Know someone who would like this newsletter? Forward it to them.
The World
U.S. government bonds rallied while bank shares weighed on major stock markets, as moderating US inflation warmed investors to the view that the Federal Reserve would have more time to remove crisis-era stimulus. Data released showed headline US consumer prices rose 5.3% cent in the year to August, a slight moderation from the 5.4% rate of inflation recorded in July. Analysts at TD Securities added: “The moderation in inflation creates less urgency for the Fed to tighten policy.” (Financial Times)
Americans last year saw their first significant decline in household income in nearly a decade, with economic pain from the pandemic prompting government aid that helped keep millions from falling into poverty. An annual Census Bureau assessment of the nation’s financial well-being offered insight into how households fared during the pandemic’s first year. Median household income was about $67,500 in 2020, down 2.9% from the prior year, when it hit an inflation-adjusted historical high. It came as the U.S. last year saw millions lose their jobs and national unemployment soar from a 50-year low to a high of 14.8%. The last time median household income fell significantly was 2011, in the aftermath of the 2007-09 recession. (Wall Street Journal)
U.S. consumer spending is still outpacing pre-pandemic levels in a sign that shoppers are shrugging off concerns around the Delta variant to continue fuelling the economic recovery, according to bank executives. At JPMorgan Chase, debit and credit card spending is still tracking 18 to 19% higher than 2019 levels. Consumer spending accelerated in 2021 after reaching a low late last year and that “strength stayed with us through the summer season, and as we sit here today” — despite a slowdown in spending in the travel and lodging sectors, Consumer and Community Banking Head Marianne Lake told investors. (Financial Times)
The gulf between moderate and progressive Democrats seems to be widening by the minute. Sen. Jon Tester (D-Mont.) told reporters that he wants “100%” of the reconciliation bill paid for by budgetary offsets. If you were wondering, that’s not in the cards at the moment. Tester wasn’t asked whether he would accept “dynamic scoring” to account for some of these offsets. The Montana Democrat certainly agrees there’s plenty of worthwhile issues to spend money on. He just doesn’t want to blow up the deficit even more. And on the day after Sen. Joe Manchin (D-W.Va.) took to the Sunday shows to say $3.5 trillion is unacceptable, Sen. Bernie Sanders (I-Vt.) made it extraordinarily clear he won’t stand for lowering the price tag. (Punchbowl News)
Joe Biden suggested he hold a face-to-face summit with Chinese president Xi Jinping during a 90-minute call last week but failed to secure an agreement from his counterpart, leading some U.S. officials to conclude that Beijing is continuing to play hardball with Washington. The US president proposed to Xi that the leaders hold the summit in an effort to break an impasse in US-China relations, but multiple people briefed on the call said the Chinese leader did not take him up on the offer and instead insisted Washington adopt a less strident tone towards Beijing. (Financial Times)
The Chinese ambassador to Britain has been banned from parliament in an unprecedented intervention that led to a diplomatic row with Beijing. Its embassy accused parliamentarians of “despicable and cowardly action” after an invitation for Zheng Zeguang to speak at an event on the Commons terrace was withdrawn. Sir Lindsay Hoyle, the Commons speaker, said that it would not be “appropriate” to allow the ambassador on to the parliamentary estate when MPs were the subject of sanctions from China after they spoke out against Uighur human rights abuses. (The Times, South China Morning Post)
Angela Merkel is seen by many Europeans as a future EU president when she ends her time as Germany’s chancellor. In a survey, 41% said that they would back Merkel, who is stepping down after Germany’s September 26 general election, as head of the European Council, compared with 14% who saw President Macron of France as the best candidate. (The Times)
California Gov. Gavin Newsom became the second governor in U.S. history to defeat a recall aimed at kicking him out of office early, a contest the Democratic governor crafted as part of national battle for his party’s values in the face of the coronavirus pandemic and lingering threats from “Trumpism.” The victory ensures the nation’s most populous state will remain in Democratic control as a laboratory for progressive policies on immigration, climate change, representation and inequality. (Associated Press, Los Angeles Times)
Preventable hospitalization costs among unvaccinated patients surged to $3.7B in August. More than 280,000 hospitalizations from COVID-19 between June and August could have been prevented by vaccination, researchers found. Meanwhile, Delta patients are clogging hospitals and spurring more procedure delays. Intermountain is the latest system to announce it's putting non-emergency procedures back on hold at 13 of its hospitals, and expects the pause to last several weeks. (Healthcare Dive, Kaiser Family Foundation)
Boris Johnson should “go hard and go early” with coronavirus restrictions this winter if there is a surge in cases, the chief scientific adviser has said, adding that the UK was at a “pivot” and warned that ministers would need to change course rapidly if cases rose quickly this winter. (The Times)
Nearly three-quarters of residents of countries with some of the world’s most advanced economies worry that climate change will one day create suffering in their own lives, according to a far-reaching Pew Research Center survey. The findings, based on responses from a representative sample of nearly 20,000 people in 17 countries spanning North America, Europe and Asia, underscore growing concerns about global warming — and how even wealthy nations can no longer avoid the worsening consequences. (Washington Post, Pew Research Center)
Economy
China’s retail sales grew 2.5% in August, far slower than 7% expected. China’s retail sales grew a disappointing 2.5% in August from a year ago. Data on consumer spending released by the National Bureau of Statistics on Wednesday came in well below the 7% growth forecast by analysts polled by Reuters. Industrial production growth was also slightly below expectations, up 5.3% in August versus predictions of 5.8% growth. (CNBC)
British finance minister Rishi Sunak said that private equity firms' interest in British listed companies reflected well on the economy, but added that he wanted to make it easier for new businesses to list on the stock market. "I would view it as a sign of confidence in the UK economy," he said when asked whether there were long-term dangers to businesses being taken private. "If international investors, whoever they are, are keen to invest their capital in the UK, that is something that is good news for our economy. And that's what you're seeing." (Reuters)
Businesses around the world want to hire but face a similar dilemma: attracting workers. A survey of nearly 45,000 employers across 43 countries showed 69% of employers reported difficulty filling roles, a 15-year high, according to employment-services provider ManpowerGroup Inc. At the same time, 15 countries -- focused in Europe and North America -- reported their highest hiring intentions since the survey began in 1962. About 40% of respondents said they offer training and skills development to attract and retain talent. A similar share reported offering flexible work schedules. Nearly a third increased wages. Others offered signing bonuses and more vacation time. (Bloomberg)
Wall Street banks are stepping up efforts to automate “grunt work” foisted on younger investment bankers, portraying the changes as an attempt to reduce workloads and stop young talent from leaving the industry. Companies including Goldman Sachs, Barclays and Moelis have initiatives under way to automate basic functions such as generating pitch books and valuation modelling, according to bank executives. The efforts suggest that attempts by Wall Street banks to mollify junior bankers by raising their pay have been insufficient to stem the high rate of attrition in their ranks. (Financial Times)
Why even giant ships can't solve the shipping crisis: Is this just a momentary supply chain blip, or a sign that the great behemoth of container shipping can no longer keep pace with our changing world? The container shipping industry is "creaking" under the strain of high demand at the moment, says Rose George, author of Ninety Percent of Everything, a book about the shipping industry. "It's always been absolutely vital, it's just never been noticed," she adds. It's taken the current crisis to highlight how crucial shipping is to the global economy. (BBC News)
Boeing says pandemic has erased two years of jet industry growth, predicting demand will bounce back by 2024 despite coronavirus crisis. (Financial Times)
Technology
The rumors were right. The centerpiece of yesterday’s big Apple event is the latest iPhone. The latest device lands less than a year after its predecessor, now that things have settled down somewhat on the supply chain side for Apple. Last year’s iPhone 12 was a massive seller, bucking the trend of stagnating smartphones sales, in part due to a bottleneck in sales from the unplanned delay, but also because it finally brought 5G connectivity to Apple’s mobile line. (TechCrunch)
Apple also announced its all-new iPad Mini. It features a new enclosure with narrower bezels and rounded corners. The big news is that it’s larger than the iPad Mini 5 with an 8.3-inch display (up from its predecessor’s 7.9-inch panel), making the device even more viable as a driver for multitasking or schoolwork. Apple says the screen can reach 500 nits of brightness and comes with anti-reflective coating. (The Verge)
Facebook knows Instagram is toxic for teen girls, company documents show. Its own in-depth research shows a significant teen mental-health issue that Facebook plays down in public. “Thirty-two percent of teen girls said that when they felt bad about their bodies, Instagram made them feel worse,” the researchers said in a March 2020 slide presentation posted to Facebook’s internal message board, reviewed by The Wall Street Journal. “Comparisons on Instagram can change how young women view and describe themselves.” For the past three years, Facebook has been conducting studies into how its photo-sharing app affects its millions of young users. Repeatedly, the company’s researchers found that Instagram is harmful for a sizable percentage of them, most notably teenage girls. “We make body image issues worse for one in three teen girls,” said one slide from 2019, summarizing research about teen girls who experience the issues. “Teens blame Instagram for increases in the rate of anxiety and depression,” said another slide. “This reaction was unprompted and consistent across all groups.” (Wall Street Journal)
The biggest television drama of the past decade has been the story of how people watch it. Ten years ago nearly nine out of ten American households subscribed to cable or satellite. Today little more than half do. The collapse of pay-tv, amid the advance of online streaming, has upended the television industry and forced Hollywood giants like Disney to rethink their business model. And the pace at which consumers are “cutting the cord” from cable providers is only increasing. But not everywhere. On the other side of the Atlantic, cord-cutters are outnumbered by cord-knotters. As Americans tear up their contracts, Europeans are signing up for cable and satellite in greater numbers than ever. Pay-tv penetration in Britain will overtake that in America this year. (The Economist)
Apple's incredible 21st century growth. (Statista)
Smart Links
U.S. News & World Report unveils the 2022 Best Colleges Rankings. (U.S. News & World Report)
Amazon hikes average U.S. starting pay to $18, hires for 125,000 jobs. (Reuters)
Ad mogul Martin Sorrell on Beijing’s tech crackdown: ‘Ignore China at your peril.’ (CNBC)
Investor Marc Lasry thinks the big-spending U.S. could be headed for distress. (CNBC)
JPMorgan chases the online investing boom with senior hires. (Wall Street Journal)
Chevron to triple low-carbon investment. (Wall Street Journal)