Know someone who would like this newsletter? Forward it to them.
The World
Tensions between the U.S. and China escalated as the two nations traded fiery accusations over spying programs, in the aftermath of the U.S. downing of a Chinese spy balloon and three unidentified flying objects a week later over North America. In a sign of how closely the U.S. had been monitoring the balloon surveillance program directed by the Chinese military recently, U.S. officials said in interviews that they began tracking the spy balloon as it lifted off from Hainan Island in southern China in late January. The combative exchange indicates how quickly the espionage programs of the two nations are becoming a revived point of tension in a relationship that is caught in a downward spiral. Mr. Biden and President Xi Jinping of China have sought since a meeting in Bali, Indonesia, in November to stabilize the ties, but the furor set off by the spy balloon has blown up those efforts. (New York Times)
China says US has sent over 10 high-altitude balloons illegally into Chinese airspace since last year: Beijing accuses Americans of flying their own devices over China without permission, but the Biden administration rejects the claim. (South China Morning Post)
Philippine President Ferdinand Marcos Jr. said his country could be pulled into a possible conflict in the Taiwan Strait because of its proximity to the island. "When we look at the situation in the area, especially the tensions in the Taiwan Strait, we can see that just by our geographical location, should there in fact be conflict in that area ... it's very hard to imagine a scenario where the Philippines will not somehow get involved," Marcos told Nikkei in an exclusive interview. (Nikkei Asia Review)
Iranian President Raisi to visit China starting today to shore up ties. (Associated Press)
Japan plans purchase of up to 500 U.S. Tomahawk cruise missiles: $1.6bn allocated for planned deal to boost counterstrike capability. (Nikkei Asia Review)
The U.S. has told its citizens to leave Russia immediately due to the war in Ukraine and the risk of arbitrary arrest or harassment by Russian law enforcement agencies. "U.S. citizens residing or traveling in Russia should depart immediately," the U.S. embassy in Moscow said. "Exercise increased caution due to the risk of wrongful detentions." "Do not travel to Russia," it added. The last such public warning was in September after Putin ordered a partial mobilization. (Reuters)
New Russian offensive underway in Ukraine, says NATO. NATO also is expected to ask its members to raise its ammunition stockpiles which have been badly depleted by the war in Ukraine, as allies try to put arms supplies to Kyiv and their own militaries on a sustainable footing after a year in crisis mode. (Reuters)
Elon Musk's Space Exploration Technologies Corp. revealed it had taken steps to prevent Ukrainian armed forces from using critical Starlink satellite internet technology, claiming Ukrainian soldiers were using the platform to help operate drones against Russia. The company said Starlink is not meant for offensive purposes and that it had not foreseen how profoundly the Ukrainian military would rely on its technology." (CNN)
The Finnish president said he trusts that Finland and Sweden will be admitted into NATO by July, and hinted that he wants the U.S. to put pressure on Turkey to approve their membership bids. If the issue drags on, the entire process of admitting new members into the military alliance will become questionable, President Sauli Niinistö said. (Associated Press)
Chinese scientists in pollution busting 1-in-80 year breakthrough: Scientists from China and Spain say they have made a rare breakthrough in the hunt for a more affordable and effective way to reduce harmful industrial emissions, using the microporous silicates called zeolites which are at the heart of catalytic converters and other processes to remove contaminants. (South China Morning Post)
The Hidden Toll of Microstress. Microstresses are small moments of stress that seem manageable on their own — think a vague, worrying text from your teen flashing on your phone while you’re in a meeting, the appearance of a colleague who always wants to vent to you, or having to tell your team that the project you’ve all been grinding out extra hours on is no longer a priority. But these microstresses aren’t as harmless as they seem. Because they’re so small and brief, they don’t trigger the normal stress response in our brains to help us cope; instead, microstress embeds itself in our minds and accrues over time. The long-term impact of this buildup is debilitating: It saps our energy, damages our physical and emotional health, and contributes to a decline in our overall well-being. But once you understand the science behind microstress and where it comes from, you can fight back. Fresh research will teach you how to recognize and manage microstress’s most common forms. (Harvard Business Review)
New Zealand declares national emergency as storm triggers floods, landslides: The tropical storm battered the North Island, causing extensive damage, power outages and stranding people on roof tops. Authorities have asked people to leave home as rivers continue to swell and the tide rises. (Reuters)
Economy
CPI Will Show Whether Stocks or Bonds Got It Right: For the first time in a long time, stock and bond markets are flashing divergent signals on the economy and future Fed policy. Today’s inflation report will go a long way in determining which one is right. Bond markets have been cautious. Yields on two-year Treasuries have soared by more than 30 basis points over the past two weeks as traders grow wary of the Fed’s hawkish messaging ahead of the latest reading on consumer prices. Stocks have been less worried. Amid the re-rating in the debt market, the S&P 500 has climbed almost 1.5% over that span. (Bloomberg)
President Joe Biden has decided to name Federal Reserve Vice Chair Lael Brainard as his top economic adviser, with an announcement coming as soon as today. In addition, Jared Bernstein, a member of the Council of Economic Advisers, is considered likely to be named its chair, replacing Cecilia Rouse, who is stepping down. (Bloomberg)
Japan's GDP slows to 1.1% in 2022 on weaker export growth. Economy marks annualized 0.6% growth in 4Q22. (Nikkei Asia Review)
The Treasury Department is preparing to start a $10 billion program for subsidizing advanced energy projects and a new tax break for solar-and-wind projects in low-income communities. The two programs were created last year in the climate, health and tax law known as the Inflation Reduction Act. The department has been working to lay out the details of how the law’s tax breaks will work, as companies begin taking advantage of new incentives to invest in projects aimed at accelerating the country’s shift away from fossil fuels. (Wall Street Journal)
Two major North American railways, Canadian Pacific and Kansas City Southern, have proposed a $27bn merger that would make it easier to move freight across North America with the first unified continental rail network. The merger is awaiting final approval from US regulators. In Houston, that would mean an additional eight trains passing through each day. However, the rail merger doesn’t just pose more inconveniences for residents of Houston’s East End. If it goes through, it would create the first direct route from Canada’s bitumen oil sands mines in Alberta to heavy crude refineries in Port Arthur, an industrial city on the Texas coast. “We fully expect that the combination of the two railroads will only strengthen their support for this new source of bitumen,” the vice-president of USD Group, a Texas-based midstream company, told a Canadian newspaper last year. (The Guardian)
Luggage Brand Away Is Exploring Options, Including a Sale. (Bloomberg)
Facing the highest cost of remote work is the world’s leading financial center, where Manhattan workers are spending at least $12.4 billion less a year due to about 30% fewer days in the office, according to new data analyzed by Bloomberg News. The steep loss is a culmination of missed sales for restaurants, retailers and other businesses that drive the local economic engine, write Emma Court and Donna Borak. Transit finances are also in free fall, and office vacancies are posing a crisis for real estate markets. And the loss in tax revenue verges on the existential: What is the value of a city when workers don’t need to be there anymore? (Bloomberg)
Technology
Amazon chief vows to ‘go big’ on physical stores: Amazon chief executive Andy Jassy has vowed to double down on the company’s struggling grocery store business, despite recently announcing that its growth plans were on hold. Jassy told the Financial Times that the ecommerce giant was ready to “go big” on bricks-and-mortar stores, blaming a lack of “normalcy” during the pandemic for a series of stumbles. (Financial Times)
Amazon’s Self-Driving Car Shuttles People on Public Roads for the First Time. (Bloomberg)
Beijing will support leading enterprises in building large AI models that can challenge ChatGPT, the city's economy and information technology bureau said. The city will support key firms to invest in building an open source framework and accelerate the supply of basic data, it said in a statement. The bureau also said that 1,048 core AI companies, or 29% of the country's total, were located in Beijing as of October last year, and that it would look into ways to cultivate talent and conduct research in areas such as ethical governance. (Reuters)
Alphabet Chairman John Hennessy explains why Google was hesitant to put out its ChatGPT competitor: Companies like Google are trying to figure out how to bring generative AI to market while it still gives inaccurate answers. Hennessy said he thinks the technology is still a year or two away from being truly useful on a wider scale. (CNBC)
The pandemic-era rise of telehealth and therapy apps has fueled a contentious product line: Americans’ mental health data. And the sale of it is perfectly legal in the United States, even without the person’s knowledge or consent. research team at Duke University’s Sanford School of Public Policy outlines how expansive the market for people’s health data has become. After contacting data brokers to ask what kinds of mental health information she could buy, researcher Joanne Kim reported that she ultimately found 11 companies willing to sell bundles of data that included information on what antidepressants people were taking, whether they struggled with insomnia or attention issues, and details on other medical ailments, including Alzheimer’s disease or bladder-control difficulties. (Washington Post)
Read the Duke study.
Walmart plans to close three of its U.S. technology hubs and require hundreds of workers to relocate to keep their jobs, according to a memo reviewed by The Wall Street Journal. The retailer will also begin to require all its technology workers to come into the office at least two days a week. The retail behemoth will close offices that house technology staff in Austin, Texas; Carlsbad, Calif.; and Portland, Ore. (Wall Street Journal)
Smart Links
Citi nears sale of Mexican bank Banamex despite state interference. (Financial Times)
The less college students sleep, the worse their grades, study finds. (Washington Post)
Super Bowl LVII Draws 113 Million Viewers, Making It Third Most-Watched TV Show Ever. (Wall Street Journal)
NBC Sports hopes to make an aggressive bid to bring back the NBA. (CNBC)
Patients still have no protection against surprise ambulance bills. And there’s no solution in sight. (STAT News)
Microsoft’s LinkedIn Lays Off Staff Amid Hiring Slowdown. (The Information)