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The World
Biden meets Li Qiang, says China economic 'crisis' makes Taiwan invasion less likely. U.S. President Joe Biden said on Sunday he held his highest level talks with Chinese leadership in months, adding that Beijing's economic wobbles would not lead it to invade Taiwan. Biden said he met with Chinese President Xi Jinping's No.2, Chinese Premier Li Qiang, at the annual G20 summit in New Delhi. The talks were the highest level meeting between the two powers in nearly 10 months since Biden and Xi spoke at last year's G20 in Indonesia. Li, who took became premier in March, attended the gathering of world leaders in place of Xi. The two leaders were not expected to hold talks at the G20 but unscripted encounters at summits are common. "My team, my staff still meets with President Xi's people and his cabinet," Biden told reporters. "I met with his No.2 person in India today." He added: "We talked about stability," and the Southern Hemisphere. "It wasn't confrontational at all." (Reuters)
Biden unveils infrastructure project to connect India, Middle East and Europe. President Biden and other G20 leaders announced a major international infrastructure project to connect India, the Middle East and Europe with railways, shipping lines, high-speed data cables and energy pipelines. Why it matters: The project, announced during the G20 Summit in New Delhi, is one of the key initiatives the White House has been pushing internationally to counter Beijing's growing influence and create an alternative to China's Belt and Road vision of which the Middle East is a key part. Biden said Saudi Arabia, Israel, the United Arab Emirates and Jordan will be part of the initiative. (Axios)
Lula says Putin can attend next year’s G20 in Rio without fear of arrest. Vladimir Putin can attend next year’s G20 summit in Rio de Janeiro without fear of arrest, the Brazilian president, Luiz Inácio Lula da Silva, has said as he took leadership of the forum. Speaking at this year’s meeting in Delhi, Lula – who has controversially tried to position himself as a peacemaker between Moscow and Kyiv – said the Russian president would be welcome to attend the November 2024 event. “What I can tell you is that, if I’m Brazil’s president, and if he comes to Brazil, there’s no reason he’ll be arrested,” the leftwinger told the Indian news group Firstpost. The international criminal court (ICC) issued a warrant for Putin’s arrest for alleged war crimes in March 2023, just over a year after Russia’s invasion of Ukraine. As a signatory of the Rome statute, Brazil is required to cooperate with ICC investigations and activities, which legal experts say includes arresting the court’s targets. Putin skipped last month’s Brics summit in South Africa, a decision widely attributed to the fact that it has signed up to the same charter. (The Guardian)
Russia is turning to old ally North Korea to resupply its arsenal for the war in Ukraine. After a year and a half of fighting in Ukraine, Russia needs to replenish its supplies of ammunition for what could be a long war of attrition. Along with ramping up its domestic arms production, Moscow is turning to an old ally with a vast arsenal — North Korea. Estimates say the reclusive and isolated Asian country has tens of millions of artillery shells and rockets that could give a huge boost to the Russian army. U.S. officials expect North Korean leader Kim Jong Un to visit Russia in the coming days to seal a possible deal on munitions transfer with President Vladimir Putin. That would be a remarkable reversal from the 1950-53 Korean War, when the Soviet Union provided the communist North with weapons and ammunition. “We know that Russian Defense Minister Sergei Shoigu has visited recently for artillery shells predominantly, and most likely that will be discussed between Putin and Kim Jong Un,” said Alexander Gabuev, head of the Carnegie Russia Eurasia Center. (Associated Press)
Morocco Races to Dig Out Survivors After Strongest Quake in 100 Years. Rescuers in Morocco raced to reach remote areas in the mountains outside Marrakesh on Sunday after the worst earthquake to hit the area in a century flattened homes across central and southern parts of the country, killing more than 2,000 people. The extent of the damage and number of casualties after the magnitude-6.8 earthquake late Friday night remained unclear because the hardest-hit communities were in the High Atlas Mountains, where the few roads appeared to be blocked by debris, and where phone service and electricity had been knocked out. State media showed footage of helicopters airlifting aid to remote areas. Many homes in that area are made of mud bricks, a traditional construction method that is highly vulnerable to earthquakes and heavy rains. In Marrakesh, the largest city in southern Morocco, residents confronted piles of rubble from buildings that had crumbled around them. In the rural areas outside the city, Moroccans climbed through the canyons between collapsed homes to retrieve bodies. And in some remote areas, residents sifted through mountains of debris with their bare hands in search of survivors. (New York Times)
In first, Israeli officials in Saudi Arabia for UNESCO conference: Bureaucrats and diplomats attend World Heritage meeting, after US asked Israel to withdraw efforts to secure visas for foreign and education ministers. (Times of Israel)
Over three-fourths of Americans think there should be a maximum age limit for elected officials, according to a CBS News/YouGov survey. The poll comes as attention toward the age of politicians has been in the spotlight after several incidents, including Senate Minority Leader Mitch McConnell (R-Ky.) freezing in front of reporters and ongoing concerns about President Biden's age. By the numbers: 77% of those surveyed said there should be "maximum age limits for elected officials," meaning "after they reach a certain age, they are not permitted to hold office any longer." The concern proved to be bipartisan, with 76% of Democrats and 79% of Republicans calling for maximum age limits for elected officials. 45% of respondents said the maximum age limit for elected officials should be 70. A combined 30% of respondents said either 50 or 60 should be the maximum age. Only 18% said 80 should be the maximum age limit for elected officials. (Axios)
The Job Market Boom Is Over. Here’s Why and What It Means: Cooling demand for workers could help achieve a soft landing—lower inflation without a recession. companies are hiring more slowly and reducing job postings as higher interest rates weigh on economic demand. More workers, including women, immigrants and Americans with disabilities, are flowing into the labor force, helping businesses fill open roles. Some economists think the labor-market cool-down points to a so-called soft landing, in which inflation falls without the economy entering a recession. Rising labor-force participation should help cool wage growth—and in turn take pressure off the Federal Reserve to raise interest rates further to reduce inflation by slowing the economy. (Wall Street Journal)
Economy
The Mighty American Consumer Is About to Hit a Wall, Investors Say: After staving off recession for longer than many thought possible, the US consumer is finally about to crack, according to Bloomberg’s latest Markets Live Pulse survey. More than half of 526 respondents said that personal consumption — the most important driver of economic growth — will shrink in early 2024, which would be the first quarterly decline since the onset of the pandemic. Another 21% said the reversal will happen even sooner, in the last quarter of this year, as high borrowing costs eat into household budgets while Covid-era savings run down. (Bloomberg)
Stocks, property value boom push U.S. wealth to record. Property values and a strong stock market pushed U.S. household wealth to a record high of $154.28 trillion in the second quarter, Federal Reserve data published Friday showed. Why it matters: The data solidifies the growing narrative that — at least for now — the U.S. economy is faring far better than its major counterparts (particularly Europe and China.) It also underscores how the Fed's aggressive tightening offensive against inflation hasn't driven the economy into a ditch, or curbed voracious consumer demand. Households have fully recouped losses suffered last year as the Fed's interest rate hikes took their toll on stocks and the housing market, Reuters notes. Zoom in: Household net worth rose to $154.3 trillion, up from $148.79 trillion at the end of the first quarter. A rally in stocks contributed $2.6 trillion in gains, or nearly half of the increase. Rising property values contributed $2.5 trillion. Compared to the first quarter of 2022, which set a previous record high of $152.49 trillion, household net worth is up by about 1.2% or $1.8 trillion. The calculation is based on the balance sheets of households, businesses, federal, state and local governments. The big picture: Analyst expectations for a recession continue to shrink, with Goldman Sachs earlier this week lowering its probability for a downturn within the next 12 months to 15% from 20%. (Axios)
Does China face a lost decade? Ever since the Chinese housing bubble burst,” said Richard Koo of the Nomura Research Institute in a recent talk, “I’ve been getting tonnes of calls from Chinese journalists, economists, investors and sometimes policymakers asking me, ‘Are we going the way of Japan?’” Mr Koo is a good person to ask: he has devoted his career to studying the aftermath of financial excess. When the American economy’s recovery from the first Gulf War faltered in 1991, his then boss at the New York Federal Reserve, Edward Frydl, began to worry about an overhang of debt and commercial property. This was “feeding a pervasive financial and economic conservatism among businesses and consumers”, Frydl argued. Demand for credit was subdued, because firms were “directing their efforts toward balance-sheet restructuring”. To describe these strains, he coined the term “balance-sheet recession”. (The Economist)
Taiwan’s year-long export slump eases as AI chip demand grows, signs semiconductor cycle is bottoming out. Taiwan’s exports slipped again in August due to weak spending by the world’s biggest economies, but a full year of monthly declines in the global hi-tech manufacturing hub showed improvement because of demand for semiconductors made to support artificial intelligence (AI). Exports from the world tech powerhouse fell by 7.3 per cent in August, year on year, to US$37.36 billion, the Ministry of Finance said on Friday. The decrease was the mildest over the past year, with semiconductor sales on the way up as developers of consumer electronics buy chips that are made for generative AI applications, analysts said. Prospects of an AI boom also dominated the world’s largest chip conference, Semicon Taiwan, this week where 60,000 guests, including executives from Europe, the United States and Japan, met to examine the industry’s future. (South China Morning Post)
Biden Forges Deeper Ties With ‘Critical’ Partner in Hanoi. President Biden visited Vietnam to celebrate a new upgrade in Washington-Hanoi relations, despite concerns about the country’s recent authoritarian crackdown and a report that it is secretly in pursuit of an arms deal with Russia. The trip to Hanoi was centered on the signing of a “comprehensive strategic partnership” with the Vietnamese, a symbolic but significant status long coveted by the U.S. Since taking office, Mr. Biden has sought to enhance relations with several Southeast Asian nations because of their tactical value as a bulwark against rising Chinese aggression in the Indo-Pacific region. The agreement “has strengthened our ties with another critical Indo-Pacific partner,” Mr. Biden said. (New York Times)
Biographies of Elon Musk and Sam Bankman-Fried Headline Fall Push for Publishers: Biographies of tech moguls Elon Musk and Sam Bankman-Fried from two big-name writers are among the most anticipated titles this fall in the publishing world, a rare instance of business books taking center stage. Walter Isaacson’s “Elon Musk,” which comes out Tuesday, is the culmination of almost three years of reporting and writing, the author said in an interview. Three weeks later, Michael Lewis’s biography of crypto entrepreneur Sam Bankman-Fried, “Going Infinite: The Rise and Fall of a New Tycoon,” goes on sale Oct. 3. (Wall Street Journal)
Technology
Meta Is Developing a New, More Powerful AI System as Technology Race Escalates: Meta Platforms is setting its sights on OpenAI. The parent of Facebook and Instagram is working on a new artificial-intelligence system intended to be as powerful as the most advanced model offered by OpenAI, the Microsoft-backed startup that created ChatGPT, according to people familiar with the matter. Meta aims for its new AI model, which it hopes to be ready next year, to be several times more powerful than the one it released just two months ago, dubbed Llama 2. The planned system, details of which could still change, would help other companies to build services that produce sophisticated text, analysis and other output. It is the work of a group formed early this year by Meta Chief Executive Mark Zuckerberg to accelerate development of so-called generative AI tools that can produce humanlike expressions. Meta expects to start training the new AI system, known as a large language model, in early 2024, some of the people said. (Wall Street Journal)
Instacart to Target Much-Diminished Valuation Range of Under $10 Billion in IPO: Instacart is targeting a valuation of roughly $8.6 billion to $9.3 billion in its imminent IPO, a fraction of what the grocery-delivery company was previously worth, in the latest sign of diminished investor enthusiasm for private growth companies. Instacart is set to start marketing its long-anticipated initial public offering to investors as early as Monday, and plans to disclose the expected valuation range then, according to people familiar with the matter. The San Francisco company’s plans could still change and it is possible the range could move around as the company receives feedback during the roadshow. The shares are expected to begin trading the following week on the Nasdaq exchange. (Wall Street Journal)
Fintech faces its reckoning: It’s only a matter of time until the house of cards collapses. The 2008 Global Financial Crisis was easily the most destructive economic crisis since the Great Depression. And yet, it’s not without a touch of irony that without it, we wouldn’t have a thriving startup ecosystem. In an attempt to reboot the global economy, central banks slashed interest rates to almost zero, resulting in an era of cheap money. This resulted in two things. First, it incentivized investors to fund promising (and, in many cases, not so promising) young tech companies. But it also allowed for the emergence of business models that, in any other circumstance, would be completely unviable. Now fintech faces a reckoning. Over the past two years, central banks have hiked interest rates from their COVID-era lows to the highest levels for a generation. And now the business models that won consumers’ affection look increasingly tenuous. (TechCrunch)
Google’s antitrust showdown: What’s at stake for the internet search titan. Google will face off in court Tuesday against government officials who have accused the company of antitrust violations in its massive search business, kicking off a long-anticipated legal showdown that could reshape one of the internet’s most dominant platforms. The trial beginning this week in Washington before a federal judge marks the culmination of two ongoing lawsuits against Google that started during the Trump administration. Legal experts describe the actions as the country’s biggest monopolization case since the US government took on Microsoft in the 1990s. In separate complaints, the Justice Department and dozens of states accused Google in 2020 of abusing its dominance in online search by allegedly harming competition through deals with wireless carriers and smartphone makers that made Google Search the default or exclusive option on products used by millions of consumers. The complaints eventually consolidated into a single case. Google has maintained that it competes on the merits and that consumers prefer its tools because they are the best, not because it has moved to illegally restrict competition. Google’s search business provides more than half of the $283 billion in revenue and $76 billion in net income Google’s parent company, Alphabet, recorded in 2022. Search has fueled the company’s growth to a more than $1.7 trillion market capitalization. (CNN)
NFL Still MVP in the Sponsorship Game: While this is by far the shortest season among major U.S. sports leagues – the MLB, NHL and NBA all play well over 1,000 regular season games – the NFL remains the largest and most popular one, and consequently the one attracting the most sponsorship dollars. According to IEG data cited by Sportico, sponsorship revenue for the NFL and its teams grew to $1.88 billion in the 2022-23 season, leaving every other league in the dust. “The NFL is the perfect example of doing more with less. Its sponsorship revenue tops all U.S. sports leagues with fewer games, limited branding and minimal broadcast-visible signage,” Peter Laatz, Global Managing Director at IEG said in a statement. Interestingly, nearly half of the league’s total sponsorship revenue goes directly to the NFL, indicating how strong of a brand the NFL is itself. (Statista)
Smart Links
PwC to curtail consulting work for US audit clients to reduce conflict risk. (Financial Times)
Inside the G20’s scramble to get consensus on the war in Ukraine. (Politico)
Taylor Swift is single-handedly giving a boost to hotel industry revenue. (CNBC)
Vietnam Air, Boeing near $7.5 billion deal for 50 737 max planes. (Reuters)