Know someone who would like this newsletter? Forward it to them.
The World
Growing talent gap in U.S. chip space emerges as makers spend billions. A push to re-shore semiconductor manufacturing in the U.S. has spurred massive spending, and with it, concerns about the size of the skilled workforce. President Joe Biden signed the CHIPS and Science Act into law one year ago, and semiconductor companies across the United States have promised to spend $231 billion on building chip manufacturing hubs on American soil. Now, as the shovels hit the ground to begin construction, companies are realizing how difficult it is to find talent. Taiwan Semiconductor Manufacturing Company, the largest contract chipmaker in the world, said it had to delay production at its $40 billion Arizona plant due to a lack of workers in the U.S. “We’re still looking for more qualified skilled trades people across the board,” said TSMC Arizona President Brian Harrison. “We are installing our unique-to-the-United-States and extremely advanced pieces of equipment.” (CNBC)
Why a stalled Ukrainian offensive could represent a huge political problem for Zelensky in the US. One of Ukraine’s greatest tragedies as it pursues a critical offensive that has, so far, failed to meet its own and Western expectations is that it cannot, by itself, decide its destiny. President Volodymyr Zelensky’s government is dependent on a massive pipeline of US and western armaments. And Russian President Vladimir Putin, whose historical obsessions and personal power calculations thrust Ukraine into this horrific war, will also have a great say in if and when it ends. So, while battlefield sacrifices will decide how much seized territory Ukraine recovers, the outcome of the war will also be shaped by outside factors, including shifting political forces in the US, Moscow and European capitals. A stalled offensive and a winter stalemate, for instance, would have particular ramifications in the United States since it could heighten questions over US support for the war that will be pushed into an acrimonious election year. (CNN)
President Erdogan wants to make nice with the West, on his terms. Less than three months ago, Turkey’s president, Recep Tayyip Erdogan, was accusing America of conspiring to topple his government, talking up his “special relationship” with Russia, and threatening to prevent Sweden from entering NATO. Today, after an unexpectedly easy victory in his country’s presidential elections in May, he is making eyes at the West. Mr. Erdogan has promised to wave through Sweden’s accession to NATO, which he has been blocking for nearly a year, has stepped up his support for Ukraine by openly backing that country’s own dreams of membership in the alliance, and has called on the European Union to resume accession talks with Turkey. He has also courted Western investors by shelving his disastrous policy of lowering interest rates in the face of rising inflation. The recent moves have already begun to pay dividends for Turkey. America seems poised to sell it $20bn-worth of f-16 warplanes and upgrade kits, a deal previously held up by Congress. Joe Biden, the American president, may soon welcome Mr. Erdogan, whom he has repeatedly snubbed, to the White House. He and other nato leaders are also looking to the Turkish strongman to convince Vladimir Putin to reopen the Black Sea to Ukrainian grain exports; a deal negotiated by Turkey to let food exports out, has been halted by Mr Putin since July 17th. (The Economist)
North Korea's Kim dismisses top general, calls for war preparations: North Korean leader Kim Jong Un replaced the military's top general and called for more preparations for the possibility of war, a boost in weapons production, and expansion of military drills, state media KCNA reported on Thursday. Kim made the comments at a meeting of the Central Military Commission which discussed plans for countermeasures to deter North Korea's enemies, which it did not name, the report said. (Reuters)
Saudis Agree With U.S. on Path to Normalize Kingdom’s Ties With Israel: The U.S. and Saudi Arabia have agreed on the broad contours of a deal for Saudi Arabia to recognize Israel in exchange for concessions to the Palestinians, U.S. security guarantees and civilian nuclear help, according to U.S. officials. U.S. officials expressed cautious optimism that, in the next nine to 12 months, they can hammer out the finer details of what would be the most momentous Middle East peace deal in a generation. But they warned that they face long odds. The stepped-up efforts come after Saudi Crown Prince Mohammed bin Salman met in Jeddah two weeks ago with Jake Sullivan, President Biden’s national security adviser, in a bid to accelerate talks. Negotiators now have moved to discussing specifics, including addressing Saudi requests that the U.S. help them develop a civilian nuclear program and offer iron clad security guarantees. (Wall Street Journal)
Ecuadorean presidential candidate Villavicencio killed at campaign event: Ecuadorean presidential candidate and former lawmaker Fernando Villavicencio was killed on Wednesday, President Guillermo Lasso said, vowing the murder will not go unpunished. Local media had earlier reported Villavicencio, a former lawmaker had been shot at a campaign event in Quito. (Reuters)
Amazon leaders fail to commit to end deforestation by 2030. Amazon leaders have called on rich countries to help them develop a Marshall-style plan to protect the world’s largest rainforest – but stopped short of committing to zero deforestation across the biome by 2030 amid divisions over oil extraction. In a joint declaration at the end of a two-day summit in the Brazilian city of Belém on Wednesday, the eight South American countries that are home to the Amazon rainforest said ensuring its survival could not be solely up to them, as resources from the forest were consumed globally. Members of the Amazon Cooperation Treaty Organization did not agree a shared commitment to end deforestation this decade, which had been hoped for in the run-up to the regional meeting. The countries were unable to agree a united position on the role of extractive industries in the region such as beef, oil and mining, which are the primary drivers of its destruction. (The Guardian)
Deadly wildfires burning across Maui prompt evacuations: At least six people have been killed in "unprecedented" wildfires that are raging across Hawaii's Big Island and Maui, officials said Wednesday. Much of Lahaina, a touristic and economic hub of 9,000 people, has been destroyed and hundreds of families displaced, Hawaii Gov. Josh Green said. Residents reported heartbreaking destruction. "We have no more Lahaina. It’s gone," Mark Stefl told CNN. Most of the fires on Maui – fueled in part by violent winds from Hurricane Dora, churning more than 800 miles away – have not yet been contained, Mayor Richard Bissen Jr. said. (CNN)
Texas is preparing for more wildfires without a break from heat in forecast: The number of acres burned this year is dramatically lower compared to 2022. But a rash of new fires have put state and local officials on edge. (Texas Tribune)
Thousands of San Diego County residents have been ordered to evacuate their homes amid a raging brush fire with the potential to spread to several hundred acres, officials said. (Los Angeles Times)
Economy
European gas price jumps almost 40% over supply disruption fears: European natural gas prices surged almost 40 per cent on Wednesday as the potential for disrupted global liquefied natural gas supply from Australia spooked traders betting on further price declines. Prices on the Title Transfer Facility, the European benchmark, rose to more than €43 per megawatt hour, up from almost €30 on Tuesday, reaching its highest point since mid-June. The increase was triggered by reports that workers at important LNG plants in Australia were planning strike action in a fight for higher pay and better job security, with market movements exacerbated by some traders closing out bets that gas prices would fall. (Financial Times)
Nasdaq, S&P 500 slip ahead of CPI data. The tech-heavy Nasdaq and the S&P 500 fell on Wednesday ahead of a key inflation report this week after mostly dovish comments from U.S. Federal Reserve officials. Rate-sensitive megacap growth and technology stocks, that have led the Wall Street rally this year, such as Nvidia (NVDA.O), Apple (AAPL.O) and Tesla (TSLA.O) shed between 0.6% and 2.5% in early trading. "There's been a little bit of shine coming off the Nasdaq that coincides with some profit taking that occurred at the end of July," Robert Pavlik, senior portfolio manager at Dakota Wealth, said. The Consumer Price Index (CPI) for July, due on Thursday, is expected to show a slight year-over-year acceleration. On a month-to-month basis, consumer prices are seen increasing 0.2%, the same rate as in June. Philadelphia Fed President Patrick Harker said on Tuesday the U.S. central bank may be at the stage where it can leave interest rates unchanged, barring any abrupt change in the direction of recent economic data. (Reuters)
How America is failing to break up with China. When it comes to tracing the geography of global supply chains, few companies provide a better map than Foxconn, the world’s largest contract manufacturer. This year the Taiwanese giant has built or expanded factories in India, Mexico, Thailand and Vietnam. The Chinese production sites once beloved by Western companies are firmly out of fashion. Souring relations between the governments in Washington and Beijing have made businesses increasingly fretful about geopolitical risks. As a consequence, in the first half of the year, Mexico and Canada traded more with America than China for the first time in almost two decades. The map of global trade is being redrawn. At first glance, this is almost exactly what is desired by America’s policymakers. Under first Donald Trump and then Joe Biden, officials have put in place an astonishing array of tariffs, rules and subsidies—an executive order introducing outbound investment screening, the latest sally, is expected soon. The aim is to weaken China’s grip on sensitive industries and, in a motivation that mostly goes unspoken, prepare for a possible invasion of Taiwan. This attempt to “de-risk” trade with China is the cornerstone of the White House’s foreign policy. (The Economist)
China’s Economy Faces Yet Another Threat: Falling Prices. The United States has spent much of the past 18 months struggling to control inflation. China is experiencing the opposite problem: People and businesses are not spending, pushing the economy to the verge of a pernicious condition called deflation. Consumer prices in China, after barely rising for the past several months, fell in July for the first time in more than two years, the country’s National Bureau of Statistics announced on Wednesday. For 10 straight months, the wholesale prices generally paid by businesses to factories and other producers have been down from a year earlier. Real estate prices are tumbling. Those patterns have amplified concerns about deflation, a potentially crippling pattern of broadly falling prices that tend to also depress the net worth of households — as it did in Japan for years — and make it very hard for borrowers to repay their loans. (New York Times)
In previous downturns the world turned to China as an engine of growth – this time that driver may not be there. When Australia’s central bank released its quarterly economic update last week, China’s “uncertain” economic outlook topped a list of domestic worries for Australia. The International Monetary Fund too singled out China in its latest world economic outlook as among the “downside” tilts to its balance of risks. The recovery of the world’s second-biggest economy from the Covid pandemic was faltering, “with cross-border spillovers” likely if it slowed, the IMF said. Wednesday brought further confirmation of China’s disappointing performance as the economy slipped into deflation for the first time since late 2020. China’s trends have been out of sync with those of richer nations for some time. (The Guardian)
Technology
China’s internet giants are rushing to acquire high-performance Nvidia chips vital for building generative artificial intelligence systems, making orders worth $5bn in a buying frenzy fuelled by fears the US will impose new export controls. Baidu, ByteDance, Tencent and Alibaba have made orders worth $1bn to acquire about 100,000 A800 processors from the US chipmaker to be delivered this year, according to multiple people familiar with the matter. The Chinese groups had also purchased a further $4bn worth of the graphics processing units to be delivered in 2024, two people close to Nvidia said. (Financial Times)
Apple Can Keep App Store Rules for Now as Top Court Spurns Epic: The US Supreme Court let Apple Inc. keep its App Store payment rules in place for the time being, rejecting an Epic Games Inc. request that would have let developers start directing iPhone users to other purchasing options. Justice Elena Kagan said she wouldn’t let a federal appeals court decision take effect immediately, as Epic had sought. The 9th US Circuit Court of Appeals said earlier this year that Apple violated California’s Unfair Competition Law by limiting the ability of developers to communicate about alternative payment systems, including purchases through the Epic Games Store. (Bloomberg)
Zoom CEO admits mistake as terms-of-service changes raise AI fears. A change to Zoom's terms of service left customers confused and worried that the video conferencing company was seeking broad rights to use images, sound and other content from meetings to train its AI algorithms. Why it matters: The pandemic made Zoom synonymous with online meetings. Now users and companies don't want to see their conversations and deliberations shared with the world. Details: Zoom made changes to its terms of service back in March, but concern only spiked this past weekend after a Hacker News post highlighted that the changes appeared to give the company unbounded rights to use content to train its AI systems. News reports and online upset over the move prompted Zoom to publish a blog post aimed at clarifying what was and wasn't changing and further altering the terms of service to say that "for AI, we do not use audio, video, or chat content for training our models without customer consent." (Axios)
Prices of Disney+, Hulu Premium Plans to Get Jacked Up but New Duo Bundle Will Offer Deep Discount: Disney, trying to swing its streaming business into the black, has set substantial price hikes for Disney+ and Hulu standalone premium plans in the U.S. — while also rolling out a heavily discounted Disney+/Hulu ad-free combo bundle. As of Oct. 12, Disney+ Premium (with no ads) will jump 27%, rising from $10.99 to $13.99/month for U.S. customers. Hulu without ads will increase 20%, from $14.99 to $17.99/month. The price for Disney+ and Hulu standalone ad-supported tiers will remain at $7.99/month each, and with the bundle of the two still $9.99/month. In addition, the monthly price of the two Hulu + Live TV packages will each go up by $7 as of Oct. 12 (the plan with ads increases to $76.99; the tier with no ads on VOD rises to $89.99). And ESPN+ pricing will increase by one dollar, from $9.99 to $10.99/month. (Variety)
Bob Iger says Disney is “actively exploring ways” to crack down on password sharing and “will roll out tactics to drive monetization sometime in 2024”. (The Wrap)
Slack’s biggest redesign ever tries to tame the chaos of your workday: Slack is changing. It’s about to roll out its biggest-ever redesign, changing both the look and the layout of the app to hopefully make things easier to find and easier to manage. It’s designed especially for the heaviest Slack users, says Noah Weiss, Slack’s chief product officer. Right now, he says, “for end users, you end up having to switch to all these different workspaces just to see channel activity, the mentions you have, the threads you’re part of, and so on.” The redesign was all about making Slack a little easier to maneuver. When you first load Slack, you’ll be taken into a new Home section that looks a lot like the existing Slack interface; it shows your channels, DMs, and apps, like you see in the current app. After that is where things start to change. The most noticeable thing in Slack is a new sidebar on the left side, which shows all your Slack stuff in a few new ways. There’s a new DMs section that looks like most other messaging and email apps and even resembles Slack’s archenemy, Microsoft Teams: all your conversations on the left and the active one on the right. The idea is to give you a way to manage all your chats in one place no matter what channel or workspace they come from. (The Verge)
Smart Links
Global rice prices surge close to 12-year highs, and could rise even more. (CNBC)
US debuts a DARPA contest to build AI systems that can proactively identify and fix software flaws, with help from Anthropic, Google, Microsoft, and OpenAI. (Engadget)
Latin America could become this century’s commodity superpower. (The Economist)
Lyft wants to kill surge pricing. (TechCrunch)
Amazon in talks to become anchor investor in Arm ahead of IPO. (Reuters)
What the Finance Industry Tells Us About the Future of AI. (Harvard Business Review)