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The World
Senior U.S. officials are racing to placate frustrated and confused allies from Europe to the Middle East to Kyiv following the leak of highly classified information about the war in Ukraine and other global issues. After the news of the leak broke last week, senior intelligence, State Department and Pentagon officials reached out to their counterparts to quell worries about the publishing of the intel, according to four officials — an American, two European and one Five Eyes member — familiar with those conversations. One said that members of the Five Eyes — the intelligence consortium of the United States, Canada, United Kingdom, Australia and New Zealand — have asked for briefings from Washington but have yet to receive a substantive response. (Politico)
Egypt secretly planned to supply rockets to Russia, leaked U.S. document says: President Abdel Fatah El-Sisi in February planned to produce 40,000 rockets for Russia and instructed officials to keep production and shipment secret ‘to avoid problems with the West’. (Washington Post)
Social-Media Platform Discord Emerges at Center of Classified U.S. Documents Leak. (Wall Street Journal)
A U.S. Navy destroyer sailed near one of the most important man-made and Chinese controlled islands in the South China Sea, in a freedom of navigation mission that Beijing denounced as illegal. While the U.S. frequently makes such voyages to challenge China and other states' territorial claims in the strategic waterway, the latest one took place as Beijing staged more war games around Taiwan. (Reuters)
Taiwan president slams 'irresponsible' China military drills. (Reuters)
GOP lawmakers condemn French President Macron’s ‘betrayal’ of Taiwan: The French embassy dismissed the criticism of Macron’s comments as “overinterpretations.” (Politico)
Lula says he will invite Xi to Brazil as China trip approaches. (Reuters)
Taiwan said it had detected 12 mainland warships and 91 jets after Beijing concluded three days of military exercises around the island following President Tsai Ing-wen's visit with U.S. House Speaker Kevin McCarthy. (Semafor)
The US and the Philippines kick off the largest version of their flagship military exercise in more than 30 years, a high-profile display of their renewed alliance that comes just a day after China was set to conclude its own drills around Taiwan. The annual Balikatan exercise will focus on developing maritime security and amphibious operations and will include live-fire training at a time the two nations are seeking to push back against Chinese aggression in the South China Sea. The presence of more than 17,600 military personnel almost doubles last year’s level, according to the US Embassy in Manila. (Bloomberg)
Facing dire polls and growing public anger and anxiety over a wave of attacks on several fronts, Prime Minister Benjamin Netanyahu announced the permanent reinstatement of Defense Minister Yoav Gallant, whom he fired two weeks ago for publicly calling to freeze plans to overhaul the judicial system. Netanyahu, in a speech to the nation, also blamed the opposition and the previous government for recent violence that has included rocket fire from Lebanon, Syria, and the Gaza Strip, and a series of deadly Palestinian terrorist attacks. (Times of Israel)
The credit crunch the Fed fears may already be taking shape. After a year of racing along a virtually unfettered path to higher interest rates, the Federal Reserve is facing its first significant pothole as the decisions made in hundreds of bank executive suites will either add up - or not - to an economy-shaping drop in lending. By raising the benchmark interest rate that banks use in lending money to each other, tighter monetary policy makes consumer and business loans more expensive and harder to get. In theory, that lowers demand for credit-financed goods and services, and in time also lowers inflation. The concern now is how far and fast that unfolds. Household and business bank accounts remain comparatively flush, a buffer against too swift an economic comedown. (Reuters)
Singapore favors AI, alternative food talent in new visa scheme. The Singapore government has unveiled details on how it seeks to attract foreign professionals as businesses prepare for one of the biggest updates to the country's visa scheme coming into effect in September. From artificial intelligence engineers to cybersecurity experts to alternative meat scientists, the government released a list of 27 jobs that will be favored in the point-based assessment process, showing what the city-state expects from global companies as it seeks to grow the economy post-pandemic. (Nikkei Asia)
Thousands of professors, part-time lecturers and graduate student workers at New Jersey’s flagship university went on strike — the first such job action in the school’s 257-year history. Classes were still being held at Rutgers as picket lines were set up at the school’s campuses in New Brunswick/Piscataway, Newark and Camden, though students said some had been canceled due to the strike. Union officials decided Sunday night to go on strike, citing a stalemate in contract talks that have been ongoing since July. (Associated Press)
Economy
Auditors Didn’t Flag Risks Building Up in Banks: When KPMG LLP gave Silicon Valley Bank a clean bill of health just 14 days before the lender collapsed, the Big Four audit firm flagged potential losses on loans as a so-called critical audit matter. But the audit opinion was silent on what actually brought down the bank—its unrealized bond losses and ability to hold them given a reliance on potentially flighty deposits. “The auditors failed to mention the fire in the basement or the box of dynamite on the first floor, but they did point out the peeling paint on the flower box,” said Erik Gordon, a University of Michigan business professor. “How could they miss the interest-rate risk?” (Wall Street Journal)
Corporate America is facing its sharpest drop in profits since the early stages of the pandemic, according to Wall Street forecasts, as high inflation squeezes margins and fears of an impending recession hold back demand. Companies on the S&P 500 index are expected to report a 6.8 per cent decline in first-quarter earnings compared with the same period a year earlier. That would be the biggest fall since the more than 30 per cent plunge in the second quarter of 2020, which came as the rapid spread of Covid-19 led to a widespread economic shutdown. (Financial Times)
Bitcoin climbed above $30,000 for the first time since June 2022, rallying more than 80% since the start of the year. The rebound is even more intense than a nearly 20% gain on the Nasdaq 100 — with which Bitcoin has tended to move in tandem — and retraces some of the digital token’s losses from 2022 following a series of crypto-related blowups. Still, Bitcoin is down more than 50% from its all-time high in November 2021. (Bloomberg)
People working from home became younger, more diverse, better educated and more likely to move during the worst part of the COVID-19 pandemic, according to survey data from the U.S. Census Bureau. In many respects, the demographic makeup of people working from home from 2019 to 2021 became more like workers who were commuting, while the share of the U.S. labor force working from home went from 5.7% in 2019 to 17.9% in 2021, as restrictions were implemented to help slow the spread of the virus, according to a report released last week based on American Community Survey data. “The increase in homebased workers corresponded with a decline in drivers, carpoolers, transit riders, and most other types of commuters,” the report said. The share of people working from home between ages 25 and 34 jumped from 16% to 23% from 2019 to 2021. The share of home-based workers who are Black went from 7.8% to 9.5%, and it went from 5.7% to 9.6% for Asian workers. It remained flat for Hispanic workers, the report said. (Associated Press)
The FTC has approved a final consent order in its first-ever enforcement action over a case involving “review hijacking,” or when a marketer steals consumer reviews of another product to boost the sales of its own. In this case, the FTC has ordered supplements retailer The Bountiful Company, the maker of Nature’s Bounty vitamins and other brands, to pay $600,000 for deceiving customers on Amazon where it used a feature to merge the reviews of different products to make some appear to have better ratings and reviews than they otherwise would have had if marketed under their own listings. (TechCrunch)
European commercial real estate: the cracks are starting to show. (Financial Times)
Technology
Apple’s personal computer shipments declined by 40.5% in 1Q23, marking a tough start to the year for PC makers still grappling with a glut of unsold inventory. Shipments by all PC makers combined slumped 29% to 56.9 million units — and fell below the levels of early 2019 — as the demand surge driven by pandemic-era remote work evaporated, according to IDC’s latest report. Among the market leaders, Lenovo Group Ltd. and Dell Technologies Inc. registered drops of more than 30%, while HP Inc. was down 24.2%. No major brand was spared from the slowdown, with Asustek Computer Inc. rounding out the top 5 with a 30.3% fall. (Bloomberg)
Taiwan Semiconductor Manufacturing Co. said its revenue fell 15% in March from a year earlier, marking the first drop in nearly four years. TSMC said that revenue fell to 145.41 billion new Taiwan dollars (US$4.78 billion) from NT$171.97 billion in March 2022. That is its first monthly revenue fall since May 2019. (Wall Street Journal)
Samsung’s Cut in Chip Production Is Good News for Industry. (Bloomberg)
A.I. Is Coming for Lawyers, Again: There are warnings that ChatGPT-style software, with its humanlike language fluency, could take over much of legal work. The new A.I. has its flaws, notably its proclivity to make things up, including fake legal citations. But proponents insist those are teething defects in a nascent technology — and fixable. Will the pessimists finally be right? Law is seen as the lucrative profession perhaps most at risk from the recent advances in A.I. because lawyers are essentially word merchants. And the new technology can recognize and analyze words and generate text in an instant. It seems ready and able to perform tasks that are the bread and butter of lawyers. (New York Times)
Alibaba to roll out its rival to ChatGPT across all its products. (CNBC)
OpenAI CEO considers opening office as Japan government eyes adoption. (Reuters)
Smart Links
Laid-Off Tech Workers Launch ‘Revenge Startups’ Just as Money Dries Up. (Wall Street Journal)
FedEx Overhaul Contemplates a Future With No Drivers on Payroll. (Bloomberg)
U.S. Postal Service seeks to hike stamp prices by 5.4%. (Reuters)
After climbing for 6 years, homeownership rate for single women fell last year. (Chicago Tribune)
TikTok Struggles to Enlist U.S. Merchants for Shopping Service. (The Information)