Know someone who would like this newsletter? Forward it to them.
The World
The U.S. and its allies are grappling with how to pare their economic relationships with China, attempting to limit ties in certain sectors they view as strategic while preserving broader trade and investment flows with the world’s second-largest economy. Russia’s invasion of Ukraine changed how Western powers think about their strategy toward China, another geopolitical rival and a close partner of Moscow. Russia throttled natural-gas exports to Europe during the war, destabilizing global energy markets. The Group of Seven advanced democracies are growing concerned that China, a dominant supplier of many goods and materials, could similarly cut off key exports in the event of a conflict or another pandemic, according to top Western economic officials. They also worry that Western investment and expertise, if left unrestricted, could help develop Beijing’s military. (Wall Street Journal)
China is starting to target western interests in the country after five years of snowballing trade and technology restrictions spearheaded by the US under presidents Donald Trump and Joe Biden. Over the past two months, Chinese officials have slapped new sanctions on US weapons companies Lockheed Martin and Raytheon, launched an investigation into US chipmaker Micron, raided US due diligence firm Mintz and apprehended local staff, detained a senior executive from Japan’s Astellas Pharma group and hit London-headquartered Deloitte with a record fine. President Xi Jinping’s administration is now considering curbing western access to materials and technologies critical to the global car industry, according to a commerce ministry review. The response to what Beijing has described as a US-led “technology blockade” reveals Xi’s strategy of narrowly targeting industries and companies with little risk of damage to China’s interests. (Financial Times)
Taiwan will buy as many as 400 land-launched Harpoon missiles intended to repel a potential Chinese invasion, completing a deal that Congress approved in 2020, according to a trade group’s leader and people familiar with the issue. Taiwan has previously purchased ship-launched versions of the Harpoon, which is made by Boeing Co. Now, a contract with Boeing issued on Taiwan’s behalf by the US Naval Air Systems Command marks a first for the mobile, land-launched version. (Bloomberg)
India and Russia are discussing a free trade agreement (FTA), the Russian trade minister said, an announcement that could deepen bilateral commercial ties that have flourished since war broke out in Ukraine. The FTA talks mark a step-up in economic relations between the two countries despite calls from Western countries for India to gradually distance itself from its dominant weapons supplier, Russia, over its February 2022 invasion of Ukraine. (Reuters)
Who are Russia’s supporters? They may be numerous, but do not offer much to the Kremlin. (The Economist)
‘Worst-case scenario’ in Sudan: The Biden administration is developing a response to escalating violence in Sudan by warring factions, with the earliest plans aimed at stopping the fighting ASAP. Each side has tens of thousands of troops in the capital of Khartoum, a city of 5 million people, and in other major cities, leading to around 100 deaths and hundreds wounded in just three days. There’s no end in sight since the prospects for a negotiated settlement are small and fighting is widespread throughout the nation. “This is the worst-case scenario,” said Cameron Hudson, who served as chief of staff to multiple special presidential envoys to Sudan. “Both sides see the other as an existential threat. They have been itching for this fight for so long that we’re not going to put a cork in it right now.” (Politico)
Explainer: What is happening in Sudan, and is it at risk of civil war? The oil-rich North African nation has been mired in instability since the 2019 coup that ousted dictator Omar al-Bashir after 30 years. A transitional civilian-military government was booted in another coup in 2021, followed by mass street protests brutally repressed by the army. The latest deadline for the army to hand over power to civilians lapsed last week — perhaps a clear sign of what was coming. If the warring parties don't back down, the risk of the conflict turning into a full-blown civil war is real. This comes 12 years after the last one ended with the independence of South Sudan. But even just continued violence will surely worsen an economic crisis spurred by sky-high inflation. Russia has long been trying to finalize a deal for a Red Sea naval base in Sudan, while the US doesn't want Khartoum to return to supporting international terrorism. Neighboring Egypt also has close ties to Sudan (both countries oppose Ethiopia's controversial Nile dam), while Saudi Arabia and the UAE also want Khartoum under their sphere of influence. Sudan is in a semi-permanent state of turmoil and, despite its oil wealth, the economy is a shambles. But its geopolitical and strategic value remains as high as low are the odds of the country returning to democracy in the near future. (GZERO Media)
A simple guide to what's going on in Sudan. (BBC)
Macron doubles down on French ‘independence’ amid pension reform crisis: French President Emmanuel Macron drew a connection between his country's pension reform and Europe's independence from other countries, during a televised address Monday evening. "We are a people who intend to control and choose our destiny, who do not want to depend on anyone, neither on the forces of speculation, nor on foreign powers, nor on wills other than our own, and we are right," Macron said during the 15-minute speech. (Politico EU)
Historic Asia heat breaks hundreds of records, with extremes in Thailand and China: Numerous heat records have been broken across Southeast Asia, China and other parts of the continent in recent days as the region remains in the grip of a dangerously scorching heat wave, with Thailand in particular experiencing unusually extreme conditions. Weather historian Maximiliano Herrera is describing it as the “worst April heat wave in Asian history.” April and May are typically Thailand’s hottest months, but the heat fueled the country’s all-time hottest temperature late last week. On Friday, Thailand surpassed 113 degrees Fahrenheit for the first time ever, topping out at 114 degrees in the town of Tak amid the country’s New Year’s celebration. (Washington Post)
Economy
Big US financial groups Charles Schwab, State Street and M&T suffered almost $60bn in combined bank deposit outflows in 1Q23 as customers continued to move their money in search of higher returns. The deposit flows, reported in first-quarter earnings, heralded an anxious start to a week when dozens of regional and midsized banks are due to announce their results, providing a fuller picture of the damage wrought by the failure last month of SVB and the other lenders. (Financial Times)
Apple joined the competition for bank deposits with the launch of a high-yield savings account that pays an annual percentage yield of 4.15%. The high-yield savings accounts, available in conjunction with Apple’s credit card, are one of the tech company’s latest steps into the financial-services space, which also include an option to allow customers to “buy now, pay later” on certain of its hardware products. The company partnered with Goldman Sachs to offer consumers those options, part of Apple’s effort to transform the iPhone into a digital wallet that can help keep consumers linked to the software ecosystem behind its devices. (Wall Street Journal)
Corporate defaults surged in March amid regional bank strain. (Financial Times)
Consulting giants McKinsey & Co. and Bain & Co. are delaying start dates for new M.B.A. hires, or in some cases paying them thousands of dollars to put off starting their jobs. Consulting firms are among the biggest recruiters of business-school talent. Delaying the start dates for so many fresh grads is causing anxiety on campuses and suggests these businesses may have wider concerns about the economy. Bain told M.B.A.s with offer letters that if they waited to start until April 2024, the firm would pay them $40,000 to work for a nonprofit or $30,000 to learn a new language or participate in an educational program, in one communication that suggested hires could also become yoga instructors or go on safari for $20,000. (Wall Street Journal)
Climate-data comments show surprising splits: Some businesses say disclosing carbon emissions and other climate data can boost profits; others, that it is costly, complicated and useless, a WSJ analysis of hundreds of comment letters on proposed SEC rules shows. In some cases, competitors stake out opposing positions or businesses reveal themselves to be at odds with their trade groups. A gusher of cash pouring into climate-related industries has further scrambled the dynamic. (Wall Street Journal)
Chinese cities court foreign investment for post-COVID recovery. (Nikkei Asia Review)
Technology
ChatGPT Can Decode Fed Speak, Predict Stock Moves From Headlines: The first wave of academic research applying ChatGPT to the world of finance is arriving — and judging by early results, the hype of the past few months is justified. Two new papers have been published this month that deployed the artificial intelligence chatbot in market-relevant tasks — one in deciphering whether Federal Reserve statements were hawkish or dovish, and one in determining whether headlines were good or bad for a stock. (Bloomberg)
Apple's revenue in India hit a record almost $6B in FY 2022, up nearly 50% YoY from $4.1B; Tim Cook is inaugurating India's first Apple stores this week. (Bloomberg)
Apple is promising more eco-friendly batteries ahead of Earth Day. The company has committed to using 100 percent recycled cobalt in all Apple-designed batteries by 2025. It also expects to use completely recycled rare earth elements in its magnets by that point, and all in-house circuit board designs will use fully recycled gold plating and tin soldering. (Engadget)
Nine states, including Michigan and Nebraska, have joined a U.S. Department of Justice lawsuit against Alphabet's Google which alleges the search and advertising company broke antitrust law in running its digital advertising business, the department said on Monday. The states joining the lawsuit were Arizona, Illinois, Michigan, Minnesota, Nebraska, New Hampshire, North Carolina, Washington and West Virginia, the department said. (Reuters)
Uber, which has for years been searching for a viable way into the $4 trillion health care market, swooped in to offer hundreds of pregnant patients in D.C. free rides to appointments in 2021 and 2022. Uber says patients who participated in the pilot were slightly more likely to get prenatal care, and it’s shopping the data around to insurers in a bid to get them to pay for the service. Uber isn’t the only tech company seeking to address missed appointments. Some, like Babyscripts, offer digital blood pressure cuffs and scales to make it easier for clinicians to monitor pregnant patients, especially when they can’t make in-person appointments. Clinics offering Babyscripts to their patients told STAT earlier this year that the devices could help reduce emergency department visits later in pregnancy. (STAT News)
Smart Links
Lululemon Is Exploring a Sale of Mirror Fitness Unit It Bought in 2020. (Bloomberg)
Judge delays Dominion and Fox News trial amid reports of settlement talks. (The Guardian)
Overdose deaths of older Americans quadrupled in past 20 years. (Washington Post)
US tax breaks lure European clean tech companies as EU lags. (Associated Press)
Bosses Pay Workers to Move Closer to Offices. (Wall Street Journal)