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The World
Treasury Secretary Janet Yellen said invoking the 14th Amendment to get around the debt ceiling and continue borrowing money to pay the nation's bills would risk a "constitutional crisis," downplaying the idea that the amendment would simply solve the looming problem -- but she avoided ruling it out entirely. "What to do if Congress fails to meet its responsibility? There are simply no good options, and the ones that you've listed are among the not good options," Yellen told ABC "This Week"when pressed on whether the Biden administration was considering using the 14th Amendment, which states that the public debt "shall not be questioned." Yellen said that the only way for the U.S. to avoid an unprecedented default as soon as next month is for Congress to pass legislation doing so, even as the White House and congressional Democrats appear to be in a stalemate with Republicans over GOP demands to tie steep spending cuts to raising or suspending the debt ceiling. (ABC News)
Biden subsidies stoke arms race among states to woo projects: US states are accelerating an arms race of tax breaks and deal sweeteners as they aggressively court foreign investors drawn to America by Joe Biden’s clean energy and chips subsidies. Representatives from more than 50 states and territories gathered in Washington this week to sell their corner of the US to overseas companies at the SelectUSA summit, run by the commerce department to promote foreign investment. Organisers said the turnout was a record, with the largest showing of US governors to date. “The event has never been bigger than this,” said Aaron Brickman of the Rocky Mountain Institute, who started the SelectUSA event. Brickman said the conference had been supercharged by the hundreds of billions of federal dollars on offer to companies wanting to build in America. (Financial Times)
Brussels has proposed sanctions on Chinese companies for supporting Russia’s war machine for the first time since the conflict in Ukraine began, in a development likely to increase tensions with Beijing. Seven Chinese businesses accused of selling equipment that could be used in weapons have been listed in a new package of sanctions to be discussed by EU member states this week, which has been seen by the Financial Times. (Financial Times)
The Arab League readmitted Syria after more than a decade of suspension, consolidating a regional push to normalise ties with President Bashar al-Assad in a move criticised by Washington. The decision said Syria could resume its participation in Arab League meetings immediately, while calling for a resolution of the crisis resulting from Syria's civil war, including the flight of refugees to neighbouring countries and drug smuggling across the region. (Reuters)
It’s Not Just Math and Reading: U.S. History Scores for 8th Graders Plunge. The pandemic plunge in U.S. history accelerated a downward trend that began nearly a decade ago, hitting this recent low at a time when the subject itself has become increasingly politically divisive. A growing number of students are falling below even the basic standards set out on the National Assessment of Educational Progress, a rigorous national exam administered by the Department of Education. About 40% of eighth graders scored “below basic” in U.S. history last year, compared with 34% in 2018 and 29% in 2014. Just 13% of eighth graders were considered proficient — demonstrating competency over challenging subject matter — down from 18 percent nearly a decade ago. (New York Times)
Asian Americans — especially young, Asian American women— are the least likely to feel they completely belong and are accepted in the U.S., an annual survey of attitudes about Asian Americans has found. Half of Asian Americans report feeling unsafe in the U.S. due to their race/ethnicity, according to the STAATUS Index (Social Tracking of Asian Americans in the U.S.). And only 22% of Asian Americans said they feel they belong and are accepted in the U.S. That's compared to 57% of white respondents, 25% of Latinos and 24% of Black respondents in the survey. (Axios)
An Illinois law required schools to test water for lead. They found it all over the state. Public officials have been aware of the problem that lead poses to children for decades. The metal damages developing brains even in very small amounts, and studies show that consuming lead lowers IQ, increases the chance of developing attention deficit disorders and is particularly destructive to young children. (Chicago Tribune)
Economy
Banks Are in the Grips of Investor Crisis of Confidence: First Republic Bank’s failure demonstrates why lenders are vulnerable to a loss of faith. (Wall Street Journal)
Bank Stocks Nearing a Crisis-Era Threshold Raises Warning Sign: S&P 500 financials threaten to push back below 2007 peak; ‘You can’t have a bull market if bank stocks are falling’. (Bloomberg)
US and European companies have blamed disappointing earnings on a slower than expected economic rebound in China, after its sudden reopening from pandemic curbs prompted over-optimistic growth forecasts. “The overall expectation was, following the reopening, the China market was going to bounce back,” Qualcomm chief executive Cristiano Renno Amon told analysts on Wednesday. “We have not seen those signs yet.” (Financial Times)
U.S. Think Tank Reports Prompted Beijing to Put a Lid on Chinese Data: A recent campaign to restrict overseas access to China-based data sources was partly triggered by a drumbeat of U.S. think tank reports on sensitive Chinese practices that alarmed Beijing, according to people with direct knowledge of the matter. Increasingly worried about perceived Western threats, Beijing in recent weeks expanded an anti-espionage law and stepped up pressure on foreign companies specializing in collecting information, such as auditors, management consultants and law firms. In addition, access to Chinese databases including Shanghai-based Wind Information has tightened for foreign think tanks, research firms and other nonfinancial entities. (Wall Street Journal)
European gas prices have fallen to the lowest level since the start of the energy crisis, boosting hopes of a stronger economic recovery as energy pressures ease. The European TTF benchmark hit a low of €35.20 a megawatt hour on Friday, a level last seen in July 2021 when Russia was first starting to squeeze Europe’s energy supplies ahead of its invasion of Ukraine. It later rose slightly to end the week at €35.95. The TTF benchmark peaked at more than €340/mwh hour last summer after Russian slashed gas exports to Europe, stoking inflation and sending energy bills soaring. (Financial Times)
Technology
After two consecutive quarterly revenue declines — and a third one on the way — Apple has a message for investors: Emerging markets are ready to take off. CEO Tim Cook made that pitch during the company’s earnings call last week, when he pointed to record-setting sales in many countries around the world. Mexico, Indonesia, the Philippines, Saudi Arabia, Turkey and the United Arab Emirates all had best-ever quarterly sales in the most recent period — even while overall revenue declined. And Malaysia, Brazil and India had their best-ever March quarter. It’s no shock that Cook is touting inroads in emerging markets. He recently toured India, where Apple just opened its first retail outlets, and has talked up the country’s potential as the next China. But the topic was a bigger source of discussion Thursday than might be expected. India alone was mentioned about 20 times on the call. (Bloomberg)
U.S. Sanctions Drive Chinese Firms to Advance AI Without Latest Chips: U.S. sanctions are spurring Chinese tech companies to accelerate research to develop cutting-edge artificial intelligence without relying on the latest American chips. A Wall Street Journal review of research papers and interviews with employees found that Chinese companies are studying techniques that could allow them to achieve state-of-the-art AI performance with fewer or less powerful semiconductors. They are also researching how to combine different types of chips to avoid relying on any one type of hardware. Chinese telecommunications provider Huawei Technologies, search firm Baidu and e-commerce giant Alibaba Group are among those seeking ways to milk more utility out of existing computer chips. (Wall Street Journal)
OpenAI’s regulatory troubles are only just beginning: The European Union’s fight with ChatGPT is a glance into what’s to come for AI services. (The Verge)
Google Plans to Make Search More ‘Personal’ with AI Chat and Video Clips: Google is shifting the way it presents search results to incorporate conversations with artificial intelligence, along with more short video and social-media posts, a departure from the list of website results that has made it the dominant search engine for decades. The changes represent a response to big shifts in the way people access information on the internet, including the emergence of AI bots like ChatGPT. Google plans to make its search engine more “visual, snackable, personal, and human,” with a focus on serving young people globally, according to the documents. It plans to incorporate more human voices as part of the shift, supporting content creators in the same way it has historically done with websites, the documents say. (Wall Street Journal)
Surprising sector leads in bummer month for venture funding: Move over, AI — other sectors are raising money too. Global funding reached $21 billion in April, down 56% from $47.8 billion year over year. The slowdown has impacted all funding stages, but there was a bright spot, with close to $5.7 billion invested in a single sector last month. (Crunchbase News)
Smart Links
Data Science Is the Hot New Master’s at B-Schools. (Bloomberg)
Bluesky says no ‘heads of state’ allowed on its Twitter-like platform for now. (Fortune)
Ford, Tesla CEOs Exchange Jabs and Praise Amid Heated EV Rivalry. (Wall Street Journal)
Air travel demand may fuel another record summer. Here’s what will be different. (Washington Post)
China’s Main Trade Fair Struggles to Lure Buyers as Global Growth Slows. (Bloomberg)