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The World
The U.S. and China are taking steps toward a visit by Xi Jinping to Washington, “moving ahead with high-level official exchanges and taking other steps to improve the tone of their turbulent relations.” Vice Premier He Lifeng would visit the U.S. first, becoming the most senior official to visit the U.S. since President Biden took office. Meanwhile, Foreign Minister Wang Yi is expected to start preparing Xi for a summit with Biden. (Wall Street Journal)
Secretary of State Antony Blinken and Indian Foreign Minister Subrahmanyam Jaishankar met at the State Department on Thursday “amid a simmering row between New Delhi and Ottawa over allegations of Indian government involvement in the killing of a Sikh activist in Canada.” While officials “had said they expected the topic to be raised,” neither man addressed it during “very brief comments to reporters” after the meeting. (Associated Press)
The case “sparked a messy diplomatic fallout between Ottawa, Washington’s closest ally, and New Delhi, an emerging Asian power being courted” by President Joe Biden as a democratic counter to China. (South China Morning Post)
North Korea has said little about its decision to expel U.S. soldier Travis King, “but several experts on the isolated country said it boiled down to this: Times have changed, and North Korea is now more likely to see an American deserter as a burden than as a benefit, unless the defector is a high-profile person privy to secret information.” (New York Times)
“Detaining Americans can backfire, as Pyongyang learned with Otto Warmbier, the U.S. college student who was detained for 17 months for stealing a propaganda poster and later died when he was released to the U.S.” (Semafor)
Saturday’s election in Slovakia could see the return to power of former Prime Minister Robert Fico, who “was accused of turning Slovakia into a Mafia state before the fallout from the murder of a journalist saw him forced out of office in 2018.” Fico has since “adopted increasingly extremist and far-right rhetoric,” sparking concern “that he could plunge Slovakia into isolation within the EU, in a similar fashion to Viktor Orban's illiberal regime next door in Hungary.” (DW)
California Gasoline Tops $6 as Newsom Directs Smog Rule Waiver: Regular gasoline in the state is almost $2.20 a gallon above the national average. The state’s prices are driven in part by rising carbon-cutting costs. (Bloomberg)
If you’re a federal worker who doesn’t know what the future holds, we’re here to tell you: Your duly elected Congress doesn’t know what the future holds, either. But this much is clear: Lawmakers are racing toward a shutdown, and it’s becoming harder by the minute to see how they can find their way to any of the potential off-ramps. A shutdown is coming. Have you asked your boss yet if you’re an essential worker? (Politico)
The federal Privacy and Civil Liberties Board, an independent agency within the executive branch, says the government should be required to get court approval before reviewing the communications of U.S. citizens collected through Section 702 of the Foreign Intelligence Surveillance Act, “a secretive foreign surveillance program.” Some Biden Administration officials warn that such a requirement “could snarl fast-moving terrorism and espionage investigations and weaken national security as a result.” (Associated Press)
The Education Department wants U.S. colleges to renew their racial diversity efforts, “urging schools to boost scholarships and minority recruiting and to place ‘meaningful emphasis’ on the adversity students face because of their race or finances.” The department released a report Thursday “promoting strategies to increase diversity in the wake of a Supreme Court decision barring colleges from considering the race of applicants in the admission process.” Education Secretary Miguel Cardona “called on state and local education leaders to ‘break down barriers for underserved students and reimagine pathways into higher education.’” (Associated Press)
Now May Be the Time to Ask Your Employer to Help With Tuition: Tuition benefits have been around for many years, but some companies are promoting them more—and more employees are partaking—amid a tight labor market, rising concerns about student-debt burdens and skyrocketing college costs. The nature of the programs is also shifting, with several companies adding prepaid options so employees don’t have to shell out their own money for degrees. Program offerings, which may be for online or in-person classes, vary widely. For example, benefits may be different for full-time and part-time employees, or offerings may vary based on an employee’s role within the organization. There may be restrictions on the type or number of degrees employees can seek, and how long a worker needs to be at the company to qualify. There can also be minimum-grade requirements, or clawback provisions if employees leave while they are pursuing a degree or for a certain time after completion. (Wall Street Journal)
Economy
US mortgage rates have reached the highest level since 2000, as elevated interest rates and climbing bond yields push up borrowing costs. The average 30-year fixed-rate mortgage has increased to 7.31 per cent, mortgage lender Freddie Mac said on Thursday, up from 7.19 per cent last week, and the highest level since the third week of December 2000. Long-term mortgage rates have been above 7 per cent since the third week of August. Federal Reserve officials have repeated the need for interest rates to stay elevated to bring inflation back to the central bank’s 2 per cent target. (Financial Times)
European government bond prices plummeted on Thursday amid concerns about interest rates remaining high for an extended period and fears caused by Italy’s larger-than-expected budget deficit. Italian 10-year government bond yields “rose as much as 0.17 percentage points to 4.96 per cent, their highest level in a decade, after prime minister Giorgia Meloni’s government raised its fiscal deficit targets and cut its growth forecast for this year and next.” The sell-off “spread to UK markets, where 10-year yields rose as much as 0.2 percentage points to 4.57 per cent — the biggest daily rise since February — before ending the day at 4.48 per cent.” (Financial Times)
Bridgewater Associates founder Ray Dalio says the U.S. is “going to have a debt crisis,” with the only question being when it happens. U.S. debt levels “have ballooned in recent years, especially after a roughly 50% increase in federal spending between fiscal 2019 and fiscal 2021.” Dalio is also “concerned there are more headwinds for the economy than just high debt levels, saying growth could fall to zero, give or take 1% or 2%.” (CNBC)
Moody’s has warned of a “race to the bottom” between banks and private credit funds in the financing of leveraged buyouts. Moody’s said “a renewed appetite among banks to lend on such deals and greater competition from the fast-growing private debt sector risked funnelling more money to lower-quality deals, just as general economic conditions are deteriorating.” (Financial Times)
The United Auto Workers “wants to emerge from its strike against Detroit’s three major automakers with at least a 30% pay raise, according to people familiar with the matter.” The UAW sought a 40% increase at the start of the strike. (Bloomberg)
California’s minimum wage for fast food workers will increase to $20 per hour next April. When the new law takes effect, “fast food workers in California will have the highest guaranteed base salary in the industry. The state’s minimum wage for all other workers — $15.50 per hour — is already among the highest in the United States.” (Associated Press)
DoorDash, Grubhub, and Uber lost an attempt to block a New York City rule setting minimum pay for food delivery workers. The rule “forces companies to either pay couriers a flat hourly rate of $17.96 or pay per delivery at about 50 cents a minute.” (Bloomberg)
Women now account for record shares of Fortune 500 chief executives and board members in the U.S., but “the share of women in top business leadership positions remains well below their share of the population.” And while 55% “say there are too few women in top executive business positions, according to a new Pew Research Center survey,” that is actually “down somewhat from 59% who said this in 2018.” (Pew Research Center)
Technology
The National Security Agency is starting an artificial intelligence security center that will be incorporated into the existing Cybersecurity Collaboration Center. Army Gen. Paul Nakasone, the outgoing head of the NSA and the commander of U.S. Cyber Command, said, “We maintain an advantage in AI in the United States today. That AI advantage should not be taken for granted.” (Associated Press)
Huawei Takes Revenge as China Catches Up on Semiconductors: Export controls haven’t stopped China from developing surprisingly advanced semiconductors for smartphones, increasing American anxieties about the country’s military capabilities amid significant uncertainty. (Bloomberg)
Sen. Mark Warner (D-VA) says Congress should be less ambitious on AI regulation rather than adopt sweeping legislation that may have unforeseen consequences. Warner said, “‘Let us figure it out first and figure out the rules later’ is, I think, a bad proposition. I’m very sensitive to the notion that on AI we shouldn’t do that, but if we try to overreach, we may come up with goose eggs.” (Politico)
OpenAI “is in advanced talks with former Apple designer Sir Jony Ive and SoftBank’s Masayoshi Son to launch a venture to build the ‘iPhone of artificial intelligence.’” Ive and OpenAI’s Sam Altman “have held brainstorming sessions at the designer’s San Francisco studio about what a new consumer product centred on OpenAI’s technology would look like.” (Financial Times)
Mark Zuckerberg “hasn’t given up on the metaverse — he’s just shifted how he talks about it. He once focused on the metaverse as a completely digital new world. Now, he aims to convince the public that the future is a blend of the digital and the physical.” (The Verge)
ESPN nears broadcast deal with Tiger Woods’ golf league: Agreement would provide a media partner for upstart virtual tournament helmed by Woods and Rory McIlroy. (Financial Times)
Smart Links
The Equal Employment Opportunity Commission is suing Tesla. (Bloomberg)
Unexpectedly strong Chinese demand is one of the drivers of high oil prices. (Nikkei Asia)
Even a Booming Economy Can’t Save Atlanta’s Office Market. (WSJ)
Chinese hackers stole 60,000 emails from top State Department officials. (CNN)
Will Heathrow’s third runway finally go ahead? (Financial Times)