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The World
AP Interview: Biden says a recession is ‘not inevitable’. President Joe Biden said Thursday the American people are “really, really down” after a tumultuous two years with the coronavirus pandemic, volatility in the economy and now surging gasoline prices that are slamming family budgets. But he stressed that a recession was “not inevitable” and held out hope of giving the country a greater sense of confidence. Speaking to The Associated Press in a 30-minute Oval Office interview, the president emphasized the battered economy that he inherited and the lingering psychological scars caused by a pandemic that disrupted people’s sense of identity. He bristled at claims by Republican lawmakers that last year’s COVID-19 aid plan was fully to blame for inflation reaching a 40-year high, calling that argument “bizarre.” As for the overall American mindset, Biden said, “People are really, really down.” (Associated Press)
U.S. stocks fell sharply, sending the Dow Jones below 30000 for the first time since January 2021. Major indexes have notched big declines in 2022 as high inflation, rising interest rates and growing concerns about corporate profits and economic growth dent investors’ appetite for risk. The blue-chips are down 18% this year, while the S&P 500 is down 23% and the Nasdaq has fallen 32%. (Wall Street Journal)
Mortgage surge toward 6% slams brakes on red-hot housing market: When mortgage broker Jeff Lazerson quoted a 6% rate for a client this week, he thought it was a mistake. The last time 30-year rates were that high was late 2008, when policymakers plunged the world into an era of ultra-low rates to pull economies back from the brink. “What a shocker!’” said Lazerson, president of Mortgage Grader Inc. in Laguna Niguel, California. “My sense is we’ll see a very nasty recession.” (Bloomberg)
Amid record inflation, 36% of employees earning $100,000 or more say they are living paycheck to paycheck. (CNBC)
Western democracy to blame for wars, chaos, human misery: Xi Jinping. Some Western nations use democracy and human rights as a pretext to meddle overseas, Xi Jinping told Politburo study session in February Democracy and human rights are not for decoration, Xi said in highlighting Western social and political issues, recently published full text shows. (South China Morning Post)
Germany is going through a “summer wave” of Covid-19 with the nationwide infection rate among the highest levels in Europe. The public have been urged to wear masks in indoor public spaces after the number of daily confirmed cases nearly doubled in a week. (The Times)
Omicron less likely to cause long COVID - UK study. (Reuters)
The lead Republican negotiator in US Senate dialogue toward a bipartisan gun safety bill walked out of the talks, dimming the likelihood of a vote on the legislation before senators leave for a two-week July 4 recess. Senator John Cornyn told reporters that he had not abandoned the negotiations, but he was returning to Texas amid difficulty reaching agreement. “It’s fish or cut bait,” he said. “I don’t know what they have in mind, but I’m through talking.” Other senators in the huddle remained inside the room. (The Guardian)
Abbott baby formula plant closes again because of flooding: The company has stopped production of its EleCare specialty formula to assess damage caused by a storm and to clean and sanitize the facility. (Washington Post)
The record-breaking heat sweeping across the US is having a deadly effect on livestock, with Kansas reporting 2,000 cattle dead. This week, the National Weather Services (NWS) predicted extreme heat on parts of the Gulf coast and spreading to the Great Lakes in the midwest, with more than 100 million Americans advised to stay inside to fight the heat. A visitor holds a water bottle to their head to cool off at the Lincoln Memorial in Washington DC in May. Kansas has also been hard hit and will continue to be. The state is among the top three producers of beef in the country, where there are twice as many cows as people, and beef is among its top exports. (The Guardian)
Economy
Spreads on US junk-rated corporate bonds, an important gauge of risk that signals higher defaults when it increases, surpassed 500 basis points for the first time since November 2020. The figure, which measures the extra yield investors demand to hold the debt instead of US Treasuries, increased 31 basis points on Thursday to 508 basis points, according to the Bloomberg US Corporate High Yield index. (Bloomberg)
The crisis at Celsius is rocking DeFi and crypto: The company froze withdrawals in what looks like an effort to stop a virtual bank run. Now boosters are wondering where the bottom is. (Bloomberg)
Bitcoin miners are scaling down production as sinking cryptocurrency prices and rising energy costs squeeze profits and slam their shares. Miners, which use powerful computers to create new units of bitcoin and validate transactions on blockchains, have been forced to change tack as tumbling crypto prices threaten to undermine their heavy investment in technology. (Financial Times)
Safety worries are putting New Yorkers off returning to their desks: By late April, only 8% of New Yorkers had returned to their offices five days a week, according to a survey of employers by Partnership for New York City, a business group. On an average weekday, 38% of Manhattan office workers were in the workplace. More than a quarter were fully remote. Firms are trying to bring workers back through mandates or incentives such as free meals and Ubers. But after more than two years of remote working, people have grown used to it. Few miss the commute. Some continue to worry about catching covid-19. (The Economist)
Real estate billionaire Stephen Ross says recession would drive people back to the office. (Bloomberg)
Technology
Amazon CEO Andy Jassy’s First Year on the Job: Undoing Bezos-Led Overexpansion. Amid one of the worst stretches for financial performance in Amazon’s history, the new CEO is working to cut back the excesses of an e-commerce operation the company expanded at breakneck pace during much of the Covid-19 pandemic. (Wall Street Journal)
Today’s Wall Street Journal deep dive into Andy Jassy’s first year as Amazon CEO is worth a read. Two things jumped out: the revelation that Amazon’s decisions about expanding its fulfillment operations are informed by an internal tool measuring demand for products, and the fact that two members of Amazon’s board went on the record to defend Jassy’s performance as CEO. (The Information)
Leaked transcript: Inside Elon Musk’s first meeting with Twitter employees. The conversation provides the most detail yet about Musk’s plans to change the social media company. In the meeting, Musk answered challenging questions submitted from employees, including how he will handle contentious speech on the platform, whether he plans layoffs, and if he will allow employees to continue to work remotely. (Recode)
Elon Musk warned Twitter staffers its business needed to “get healthy” and undergo a “rationalization of headcount” as he addressed the social media platform’s employees directly for the first time since launching his $44bn takeover bid. Musk laid out a bold vision for Twitter’s future, including increasing the number of people who use the platform to at least 1bn. (Financial Times)
SoftBank’s Vision Fund deals show slowing pace, smaller rounds: When SoftBank announced last month it will take a more conservative approach to selecting investments, it was another warning shot that the high times of 2021 are over for venture capital. However, SoftBank was slowing its investing even before the declaration—at least in terms of the size of the rounds it participated in, if not the number. (Crunchbase)
Tesla has significantly increased the prices of its electric cars across its entire lineup with some models going up by as much as $6,000. After a year of increasing prices almost every month in 2021, Tesla slowed down the rapid rise in prices across its electric vehicles in early 2022. The last major price increase was in March 2022 – followed by a smaller one on long-range vehicles in April. (Electrek)
TSMC executives said the world's biggest chipmaker will have the next version of ASML's most advanced chipmaking tool in 2024. The tool called "high-NA EUV" produces beams of focused light that create the microscopic circuitry on computer chips used in phones, laptops, cars and artificial intelligence devices such as smart speakers. EUV stands for extreme ultraviolet, the wavelength of light used by ASML's most advanced machines. (Reuters)
Block is abandoning its San Francisco office, which is where the company has been headquartered for over a decade. (San Francisco Chronicle)
Smart Links
Airlines were totally unprepared when travel came roaring back. (Bloomberg)
Gatwick set to cancel one in ten flights during summer holidays. (The Times)
More than 1.5 billion people watch YouTube Shorts every month. (The Verge)
ABA proposes eliminating standardized tests for law school. (Inside Higher Ed)
Drop that fork! Why eating at your desk is banned in France. (NPR)