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The World
Tens of thousands at risk from flooding after Ukraine dam collapse: About 42,000 people were at risk from flooding in Russian and Ukrainian controlled areas along the Dnipro River after a dam collapsed, as the United Nations aid chief warned of "grave and far-reaching consequences." The destruction of the Kakhovka dam and power plant that unleashed floodwater across southern Ukraine is likely to limit Kyiv’s options in its incipient counter-offensive, according to military officials and analysts. But some military analysts and Ukrainian officials say the timing of the dam’s destruction is suspicious, as it largely benefits Russia, by scuppering Kyiv’s plans to attack to the south and increasing the likelihood of an eastward offensive that Moscow could focus on. (Reuters, Financial Times)
Wildfire Smoke Darkens Skies and Triggers Air Alerts in Northern U.S.: A smoky haze floated over a wide swath of the northern United States on Tuesday from Canada, where hundreds of wildfires were blazing, triggering air alerts from Minnesota to Massachusetts. In Ontario, a layer of haze blanketed parts of Ottawa and Toronto, where Canadian officials warned residents about the poor air quality, as smoke floated over portions of New York State and Vermont. All of New York City was under an air quality alert on Tuesday because of the smoke; by the afternoon, the Manhattan skyline was obscured by hazy skies. (New York Times)
PGA Tour, LIV Golf Agree to Merge: The PGA Tour and LIV Golf, the Saudi-backed upstart that sent the industry into chaos when it teed off last year, have agreed to a stunning merger that ends the divide that has dominated the sport for the last year. The deal weds the Saudi money and the PGA Tour name and connections after months of bruising litigation and sharply traded accusations. It also consolidates the biggest assets in professional golf—at a time when golf bodies including the Tour are being investigated by the Justice Department for antitrust violations. Now, the same Saudi gushers that have funded LIV will be pooled with the PGA Tour’s existing revenue streams, giving the combined entity vast new resources for unnamed future investments. It effectively makes the Saudis investors in U.S. golf’s legacy powerhouse—a move that carries risk for the PGA Tour, which has spent the past year lashing out at its rival as LIV paid hundreds of millions of dollars to stars like Phil Mickelson and Brooks Koepka to persuade them to defect. (Wall Street Journal)
Saudi Arabia passes four domestic football teams to sovereign fund: The Saudi government has handed ownership of four top domestic football teams to its deep-pocketed sovereign wealth fund, putting increased financial firepower behind the country’s ambitious plans in the sport. The Public Investment Fund said that Al Ittihad, Al Ahli, Al Hilal and Al Nassr — where Portuguese star Cristiano Ronaldo plays — had been converted into corporate entities, having previously been run by the state. The $600bn fund will own 75 per cent of each of the four clubs, with the remaining shares held by new non-profit foundations. The move to change the ownership structure of the biggest domestic clubs coincides with a push to bring more top players to the country. Since Ronaldo arrived in January, lucrative offers have reportedly been made to Argentina’s World Cup-winning captain Lionel Messi and Karim Benzema, winner of the 2022 Ballon d’Or. The trio are among the greatest footballers of the past 20 years, although all of them are nearing the end of their careers. Messi already has a promotional deal with Visit Saudi, the country’s tourism board. (Financial Times)
New US Spy Satellites to Track Chinese, Russian Threats in Orbit: The US Space Force is set to launch a constellation of satellites this summer to track Chinese or Russian space vehicles that can potentially disable or damage orbiting objects, the latest step in the burgeoning extra-terrestrial contest between superpowers. Dubbed “Silent Barker,” the network would be the first of its kind to complement ground-based sensors and low-earth orbit satellites, according to the Space Force and analysts. The satellites will be placed about 22,000 miles (35,400 kilometers) above the Earth and at the same speed it rotates, known as geosynchronous orbit. (Bloomberg)
China is building the most powerful warship radar on record: A peer-reviewed paper says Earth’s curve can affect the line of sight but boost in capability could give PLA major advantage. New-generation system can suppress adversaries with output power peaking at 30 megawatts, the researchers said. (South China Morning Post)
Hundreds of passengers and crew on an Air India flight from New Delhi to San Francisco face a tense wait to complete their flight after an engine problem forced them to land in the far east of Russia. It is unclear whether engineers from either Boeing or GE — both US companies — would be allowed to travel to Russia to service the aircraft, given US sanctions against the country following its full-scale invasion of Ukraine. After the imposition of sanctions, Russia has seized scores of western-owned chartered aircraft that were under Russian operators’ control. The diversion comes the day after Scott Kirby, chief executive of the US’s United Airlines, warned at the Iata annual meeting in Istanbul of the risks of flights of aircraft with US citizens on board over Russia. “When you fly over Russia, you use a Russian airport as a place to divert airplanes,” Kirby said at a briefing. “If there are mechanical issues or medical issues, you’re going to land in Russia. What’s going to happen if an airline lands in Russia with some prominent US citizens on board? That is a potential crisis in the making.”
Economy
China’s exports tumble in May, adding to economic woes: China’s exports fell by 7.5 per cent in May compared with a year earlier, while imports fell by 4.5 per cent last month, year on year. Beijing has pledged to shore up trade to support the overall economic recovery, but China’s exports have struggled due to weak global demand. (South China Morning Post)
The World Bank raised its 2023 global growth outlook as the U.S., China and other major economies have proven more resilient than forecast, but said higher interest rates and tighter credit will take a bigger toll on next year's results. Real global GDP is set to climb 2.1% this year, the World Bank said in its latest Global Economic Prospects report. That's up from a 1.7% forecast issued in January but well below the 2022 growth rate of 3.1%. (Reuters)
Interest-Only Loans Helped Commercial Property Boom. Now They’re Coming Due. Nearly $1.5 trillion in commercial mortgages are coming due over the next three years, according to data provider Trepp. Many of the commercial landlords on the hook for the loans are vulnerable to default in part because of the way their loans are structured. Unlike most home loans, which get paid down each year, many commercial mortgages are known as interest-only loans. Borrowers make only interest payments during the life of the loan, with the entire principal due at the end. Interest-only loans as a share of new commercial mortgage-backed securities issuance increased to 88% in 2021, up from 51% in 2013, according to Trepp. (WSJ)
The venture capital giant Sequoia Capital is splitting its China business into a separate entity amid rising tensions between Washington and Beijing. The renowned Silicon Valley group, which made bets on fast-growing tech companies such as TikTok parent ByteDance and Alibaba, said on Tuesday it would run its Chinese business as a “completely independent” entity from its US operation. The Chinese arm will give up the Sequoia name and instead be called HongShan, a romanisation of its Chinese name, which means redwood. The VC group will also separate its Indian and south-east Asian business into a third entity, it said, adding that the changes would take place by March next year. (Financial Times)
Companies That Embraced Social Issues Have Second Thoughts: Executives rethink if and when to weigh in on potentially divisive issues, fearing backlash from all sides, and develop crisis plans in case things go wrong. CEOs spent the past few years adjusting to a world in which investors, customers and employees expected corporate leaders to align themselves with social causes. Today, that has made companies targets in the U.S. culture wars, where one step can turn a social-media storm into a corporate crisis that cripples businesses and wrecks careers. (Wall Street Journal)
A New CEO Says Employees Can’t Work Remotely After All, and They Revolt: After insurance-industry company Farmers Group told employees last year that most of them would be remote workers, many made significant lifestyle changes in response to the policy. Some sold their cars, others expanded home offices or moved their families to new cities. Then last month, Raul Vargas, who recently took over as chief executive, said he was reversing the approach. He would require the majority of Farmers employees to be in the office three days a week. That decision sparked worker outrage. More than 2,000 comments have been posted on Farmers employees’ internal social-media platform, most of which were negative or crying and angry emojis, according to postings viewed by The Wall Street Journal and interviews with employees. (Wall Street Journal)
Technology
SEC sues Coinbase over exchange and staking programs, stock drops 12%: The SEC sued Coinbase, alleging that the company was operating as an unregistered exchange and broker, and that 13 assets listed on its platform were considered crypto asset securities. The regulator asked that the exchange be “permanently restrained and enjoined” from doing so. The suit comes just one day after the SEC sued Binance and its founder Changpeng Zhao. (CNBC)
TSMC has defended its push to diversify manufacturing beyond the company’s native Taiwan as a vital step to secure the future of the world’s largest contract chipmaker, amid increasing geopolitical tensions. Taiwan Semiconductor Manufacturing Company’s overseas expansion plans have triggered concerns at home, with shareholders challenging management at its annual meeting on Tuesday. They asked chair Mark Liu to explain the rationale behind his decision to invest $40bn in two fabrication plants in the US, build another one in Japan and consider one in Germany. (Financial Times)
Apple didn't mention AI at WWDC 2023, instead referring to machine learning and transformers while describing features and touting M2 Ultra for training models. (Ars Technica)
Social-media company Reddit is laying off roughly 90 employees and slowing hiring as it restructures key parts of its business. Reddit is making the moves to address priorities, including funding projects and achieving its goal of breaking even next year, Chief Executive Steve Huffman told employees in an email seen by The Wall Street Journal. The job cuts amount to around 5% of Reddit’s workforce of approximately 2,000 people. (Wall Street Journal)
Smart Links
To Reignite the U.S. Chip Industry, Invite More Chefs into the Kitchen. (Scientific American)
Columbia University ends cooperation with U.S. News college rankings. (Washington Post)
Australia’s economy expands 2.3% in the first quarter, slowest growth in 1½ years. (CNBC)
College Is About To Get A Lot More Expensive For Middle Class Families. (Forbes)
New York City sues Hyundai and Kia over rising vehicle thefts. (Financial Times)
These Are the World’s 20 Most Expensive Cities for Expats in 2023 (Tl;dr: NYC is No. 1). (Bloomberg)