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The World
Worldwide oil demand is racing toward an all-time high and some of the smartest minds in the industry are forecasting $100-a-barrel crude in a matter of months, but US producers are playing the short game and looking to turn over as much cash as possible to investors. Shareholders in US oil companies reaped a $128 billion windfall in 2022 thanks to a combination of global supply disruptions such as Russia’s war in Ukraine and intensifying Wall Street pressure to prioritize returns over finding untapped crude reserves. Oil executives who in years past were rewarded for investing in gigantic, long-term energy projects are now under the gun to funnel cash to investors who are increasingly convinced that the sunset of the fossil-fuel era is nigh. (Bloomberg)
China is set to increase defense spending this year by 7.2% to 1.56 trillion yuan ($230 billion), according to a draft released Sunday by the Ministry of Finance. China’s defense budget grew by 7.1% last year to 1.45 trillion yuan, faster than the 6.8% increase in 2021 and 6.6% climb in 2020. (CNBC)
Chinese Premier Li Keqiang mentioned "stability" 33 times in his government work report on Sunday, underscoring Beijing's resolve to stabilize an economy battered by the coronavirus. (Nikkei Asia Review)
Beijing is pressing Hong Kong’s elite to give up their western passports in order to be selected for the Chinese parliament as it tries to stamp out foreign influence and tighten control of the territory. Officials told politicians and tycoons wishing to represent Hong Kong at China’s top decision-making body to renounce passports or travel documents from countries including the UK, according to one new delegate, one former delegate and another person briefed on the selection process. (Financial Times)
Migrants on small boats to be barred from Britain: Asylum seekers who arrive on small boats will be removed from Britain and prohibited from returning or claiming citizenship under laws to be announced on Tuesday. Rishi Sunak and Suella Braverman, the home secretary, will bring forward legislation to make all such asylum claims inadmissible. (The Times)
Spain announces law promoting gender parity in politics and business: Spanish Prime Minister Pedro Sanchez on Saturday announced a gender equality law that will require more equal representation of women and men in politics, business and other spheres of public life. (Reuters)
Food fight: FDA is redefining ‘healthy’ and food industry is pushing back. Less saturated fat, less sodium, less added sugar; manufacturers say almost no packaged foods would qualify under the agency’s new rules. The FDA announced in September that the agency planned to change the rules for nutrition labels that go on the front of food packages to indicate that they are “healthy.” Dozens of other food manufacturers and industry organizations have joined Conagra in claiming the new standards are draconian and will result in most current food products not making the cut, or in unappealing product reformulations. Under the proposal, manufacturers can label their products “healthy” only if they contain a meaningful amount of food from at least one of the main food groups such as fruit, vegetable or dairy, as recommended by federal dietary guidelines. They must also adhere to specific limits for certain nutrients, such as saturated fat, sodium and added sugars. It’s the added sugar limit that has been the sticking point for many food executives. The FDA’s previous rules put limits around saturated fat and sodium but did not include limits on added sugars. (Washington Post)
Diabetes and obesity rising in young Americans, study finds. (Washington Post)
Fewer Americans Want U.S. Taking Major Role in World Affairs: 65% of Americans prefer the U.S. to take the leading (20%) or a major role (45%) in world affairs. This is down from 69% in 2019 and 72% as recently as 2017. The current figure is one percentage point below the prior low from 2011. In almost all years since Gallup first asked the question in 2001, more than seven in 10 Americans have favored a leading or major role for the U.S., including a high of 79% in February 2003. (Gallup)
Economy
The US is more attractive than the UK for energy investment, says Shell chief: America is significantly more attractive than Britain for energy investment, Shell’s new chief executive has said. Wael Sawan said the government should “take a page from some of the things that the US have done recently, through the Inflation Reduction Act”, a $369 billion package of subsidies to spur green investment in America. (The Times)
Federal Reserve officials are converging around the need to keep US interest rates high for longer, reflecting concern about recent hotter-than-expected inflation data and worries about global economic trends that could fuel price pressures. “In order to put this episode of high inflation behind us, further policy tightening, maintained for a longer time, will probably be necessary,” Mary Daly, president of the San Francisco Fed, said at Princeton University. Daly’s remarks follow a series of hawkish comments from other senior officials at the US central bank, reacting to economic indicators showing that US inflation is not subsiding as rapidly as hoped. (Financial Times)
Bars, Hotels and Restaurants Become the Economy’s Fastest-Growing Employers: Hospitality companies are reviving their hiring after making pandemic cuts, offsetting slower jobs growth in the technology industry. (Wall Street Journal)
Credit Suisse’s new investment bank will create a partner level above its existing managing directors, providing a senior rank for top deal makers. Between 50 and 100 existing CS First Boston managing directors are up for partnership in the boutique’s new organizational structure, which will be similar to that of banks like Goldman Sachs, executives said this week at an off-site meeting. (Bloomberg)
Amazon is pausing construction on its sprawling second headquarters near Washington, a decision that coincides with the company’s deepest ever job cuts and a reassessment of office needs to account for remote work. John Schoettler, Amazon’s real estate chief, confirmed the pause in a statement to Bloomberg News. Schoettler said the company remains committed to Arlington, VA, where by 2030 Amazon has committed to spend $2.5 billion and hire some 25,000 workers. But the construction moratorium will delay the online retailer’s full arrival at its biggest real estate project, and could create headaches for local developers, as well as construction and service workers banking on Amazon’s rapid expansion. (Bloomberg)
Technology
Tech giants like Amazon, Alphabet Inc. and Microsoft Corp. for years drove demand for office space, helping prop up building values in cities like New York, San Francisco and Washington, D.C. Now many of these firms are canceling leases, putting space up for sublease and rolling back plans to buy or build offices as they lay off workers and look to cut costs. That is putting pressure on building owners at a time when they are already grappling with weak demand from other industries and a rise in interest rates. “The one thing to hang your hat on for a lot of office owners was that tech demand,” said John Kim, a real-estate stock analyst and managing director at BMO Capital Markets. “We didn’t realize it would be this bad this fast.” (Wall Street Journal)
Apple Readies Its Next Range of Macs, Including — Finally — a New iMac: Apple’s next iMac desktop is at an advanced stage of development called engineering validation testing, and the company is conducting production tests of the machine. The next iMac will continue to come in the same 24-inch screen size as the current model, which was announced in April 2021. The versions being tested also come in the same colors as the current iMac, a palette that includes blue, silver, pink and orange. The new iMacs will, of course, be more powerful — with a new M-series chip to replace the M1. There also will be some behind-the-scenes changes. The computer will see some of its internal components relocated and redesigned, and the manufacturing process for attaching the iMac’s stand is different. While development of the new iMacs — codenamed J433 and J434 — has reached a late stage, it’s not expected to go into mass production for at least three months. That means it won’t ship until the second half of the year at the earliest. (Bloomberg)
US-listed tech companies face cash crunch after burning through billions from IPOs: Technology groups that have recently listed in the US burnt through more than $12bn of cash in 2022, with dozens of companies now facing difficult questions over how to raise more funds after their share prices tumbled. As the proceeds from the dealmaking frenzy start to run low, however, many face a choice between expensive capital raises, extreme cost cutting, or takeover by private equity groups and larger rivals. “[Those companies] benefited from the very high valuations but unless you’re really bucking the trend your stock is way down now. That can leave you kind of stuck,” said Adam Fleisher, a capital markets partner at law firm Cleary Gottlieb. (Financial Times)
Siri co-creator Adam Cheyer says generative AI will spur an assistant voice renaissance; Satya Nadella says Cortana, Alexa, Siri, Google Assistant “don't work”. (Financial Times)
Scammers are using voice-cloning AI to impersonate family members in distress, sometimes spoofing specific numbers to further the ruse, and victims fall for it. Advancements in artificial intelligence have added a terrifying new layer, allowing bad actors to replicate a voice with just an audio sample of a few sentences. Powered by AI, a slew of cheap online tools can translate an audio file into a replica of a voice, allowing a swindler to make it “speak” whatever they type. Experts say federal regulators, law enforcement and the courts are ill-equipped to rein in the burgeoning scam. (Washington Post)
Bing Chat appears to have a hidden Celebrity mode, in which the chatbot answers questions while impersonating Biden, Trump, Tom Cruise, and other famous people. (Bleeping Computer)
Smart Links
Subway’s Potential $10 Billion Sale Draws Goldman, Bain. (Bloomberg)
Who to fire? How the biggest companies plan mass lay-offs. (Financial Times)
TikTok Introduces 60-Minute Daily Time Limit for Children. (Wall Street Journal)
Female Execs Are Exhausted, Frustrated and Heading for the Exits. (Bloomberg)
International schools shift to new markets after China boom stalls. (Financial Times)
Ukraine: U.S. Military Aid Exceeds Costs of Afghanistan. (Statista)