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The World
Inflation cooled last month to its slowest pace in more than two years, giving Americans relief from a painful period of rising prices and boosting the chances that the Federal Reserve will stop raising interest rates after an expected increase this month. The consumer-price index climbed 3% in June from a year earlier, the Labor Department said Wednesday, sharply lower than the recent peak inflation rate of 9.1% in June 2022, when gasoline prices hit a U.S. record average of $5 a gallon. The June rate declined from 4% in May. Inflation was last close to 3% in March 2021. (Wall Street Journal)
Easing inflation lifts hopes of a breather in US rate rises: A quarter-point increase is still expected this month but that could be the last of this tightening cycle. (Financial Times)
Inflation will continue to batter colleges through fiscal 2024, Moody’s predicts. (Higher Ed Dive)
NATO had some significant successes at its summit that ended as it worked hard to project unity in support of Ukraine’s bloody defense against Russia’s invasion. Turkey lifted its objections to Sweden’s membership. The alliance approved new spending goals and its most ambitious military plans for Europe’s defense since the Cold War. There were new commitments for long-term support for Kyiv. And all 31 member states agreed that Ukraine belongs in NATO, a significant shift stemming from its brave, resilient defense of its country and of Western values. Even so, the summit’s final communiqué, with its ambiguous diplomatic language, does not disguise some serious strains among alliance members in the bitter fight over how to describe Ukraine’s path toward NATO membership. Ukraine was promised an invitation “when allies agree and conditions are met,” leaving both the timing and the conditions safely unsaid. (New York Times)
NATO's plan to open a liaison office in Tokyo is "still on the table," Secretary-General Jens Stoltenberg said, even as the alliance's annual summit closed without a decision on the Indo-Pacific hub. (Nikkei Asia Review)
China hits back against NATO’s ‘eastward march’ as Indo-Pacific leaders and alliance members meet at summit. Australia, Japan, New Zealand and South Korea attend second day of security alliance meeting in Vilnius, prompting response from Beijing. Tokyo and NATO agree to partner on security and cyber defense, while Japanese officials say they still have hopes for vetoed liaison office. (South China Morning Post)
Microsoft disclosed that a China-based hacking group gained access to an unspecified number of email accounts across approximately 25 organizations. Many of the accounts affected are tied to government agencies and individuals likely associated with those agencies, Microsoft said. The Cybersecurity and Infrastructure Security Agency also said in an advisory released Wednesday that a U.S. federal civilian agency identified "suspicious activity" in its Microsoft 365 cloud environment last month, resulting in state-backed hackers exfiltrating unclassified information. (Axios)
US-China relations: poisoned public opinion driving vicious cycle towards new cold war. In early June, a survey of more than 2,000 Chinese people conducted by Stanford University found that 75 per cent of respondents held negative views of the US. The same survey showed that American respondents’ views of China were similarly negative at 76 per cent. The findings are in line with other polls that show unfavourable views of each other are at record lows. Another poll by the Roper Centre in the US found that Americans’ views of China have started to resemble their views of the Soviet Union decades ago in terms of hostility, pessimism and militarism. (South China Morning Post)
The world is "far off track" to meet its goal of ending hunger and food insecurity by 2030, the United Nations warned. Between 691 and 783 million people faced hunger in 2022 — an increase of 122 million people since 2019. Multiple crises, including the COVID-19 pandemic, natural disasters exacerbated by climate change and Russia's invasion of Ukraine contributed to the increase, the UN said. Instead of the world meeting its food goals by 2030, the UN estimated that 600 million people will be chronically undernourished by that year. The UN's report said persisting effects of the pandemic and rising food prices from disasters or conflict left approximately 2.4 billion people — 29.6% of the world's population — without access to nutritious, safe and sufficient food all year round. (Axios)
FBI Director Christopher Wray strongly defended his workforce in testimony before Congress, where he faced hours of combative questioning by Republicans who accuse the agency of overzealously targeting their party, namely former President Donald Trump and his supporters. The appearance was Wray’s first before the House Judiciary Committee since Republicans took control and the panel’s chairman, Jim Jordan (R., Ohio), launched an investigation of what he decried on Wednesday as the “weaponization of the government against the American people.” The hearing reflected an unusual political moment in which Republicans, who once supported the bureau as the party of law and order, are now among its harshest critics, while Democrats, historically more skeptical of law enforcement, have come to the FBI’s defense. (Wall Street Journal)
Another Insurance Company Exits Florida: Farmers Insurance informed the state it was dropping home, auto and umbrella policies across Florida, potentially affecting tens of thousands of people, the Miami Herald reports. It’s the fourth company to leave the Florida market in the last year — most citing rising risks from hurricanes. (Political Wire)
The world is hotter than it’s been in thousands of years, and it’s as if every alarm bell on Earth were ringing. The warnings are echoing through the drenched mountains of Vermont, where two months of rain just fell in only two days. India and Japan were deluged by extreme flooding. They’re shrilling from the scorching streets of Texas, Florida, Spain and China, with a severe heat wave also building in Phoenix and the Southwest in coming days. They’re burbling up from the oceans, where temperatures have surged to levels considered “beyond extreme.” And they’re showing up in unprecedented, still-burning wildfires in Canada that have sent plumes of dangerous smoke into the United States. Scientists say there is no question that this cacophony was caused by climate change — or that it will continue to intensify as the planet warms. (Washington Post)
Economy
Remote Work to Wipe Out $800 Billion From Office Values, McKinsey Says: Remote work risks wiping $800 billion from the value of office buildings in major cities, highlighting the potential losses that landlords are facing from post-pandemic changes in employment trends. Covid-19’s push toward hybrid work has driven the need for office space down with vacancy rates rising, McKinsey Global Institute said in a report that modeled the impact on valuations by 2030 in nine cities globally. (Bloomberg)
Fund Titans Are Betting on Everything Gaining Against the Dollar: The dollar has defied predictions of a prolonged slump since at least the beginning of the year but top money managers say it’s now on borrowed time as US exceptionalism wanes. The greenback is weakening as US interest rates near a peak and the Federal Reserve’s aggressive tightening begins to take a toll on the world’s largest economy, investors say. That will set the stage for the likes of the yen, kiwi and emerging-market currencies such as the Brazilian real and Colombian peso to strengthen, according to AllianceBernstein and UBS Asset Management. (Bloomberg)
Shopify Shames Employees With Cost Calculator for Pointless Meetings: The company’s new internal tool is part of a push to boost productivity by removing a projected 322,000 hours of meetings this year. (Bloomberg)
South Korean automaker Kia plans to invest over $200 million in its assembly plant in Georgia, where it will begin production of the electric EV9 SUV next year. The news comes as foreign automakers double down on North American production in order to qualify for federal EV tax credits. Assembly on the continent is required for vehicles to be eligible for up to $7,500 under the Inflation Reduction Act (IRA) signed in August 2022. Hyundai Motor Group, which owns Kia, is also working with battery manufacturer SK On to build a new battery manufacturing plant in the state. SK Innovation has also opened a $2.6 billion battery plant in Georgia to produce batteries for Ford. (TechCrunch)
Americans’ confidence in higher education has fallen to 36%, sharply lower than in two prior readings in 2015 (57%) and 2018 (48%). In addition to the 17% of U.S. adults who have “a great deal” and 19% “quite a lot” of confidence, 40% have “some” and 22% “very little” confidence. (Gallup)
Technology
Elon Musk has formally launched xAI, an artificial intelligence company aiming to challenge the dominance of Sam Altman’s OpenAI and “understand the true nature of the universe”. The company will be led by Musk and staffed by a team hired from other leading AI research labs, including Igor Babuschkin from DeepMind and researchers from Microsoft and OpenAI. The Twitter owner and Tesla and SpaceX boss has also secured thousands of GPU processors from Nvidia, which are required to build large language models that consume vast amounts of content. (Financial Times)
Britain's competition regulator said a restructured deal between Microsoft and Activision Blizzard could satisfy its concerns, subject to a new investigation, marking a climbdown in its opposition to the biggest gaming deal in history. The Competition and Markets Authority said that while merging parties could not submit new remedies once a final report has been issued: "they can choose to restructure a deal, which can lead to a new merger investigation." (Reuters)
Lina Khan Is Taking on the World’s Biggest Tech Companies—and Losing: FTC chair’s court loss against Microsoft marks another setback in her fight to block mergers. (Wall Street Journal)
As Twitter continues to implode, advertisers pin their hopes on Threads: Instagram Threads debuted last week and has amassed more than 100 million sign-ups, which has caught the attention of numerous companies, several digital marketing agencies and industry experts told CNBC. Many businesses that have stopped advertising on Twitter over brand safety concerns are excited about the possibility of advertising on Threads, once that option becomes available. (CNBC)
Intel and Nvidia continue to push purpose-built chips for training AI systems in China amid US export restrictions: Intel said its Gaudi2 processor, which is not subject to US restrictions, is the company’s answer to Nvidia’s A100 GPU, used for training AI systems. It follows efforts by Nvidia earlier this year to push modified versions of the firm’s US-restricted A100 and H100 GPUs in China. (South China Morning Post)
TSMC, Foxconn hit in biggest Taiwan tech slump in 10 years. (Nikkei Asia Review)
Amazon Prime Day is single biggest e-commerce day so far in 2023: Amazon's annual, global Prime Day has become a tide that lifts all boats in retail. Shoppers spent $6.4 billion across U.S. e-commerce platforms on Tuesday, the first day of Amazon's Prime Day. That's up about 6% from last year, based on 1 trillion visits to U.S. retail sites. Notably, curbside pickup of online orders rose to 20% of digital sales this year, up from 18% last year, reflecting a rising trend that's helped boost brick-and-mortar giants like Walmart to become more competitive with Amazon. Buy now, pay later orders grew about 20% compared to the first day of Prime day last year, driven by apparel, home and electronics merchandising purchases, as excess savings from the pandemic has fallen about 60% from its peak. (Axios)
Smart Links
Disney gives CEO Bob Iger two extra years to find another successor. (Financial Times)
The Art Market Hits a Wall: Christie’s sold $3.2 billion in art during the first half of 2023, a 23% drop from the year. (Wall Street Journal)
China reveals first details of crewed lunar landing mission by 2030. (South China Morning Post)
Yen strengthens in reversal, driving down Japanese stock prices. (Nikkei Asia Review)