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The World
American Business Confidence in China Slumps to Lowest in Decades: U.S. companies are painting the bleakest picture in decades over doing business in China as tensions between Beijing and the West are compounded by a deteriorating environment for their operations. Just over half of 325 members surveyed by the American Chamber of Commerce in Shanghai were optimistic about their five-year business outlooks, the lowest since the survey began in 1999, the group said Tuesday. As recently as 2021, the figure stood at 78%. While sectors such as pharmaceuticals, legal services and retail reported slightly higher levels of optimism, they were lower in logistics, technology and management consulting because of factors such as China’s crackdown on due-diligence firms, the annual survey said. (Wall Street Journal)
How Iran and the US reached the prisoner swap deal: Implementation of the deal was triggered when Qatar confirmed that the funds had been transferred to bank accounts in Doha, a source briefed on details of the matter told Reuters. The agreement was the culmination of months of diplomatic contacts, secret talks and legal manoeuvring, with Qatar at the heart of negotiations, sources and officials familiar with the discussions told Reuters. Doha hosted at least eight rounds of clandestine indirect meetings between Tehran and Washington since March 2022. The first public glimpse of the deal came on Aug. 10 when Iran allowed four detained U.S. citizens to move into house arrest from Tehran's Evin prison. A fifth was already confined at home. A month later, Washington waived sanctions to allow the transfer of Iran's funds to banks in Qatar, which will have a monitoring role to ensure Iran's clerical rulers spend the funds on non-sanctioned goods. (Reuters)
The leader of Britain’s Labour Party vows to mend ties with the EU if victorious. Keir Starmer “has promised to seek a major rewrite of Britain’s Brexit deal in 2025 if the Labour party wins the next general election, saying he owes it to his children to rebuild relations with the EU.” The UK’s Trade and Cooperation Agreement with the EU, negotiated by Boris Johnson, is up for review that year, and Starmer said in an interview, “Almost everyone recognizes the deal Johnson struck is not a good deal — it’s far too thin. As we go into 2025 we will attempt to get a much better deal for the UK.” Recent polls show Labour leading the Tories by about 20 points; an election must be held by January 2025. (Financial Times)
The U.S. Space Force is building a command center in Japan. The command post will be the third in the Indo-Pacific after sites opened in Hawaii and South Korea last year, and a number of Space Force personnel are already stationed in Japan. Chinese defense experts “warned that the new space command post in Japan would fuel the space race among China and the US. ‘These two space command centres [in South Korea and Japan] that take care of US intelligence, communication and position satellites are not only aimed at China’s most powerful strategic weapons, such intercontinental ballistic missiles and anti-satellite systems, but also help interfere with the joint operations of the PLA’s missile force, navy, air force and strategic support force,’ said Ni Lexiong, a professor at Shanghai University of Political Science and Law.” (South China Morning Post)
Benjamin Netanyahu hopes Elon Musk can lessen antisemitism on social media. During a live discussion on X from New York, the Israeli Prime Minister told Musk that he knows Musk is “committed” to combatting antisemitism and “hopes Musk will be able to help if not stop antisemitism on social media, then at least ‘roll it back.” Musk said that free speech “does at times mean that someone you don’t like is saying something you don’t like” but that if X is “too ‘unpleasant,’ people will not use it.” (Times of Israel)
For the first time ever, more than 10% of Japan’s population is age 80 or older, and the trend could continue in other developed countries. Finland and Italy are not far behind Japan in their share of elderly people, and a New York Times report recently found that “many of the world's leading economies — including much of Western Europe, China, and South Korea — will have old-age populations by 2050. Meanwhile, much of South and Southeast Asia, Africa, and the Middle East will have more balanced workforces, leading to a possible reshaping of economic and geopolitical power.” (Semafor)
Hard-right politics are on the rise around the world. “In Europe, nationalist or far-right parties are growing in Germany, France, Italy, the Netherlands, Belgium, Switzerland, Austria, Hungary, Poland, and even Finland and Sweden,” while right-wing populists are finding support in Central and South America. In Argentina, self-described “anarcho-capitalist” Javier Milei, once a dark horse, is now the favorite in next month’s presidential election and has caught the eye of Tucker Carlson, who flew to Buenos Aires to interview Milei last week. (Axios)
Nearly one in five U.S. jobs created in 2023 have been in the public sector. Government jobs at the federal, state, and local level have risen by 327,000 positions so far since January — amounting to nearly 20% of all new jobs compared to just five percent during the same period in 2022. Much of the hiring has been to backfill jobs left open by teachers and others who quit during the pandemic. ZipRecruiter economist Julia Pollak said, “After two years of very underwhelming government hiring, it’s a necessary catch-up.” (Wall Street Journal)
California is suing five oil and gas giants and the American Petroleum Institute. The Golden State accuses BP, Chevron, ConocoPhillips, ExxonMobil, Shell, and the industry trade group of misleading the public about the impact of fossil fuels on the climate and for causing billions of dollars in environmental damage. The case “is the latest in a string of climate litigation actions in the U.S. targeting fossil fuel companies, bolstered by ‘attribution studies’ which are able to more precisely allocate responsibility for climate damage. In June, Oregon filed a lawsuit against oil companies seeking $1.5 billion in damages for a deadly 2021 heat wave.” (Semafor)
Economy
This is not the economy the Fed was expecting. When the Federal Open Market Committee meets this week, it will confront lower inflation and a stronger economy than it projected in June. The Fed expected inflation-adjusted growth of just one percent in Q4, “but economists polled by S&P Global Market Intelligence last week estimate that GDP will be up by 1.8% in the fourth quarter — a forecast that has embedded in it an expectation that the economy will hit a rough patch at the end of the year.” This makes a rate increase this week unlikely, which for investors is “a mixed bag: Any hints that the Fed’s rate increases might have come to an end would be welcome, but a lesser disposition to cut could leave long-term Treasury yields, and other long-term rates such as on mortgages, uncomfortably high.” (Wall Street Journal)
“At the Federal Reserve's policy meeting this week, the big question will be less about what to do now (which is likely ‘nothing’) but what, if anything, to do next.” (Axios)
America’s gross national debt exceeded $33 trillion for the first time. (New York Times)
U.S. mortgages are less affordable than ever. Mortgage rates hit their highest rate since 2000 last month, and a scarcity of inventory is pushing prices ever higher. (Bloomberg)
Housing prices are not expected to fall any time soon. (Axios)
U.S. consumers will continue to cut back on spending during the crucial holiday shopping season. A new CNBC-Morning Consult survey found that 92% of U.S. adults have reduced their spending over the past six months, and in “a warning for retailers,” 76% plan to “cut back on spending for non-essential items and 62% expect to cut back on essential items ‘sometimes’ or ‘more often’ over the next six months.” (CNBC)
UAW President Shawn Fain says there is no role for the White House in strike negotiations. Asked on MSNBC if the White House will help broker an agreement between the United Auto Workers and automakers, Fain replied, “No, not at all. This battle is not about the President. … This battle is about the workers standing up for economic and social justice and getting their fair share because they’re fed up with going backwards.” On Friday, President Biden said he would send Acting Labor Secretary Julie Su and White House senior advisor Gene Sperling to Detroit to help mediate the negotiations. (CNBC)
Ford is facing a possible strike by workers on both sides of the US-Canada border, as 5,700 workers threaten to walk out of the company’s Canadian plants when their contract expires at midnight. (Financial Times)
The most recent contract proposal by Stellantis could result in the closing of 18 U.S. facilities, impacting thousands of union members. But the plan could also bring new investments and repurpose an idled Illinois vehicle assembly plant. (CNBC)
Automakers misread the UAW’s intentions in advance of the strike. (Bloomberg)
Who are the new breed of leaders helming the nation’s largest unions? (Associated Press)
San Francisco Office Market Shows Signs of Life: Sales slowly materialize as some sellers finally accept much lower prices. After a long stretch when the city’s office buildings couldn’t attract buyers even at cut-rate prices, sales are slowly materializing. Investors have purchased or agreed to purchase five major office towers in recent months, already making 2023 the most active year for sales since 2019. (Wall Street Journal)
Remote work has environmental advantages. According to a study published Monday, fully remote workers “could produce less than half the climate-warming emissions of people who spend their days in offices,” while those working remotely two to four days per week “could also cut emissions by 11 to 29 percent, according to the study. The findings help shed more light on the factors that can influence the environmental and climate effects of different work models, said Longqi Yang, an applied research manager at Microsoft and one of the paper’s authors.” (Washington Post)
Technology
Amazon will hire Microsoft’s departing product chief. Panos Panay, who led Microsoft’s Windows team and played a major role in the company’s rollout of Surface computers, will head up the unit devoted to Alexa and Echo smart speakers, Amazon Fire streaming sticks, Kindle e-readers, and other devices. Amazon is holding its annual new devices event on Wednesday at its new HQ2 campus in Arlington, Virginia. (Bloomberg)
Saudi Arabia is in talks with Tesla about setting up a manufacturing facility. As part of its effort to diversify away from oil, the Kingdom has set a goal of selling 20 million vehicles a year by 2030, up from around 1.3 million last year. The Saudis are hoping to entice Tesla by securing cobalt assets from the Democratic Republic of Congo that would make it easier to produce EV batteries. But “any deal could be fraught with complications, given Tesla Chief Executive Elon Musk’s contentious relationship with the Saudis as well as the kingdom’s existing partnership with the company’s electric-vehicle rival Lucid Group.” (Wall Street Journal)
A deal between Disney and Charter Communications could strike a blow against cable-cutters. Under the agreement, Disney streaming services will be bundled “with Charter’s cable television packages. That pact could be a watershed for traditional TV gatekeepers that want a piece of the action from the streaming services they’ve grown to fear. Charter urgently wanted a deal in place for Disney-owned ESPN — the most important cable network in the TV ecosystem — because it believed such a deal would help it reach similar arrangements with the operators of other streaming services, one person with knowledge of Charter’s thinking said.” (The Information)
“It’s the kind of move we all would have loved cable to make 10 years ago when we all subscribed to cable. This is exciting news, but for a rapidly shrinking audience.” (The Verge)
ABC is adding 10 “Monday Night Football” games to its broadcast schedule. The Disney-owned network will air the additional games to fill gaps in its writers’ strike-impacted fall schedule. The move is in addition to games already announced as simulcasts from games shown on Disney’s ESPN. (Deadline)
Smart Links
MBAs Are Spurning McKinsey to Buy Small Companies. (Bloomberg)
Instacart prices shares at $30 as IPO market warms up. (Financial Times)
Olive oil prices surge over 100% to record highs, sparking cooking oil thefts. (CNBC)
Surging Physical Oil Market Brings $100 Crude Back in Sight. (Bloomberg)
The fee war among asset managers has made index-tracking funds nearly free. (Wall Street Journal)
Apple has rolled out its iOS 17 operating system for iPhones, which includes better autocorrect, live voicemail transcription, and a new StandBy mode. (Axios)