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The World
Joe Biden pledged to use the US military to defend Taiwan if China invades, in remarks made during his first visit to Japan as president. “Yes. That is the commitment we made,” Biden said at a news conference in Tokyo when asked whether he was willing to use force to defend Taiwan. Biden’s remark appeared to overturn the decades-old US policy of “strategic ambiguity” on whether it would defend Taiwan, but the White House insisted its policy on the democratic island had not changed. (Financial Times)
Biden enlisted a dozen Asia-Pacific nations to join a new loosely defined economic bloc meant to counter China’s dominance and reassert American influence in the region five years after his predecessor withdrew the U.S. from a sweeping trade accord that it had negotiated itself. The alliance will bring the U.S. together with such regional powerhouses as Japan, South Korea and India to establish new rules of commerce in the fastest-growing part of the world and offer an alternative to Beijing’s leadership. (New York Times)
Australia's new Labor government will put greater focus on relations with Southeast Asia and climate change, an issue crucial to its Pacific neighbours, as it navigates ties with a more assertive China. (Reuters)
UBS and JPMorgan Chase downgraded their forecasts for China’s economic growth this year after activity in April was crushed by Covid-related restrictions, creating an even tougher uphill battle for the world’s second-largest economy. UBS cut its year-on-year gross domestic product growth forecast to 3% from 4.2%, citing the impact of Covid Zero. (Bloomberg)
Davos:
Multiple threats to the global economy topped the worries of the world's well-heeled at the annual Davos think-fest, with some flagging the risk of a worldwide recession. (Reuters)
The world economy is at risk of a food crisis as a result of unprecedented supply disruption caused by the war in Ukraine, the head of the International Monetary Fund has warned. Kristalina Georgieva, the IMF’s managing director, told the World Economic Forum that global “anxiety around access to food at reasonable prices is hitting the roof”. (The Times)
Saudi Arabia has signaled it will stand by Russia as a member of the Opec+ group of oil producers despite tightening western sanctions on Moscow and a potential EU ban on Russian oil imports. Prince Abdulaziz bin Salman, the energy minister, told the Financial Times that Riyadh was hoping “to work out an agreement with Opec+ . . . which includes Russia”, insisting the “world should appreciate the value” of the alliance of producers. (Financial Times)
Starbucks is closing down its business in Russia, as the invasion of Ukraine puts an end to its 15-year presence in the country and marks the departure of another big Western corporation. (Wall Street Journal)
The number of people forced to flee conflict, violence, human rights violations and persecution has crossed the milestone of 100 million for the first time on record, propelled by the war in Ukraine and other deadly conflicts, The U.N. refugee agency said. “One hundred million is a stark figure — sobering and alarming in equal measure,” said UN High Commissioner for Refugees Filippo Grandi. “It’s a record that should never have been set. (Associated Press)
Businesses that help employees get abortions could be the next target of Texas lawmakers if Roe v. Wade is overturned. Fourteen GOP legislators warned Lyft that they’d seek to ban companies that pay for abortions from doing business in Texas. The extent of support for the idea is unclear. (Texas Tribune)
Gov. Gavin Newsom met with leaders of the state’s largest urban water suppliers and implored them to step up efforts to get people to reduce water use as California’s drought continues to worsen. He warned that if conservation efforts don’t improve this summer, the state could be forced to impose mandatory water restrictions throughout the state. (Los Angeles Times)
US PhD students face cash crisis: Salaries for PhD students in the biological sciences fall well below the basic cost of living at almost every institution and department in the United States. Crowdsourced findings — submitted by students, faculty members and administrators — show that, for example, the basic stipend for biology PhD students at the University of Florida is around US$18,650 for a 9-month appointment, about $16,000 less than needed to cover expenses such as food, health care, housing and transport. (Nature)
Economy
Tax breaks aren’t the primary incentive for philanthropy among the ultra-wealthy, according to BNY Mellon Wealth Management’s inaugural Charitable Giving Study. The report, polling 200 individuals with wealth ranging from $5 million to more than $25 million, found the top three motivators were personal satisfaction, connection to a cause or organization and a sense of duty regarding giving back. By contrast, tax benefits ranked among the bottom three reasons for donating money to charity, the findings show. (CNBC)
There’s a stronger interest in charitable giving among millennials, Gen X and the wealthiest investors, according to the report. “The younger generations are more charitably inclined, and they care more about impact,” said David Foster, founder of Gateway Wealth Management.
Credit Suisse CEO Thomas Gottstein doesn’t think banks will ever return to working full-time from the office: “It’s unrealistic and it is not what employees want,” he said. “We are in a soft way trying to encourage people to come back, but it’s counterproductive if you push too hard.” (Bloomberg)
Exodus from Midtown Manhattan is being led by tech and banks: Companies are bypassing prime blocks in Midtown Manhattan for neighborhoods further west or downtown, as Park Avenue fades from prominence after decades as a magnet for some of the world’s biggest companies. With many employees preferring to work remotely or from home, companies are giving priority to state-of-the-art office towers with outdoor space and buildings in trendier neighborhoods in an effort to lure workers back to their desks. (Wall Street Journal)
The Biden administration is considering a release of diesel fuel from federal reserves to address skyrocketing prices and the threat of supply outages on the East Coast. (Wall Street Journal)
Money market funds and banks parked a record $2.04tn at the Federal Reserve, underscoring the demand for safe-haven investments as interest rates rise and financial markets whipsaw. The figures disclosed by the Federal Reserve Bank of New York marked the first time more than $2tn had been tucked away in the Fed’s overnight reverse repo facility. (Financial Times)
Christine Lagarde signaled for the first time that the European Central Bank’s eight-year experiment with negative rates will end within months, saying borrowing costs are on track to hit zero by the end of September. (Financial Times)
The Fortune 500 was announced. This year, a record 44 women are running Fortune 500 businesses. That’s up from last year’s previous record of 41. It’s certainly progress worth celebrating, but it still means that just 44 out of 500 companies, or 8.8%, are women-led. (Fortune, The Broadsheet)
Technology
Broadcom is in talks to pay around $60 billion for VMware in what would be one of the biggest takeover deals of the year. The two technology companies are aiming to announce a cash-and-stock deal worth about $140 a share on Thursday, assuming the talks don’t fall apart, the people said. The price wasn’t yet set and could still move around, some of the people cautioned. To help pay for the deal, Broadcom plans to tap a handful of banks for a roughly $40 billion debt package. (Wall Street Journal)
The era of open borders for data is ending. France, Austria, South Africa and more than 50 other countries are accelerating efforts to control the digital information produced by their citizens, government agencies and corporations. Driven by security and privacy concerns, as well as economic interests and authoritarian and nationalistic urges, governments are increasingly setting rules and standards about how data can and cannot move around the globe. The goal is to gain “digital sovereignty.” (New York Times)
As GDPR turns four, despite some positives, regulators struggle to keep up with complaints, the ad industry remains littered with potential abuses. Since the General Data Protection Regulation went into effect, data regulators tasked with enforcing the law have struggled to act quickly on complaints against Big Tech firms and the murky online advertising industry, with scores of cases still outstanding. While GDPR has immeasurably improved the privacy rights of millions inside and outside of Europe, it hasn’t stamped out the worst problems: Data brokers are still stockpiling your information and selling it, and the online advertising industry remains littered with potential abuses. (Wired)
Conan O’Brien’s podcast company sells SiriusXM in a deal valued around $150 million. The sale of Team Coco comes as audio companies make deals with podcasters with large followings. (Wall Street Journal)
Zoom pops 16% on first-quarter earnings beat and strong guidance; Snap plunges 30% after CEO warns company will miss revenue and earnings estimates, slow hiring. (CNBC)
Snap’s warning that its 2Q22 revenue and profits will be below what it projected just a few weeks ago, thanks to a faster than expected deterioration in macroeconomic conditions, is an ominous signal for the ad market. Snap had outperformed many of its digital ad peers, most obviously Meta Platform, Twitter and Pinterest, in revenue growth in recent quarters. If Snap is feeling things this badly, how are those other companies faring? (The Information)
Smart Links
The top 50 richest people have lost more than half a trillion dollars this year. (Wall Street Journal)
Airbnb gives up on China as it shifts focus to outbound travel. (Financial Times)
Swedish fintech Klarna to cut 10% of workforce. (Financial Times)
Anaheim mayor resigns amid corruption probe into his role in Angel Stadium land sale. (Los Angeles Times)
FIFA appoints three female referees for World Cup for first time in competition history. (The Athletic)