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The World
Ukraine declares war on Russia’s Black Sea shipping. Russian ports and ships on the Black Sea — including tankers carrying millions of barrels of oil to Europe — could justifiably be attacked by the Ukrainian military as part of efforts to weaken Moscow's war machine, a senior Kyiv official warned Monday in the wake of two recent attacks on Russian vessels. "Everything the Russians are moving back and forth on the Black Sea are our valid military targets," Oleg Ustenko, an economic adviser to Ukrainian President Volodymyr Zelenskyy, told POLITICO, saying the move was retaliation for Russia withdrawing from the U.N.-brokered Black Sea grain deal and unleashing a series of missile attacks on agricultural stores and ports. “This story started with Russia blocking the grain corridor, threatening to attack our vessels, destroying our ports,” Ustenko said. “Our maritime infrastructure is under constant attack." (Politico)
Turbulent Waters: How the Black Sea Became a Hot Spot in the War. Russian warships patrol the surface of the Black Sea, launching missiles at Ukrainian towns while creating a de facto blockade, threatening any vessel that might try to breach it. Skimming the water’s surface, Ukrainian sea drones carry explosives stealthily toward Russian ports and vessels, a growing threat in Kyiv’s arsenal. In the airspace above, NATO and allied surveillance planes and drones fly over international waters, gathering intelligence used to blunt Moscow’s invasion, even as Russia fills the skies with its own aircraft. Bordered by Ukraine, Russia and three NATO countries, but sometimes overlooked in the war, the Black Sea has become an increasingly dangerous cauldron of military and geopolitical tensions, following Moscow’s decision last month to end a deal ensuring the safe passage of Ukrainian grain. (New York Times)
China again asked the Philippines to tow away a grounded warship - a World War Two-era vessel now used as a military outpost - from a disputed shoal on Tuesday, after Manila rejected Beijing's earlier demand. Tensions have soared between the two neighbours over the South China Sea under Philippine President Ferdinand Marcos Jr, with Manila pivoting back to the United States, which supports the Southeast Asian nation in its maritime disputes with China. (Reuters)
TED talks cross free speech ‘red line’ in Xi Jinping’s China: TED, the US non-profit famous for snappy speeches from visionary leaders, espouses the belief that there is no greater force for changing the world than an idea. But the group’s days of spreading ideas to China’s 1.4bn people are now in question after it drew the ire of another powerful force: the Chinese Communist party’s security hawks. A TEDx event — where independent organisers license the organisation’s brand — planned for this Sunday in Guangzhou has been called off after police in the southern Chinese city said co-ordinators had breached restrictions on foreign non-governmental organisations. (Financial Times)
The Biden administration plans on Wednesday to issue new restrictions on American investments in certain advanced industries in China, according to people familiar with the deliberations, a move that supporters have described as necessary to protect national security but that will undoubtedly rankle Beijing.
The measure would be one of the first significant steps the United States has taken in its economic clash with China to clamp down on financial flows. It could set the stage for more restrictions on investments between the two countries in the years to come. (New York Times)
President Joe Biden said he plans to travel to Vietnam soon as the US seeks to bolster its ties with Asian nations and reduce China’s influence on the region. “I’m going to be going to Vietnam shortly. Vietnam wants to change our relationship and become a partner,” Biden said Tuesday evening at a Democratic fundraiser in Albuquerque, New Mexico. (Bloomberg)
Disney is pushing into the US sports betting industry, tying its ESPN cable network to the casino and online gambling company Penn Entertainment in a $2bn deal. Penn would rebrand its US sports betting portals, available in 16 states and currently known as Barstool Sportsbook, to ESPN Bet, the companies said on Tuesday. The move comes less than six months after Penn completed a $551mn acquisition of Barstool, the sports gambling and entertainment site founded by Dave Portnoy in 2003 and which has become known in the US for its boisterous and occasionally controversial commentary. Under the terms of the agreement, Penn will pay ESPN $1.5bn in cash payments over a 10-year term and grant $500mn in warrants for Penn stock. The rebranding will take effect this autumn. (Financial Times)
How real is America’s chipmaking renaissance? American chipmakers account for a third of global semiconductor revenues. They design the world’s most sophisticated microprocessors, which power most smartphones, data centres and, increasingly, artificial-intelligence (ai) models. But neither the American firms nor their Asian contract manufacturers produce any such leading-edge chips in America. Given chips’ centrality to modern economies—and, in the age of ai, to warfighting—that worries policymakers in Washington. Their answer was the chips Act, a $50bn package of subsidies, tax credits and other sweeteners to bring advanced chip manufacturing back to America, which President Joe Biden signed into law on August 9th 2022. (The Economist)
UC admits record number of California first-year students for fall 2023, led by Latinos: The UC admitted a record number of California first-year students for fall 2023, led by Latinos and an increase in Native Americans who helped make up the largest ever group of underrepresented students offered admission. (Los Angeles Times)
Economy
US credit card debt tops $1 trillion, overall consumer debt little changed: Americans borrowed more than ever on their credit cards in the last quarter, the New York Federal Reserve Bank said on Tuesday, with balances surpassing $1 trillion for the first time even as overall household debt loads were largely unchanged. Credit card balances rose by $45 billion to $1.03 trillion in the second quarter, the regional Fed bank said in its latest quarterly household debt and credit report, reflecting robust consumer spending as well as higher prices due to inflation, researchers said. (Reuters)
Consumer prices in China have fallen into deflation for the first time in more than two years, in one of the starkest indicators of the challenges facing policymakers as they struggle to revive demand. The consumer price index fell 0.3 per cent year on year in July, compared with no change a month earlier. The producer price index, a gauge of prices as goods leave factory gates, was down 4.4 per cent. (Financial Times)
Taiwan’s exports fall for 11th straight month, as mainland China’s weakened world-factory role hit shipments. (South China Morning Post)
S&P drops ESG scores from debt ratings amid scrutiny: S&P Global has stopped handing out scores to corporate borrowers on ESG criteria, at a time of rising questions about their utility and political attacks on such metrics. The debt rating agency has since 2021 published scores from one to five for a company’s exposure to each element of environmental, social and governance risks. (Financial Times)
WeWork, the US office space company SoftBank once valued at $47bn, has warned for the first time that it faces “substantial doubt” about its ability to continue as a going concern. In a second-quarter earnings report that fell short of its guidance from three months ago, WeWork said its outlook depended on a series of plans including further restructuring and a search for additional capital over the next 12 months. (Financial Times)
PayPal’s stablecoin is first dollar-backed digital currency from a major U.S. financial institution. PayPal on Monday launched a U.S. dollar-backed stablecoin to help facilitate payments as its latest addition to its suite of crypto services. It’s the first such move from a major U.S. financial institution. The new asset, called PayPal USD (PYUSD), was designed to address the “emerging potential” to “transform payments in Web3 and digitally native environments.” Its launch comes as market participants await a vote in Congress on a key stablecoin bill, which has just advanced to the House with three other crypto bills for the first time. PayPal said the stablecoin’s function is to reduce friction for in-experience payments in virtual settings and allow direct flows to developers. It’s redeemable for dollars and backed by dollar deposits, short-term U.S. Treasurys and similar cash equivalents. “The shift toward digital currencies requires a stable instrument that is both digitally native and easily connected to fiat currency like the U.S. dollar,” said Dan Schulman, president and CEO of PayPal. “Our commitment to responsible innovation and compliance, and our track record delivering new experiences to our customers, provides the foundation necessary to contribute to the growth of digital payments through PayPal USD.” Shares of PayPal were higher by more than 2% following the news. (CNBC)
Technology
Apple is planning to move the button to hang up a call in new iPhone software: Apple’s iOS 17 will include one of the biggest revamps to the iPhone’s phone app in years. In beta versions of iOS 17, Apple has moved the “End Call” button away from the center of the screen to the lower right-hand corner. It’s easy to imagine someone with muscle memory from years of hanging up phone calls accidentally pressing where the button used to be. (CNBC)
Google and Universal Music negotiate deal over AI ‘deepfakes’: Google and Universal Music are in talks to license artists’ melodies and voices for songs generated by artificial intelligence as the music business tries to monetize one of its biggest threats. The discussions, confirmed by four people familiar with the matter, aim to strike a partnership for an industry that is grappling with the implications of new AI technology. The rise of generative AI has bred a surge in “deepfake” songs that can convincingly mimic the voices, lyrics or sound of established artists, often without their consent. Frank Sinatra’s voice has been used on a version of the hip-hop song “Gangsta’s Paradise” while Johnny Cash’s has been deployed on the pop single “Barbie Girl”. A YouTube user called PluggingAI offers songs imitating the voices of the deceased rappers Tupac and Notorious B.I.G. (Financial Times)
Toronto Takes on Silicon Valley to Become an AI Startup Hub: Canada’s long-running investment in artificial intelligence development and technology may be paying off, as Toronto capitalizes on the region’s academic heft. (City Lab)
One of the biggest divides in the AI world is getting a high-profile test case in Europe: France is putting its chips down on open-source AI, hoping to position itself as a global leader in the AI industry. The moves France is making are significant because they intersect with two of the biggest global stories in AI right now: Europe’s role as its chief regulator, and the growing philosophical divide between open-source developers and closed shops like the (now-ironically-named) OpenAI. As for the French, they see siding with the former as a way to kill two, or even three, birds with one stone. By championing open-source AI systems, they can fight U.S.-based tech giants, bolster their own tech sector and maybe even carve out a new regulatory lane as the European Union’s AI Act hurtles toward passage. (Politico Digital Future)
Mobile and Console Games Dominate Video Game Market. (Statista)
Smart Links
China’s renminbi slips against dollar ahead of deflation expectations. (Financial Times)
Sales at vegan burger maker Beyond Meat fall by almost a third. (The Guardian)
Wall Street WhatsApp, Texting Fines Exceed $2.5 Billion. (Bloomberg)
Ransomware attack shuts down hospital emergency rooms in several states. (STAT News)
53% of student loan borrowers added credit card debt during the payment pause. (CNBC)