result of rising global temperatures and there is no quick fix to reverse the damage done, scientists said in a new study of the impact of climate change on the continent. (Reuters)
This Scorching Summer Is Taking a Toll on Your Favorite Foods: A perfect storm of extreme weather and war have hit northern hemisphere crops like wheat, peaches, and olives. Welcome to the increasingly precarious future of food. (Wired)
Which States Are Contributing the Most to U.S. GDP? The seven most populous states, California, Texas, Florida, New York, Illinois, Pennsylvania and Ohio are also the seven biggest contributors to U.S. GDP, according to the Bureau of Economic Analysis. Yet, California is way ahead of the competition as far as per-capita contribution goes. While 11.7 percent of Americans live in California, the state contributed 14.2 percent to GDP in Q1 of 2023. New York state, where 5.9 percent of Americans live, had a share of 8.1 percent of GDP that quarter. Florida, which has a 6.7 percent share of population, only contributed 5.5 percent of GDP. As far as regions go, the Southeast, including populous states Florida, Georgia and North Carolina, contributed the biggest share of just over a fifth to U.S. GDP. The Far West held the second largest share of almost exactly one fifth, largely driven by California. (Statista)
Economy
Moody’s Investors Service lowered credit ratings for 10 small and midsize US banks and said it may downgrade major lenders including U.S. Bancorp, Bank of New York Mellon Corp., State Street Corp., and Truist Financial Corp. as part of a sweeping look at mounting pressures on the industry. Higher funding costs, potential regulatory capital weaknesses and rising risks tied to commercial real estate loans amid weakening demand for office space are among strains prompting the review, Moody’s said in a spree of notes late Monday. (Bloomberg)
Debt costs threaten to wipe out apartment buildings across the U.S. Investors bid up the prices of multifamily buildings for years, attracted by steadily rising rents and the prospect of outsize returns. But many took on too much debt before a sudden surge in interest rates, slowing rent growth and rising building expenses. Apartment-building values fell 14% for the year ended in June, according to data company CoStar. Outstanding multifamily mortgages have risen to about $2 trillion, according to the Mortgage Bankers Association. Nearly $1 trillion in multifamily debt is set to come due by 2027, according to data provider Trepp. (Wall Street Journal)
CFO Search: In the past couple of months, the finance chiefs of illustrious companies including Alphabet, Disney and Uber have stepped down or announced their intention to do so. Those companies are now looking for replacements. And on Monday, Tesla said its CFO, Zachary Kirkhorn, was departing, although Elon Musk’s electric vehicle maker has already replaced Kirkhorn, promoting Chief Accounting Officer Vaibhav Taneja to the role. Is the rash of CFO exits a coincidence or something more? Circumstances vary, but all of those who left had filled the jobs for several years—Disney’s former CFO, Christine McCarthy, and Alphabet’s soon-to-be-former CFO, Ruth Porat (promoted to a new position as president and chief investment officer), had both been in their jobs since 2015. Uber’s finance chief, Nelson Chai, had filled the role for five years. Kirkhorn, meanwhile, had been in the job for four years, following nine years in lower-down finance jobs at the company. As analyst Gene Munster told Bloomberg, Kirkhorn’s 13-year total stint at Tesla was like “working 50 years for anyone else.” (The Information)
Venture Capitalists Sitting on $271 Billion in ‘Dry Powder’: After a year of slower dealmaking prompted by the spike in interest rates, venture capital is still trying to find its footing. Startup investors have been providing follow-on funding to startups they’ve already invested in and are often writing smaller checks. The result: in the U.S., VC investors are currently sitting on around $271 billion in cash for startups, almost double the reserved capital five years ago. (The Information)
Italy has approved a one-off 40% tax on profits banks reap from higher interest rates and it plans to use proceeds to help mortgage holders, in a move that sent banking shares plunging. (Reuters)
Technology
Nearly half of Americans — 45% of them — are concerned about the effect artificial intelligence will have on their own line of work, compared with 29% who are not concerned, according to a new poll for The Times conducted by Leger, a Canadian-based polling firm with experience in U.S. surveys. The level of concern is consistent across partisan lines and rises to 57% among 18- to 34-year-olds. Americans older than 55 were less likely to express concern about AI affecting their work. Almost two-thirds of American adults said they thought entertainment unions were justified in making AI a centerpiece of their negotiating demands. (Los Angeles Times)
The Other A.I.: Artificial Intimacy With Your Chatbot Friend. AI chatbots aren’t just for planning vacations or writing cover letters. They are becoming close confidants and even companions. The recent AI boom has paved the way for more people and companies to experiment with sophisticated chatbots that can closely mimic conversations with humans. Apps such as Replika, Character.AI and Snapchat’s My AI let people message with bots. Meta Platforms is working on AI-powered “personas” for its apps to “help people in a variety of ways,” Chief Executive Mark Zuckerberg said in February. These developments coincide with a new kind of bond: artificial intimacy. (Wall Street Journal)
TikTok’s algorithm will be optional in Europe: TikTok users in Europe will be able to see recommended ‘For You’ videos that don’t rely on tracking their online activity. (The Verge)
No confirmation of superconductor claim: In late July, researchers claimed they had discovered the first superconductor, called LK-99, that works at room temperature and ambient pressure. So far, all efforts to reproduce this spectacular finding have come up short. Superconductivity — the ability to transport electricity without any resistance — has so far been described only in materials cooled to ultra-low temperatures or under extreme pressures. Two replication experiments failed to observe any signs of superconductivity, and a third found near-zero electrical resistance, but only well below room temperature. Theoretical studies suggest that LK-99 might have interesting features but none found evidence that it is a superconductor in ambient conditions. (Nature)
Smart Links
Novo’s obesity drug Wegovy lowers cardiovascular risk by 20%, landmark trial finds. (STAT News)
Apple, Samsung to invest in Arm as it eyes September IPO. (Nikkei Asia Review)
Factories across Asia are struggling to attract young workers, which is bad news for Western consumers accustomed to inexpensive goods. (Wall Street Journal)
How Apple Will Save Billions on Chips for iPhone. (The Information)
Neuralink, a company Elon Musk co-founded that is developing chips that it hopes to embed in people’s brains, raised $280 million in a Series D. (The Information)
New lending by mortgage REITs has dried up. (Wall Street Journal)
Paramount’s Streaming Revenues Up 40% as TV Business Continues Decline. (The Information)