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The World
The Biden administration released a detailed plan that will make it easier for student-loan holders to wipe out their debts using income-driven repayment plans. The proposed rule from the Education Department is a key step in overhauling the $1.6 trillion federal loan program that has left millions with ballooning debts. The administration first announced the change in August when it unveiled its plan to cancel up to $20,000 in student debt for qualifying borrowers. The Supreme Court plans next month to take up a challenge to that broader debt-forgiveness, which is frozen after being blocked by lower courts. (Wall Street Journal)
In the first visit to Mexico by a U.S. leader in almost a decade, President Biden met with Mexican President Andrés Manuel López Obrador to discuss trade, the drug war and record levels of illicit immigration in a wide-ranging conversation that was mostly cordial but at one point turned testy as the Mexican leader demanded his U.S. counterpart do more to help the region. “End with this forgetfulness, this abandonment, this disdain toward Latin America and the Caribbean,” López Obrador told Biden. Biden responded by saying that the U.S. had invested “tens of billions of dollars” in Latin America in the last 15 years, while also donating more than any other country globally to causes worldwide. The U.S. “responsibility,” Biden said pointedly, extends well beyond the Western Hemisphere. (Los Angeles Times)
Russia and Iran are working on a new shipping corridor that cuts Europe and its sanctions out of the picture, and are looking to partner with India, which has kept its distance from the Western-led isolation campaign against the two countries. The plan is an answer to the U.S.-led push for "friendshoring," an effort to relocate supply chains to allies and friendly countries. (Nikkei Asia)
Britain and Japan are expected to sign a major defence pact on Wednesday that will make it easier for the two nations to engage in joint military exercises and deploy troops to each other’s countries. British Prime Minister Rishi Sunak and his Japanese counterpart Fumio Kishida are expected to sign a so-called reciprocal access agreement at a ceremony at the Tower of London on Wednesday, following an agreement in principle reached between the countries in May. The pact will go before Japan’s Diet and Britain’s Parliament in the coming weeks. (South China Morning Post)
The French government is planning to raise the official retirement age by two years as part of a long-delayed reform to the country’s pension system that prompted labor unions to call for nationwide strikes next week. New legislation will require French citizens to work until 64, from 62 currently, to qualify for a full pension. From September this year, the regular retirement age will increase by three months a year until 2030. The higher retirement age should tackle a pension funding deficit, Prime Minister Élisabeth Borne told reporters on Tuesday as she laid out the reforms. (CNN)
The Last 8 Years Were the Hottest on Record: The world remained firmly in warming’s grip last year, with extreme summer temperatures in Europe, China and elsewhere contributing to 2022 being the fifth-hottest year on record, European climate researchers said. (New York Times)
Southern California faces another day of heavy rains, strong winds and flooding fears: In the last two weeks, parts of California have received more than 25 inches of rain, with some areas receiving 35 inches or more. Here's a look at how much precipitation the state has received in the last 14 days: (Los Angeles Times, CNN)
Economy
After a brief respite in 2021, public pension plans are reeling from a one-two punch: the fallout from 2022's market rout and heightened demands to deliver cost-of-living-adjustments (COLA). Driving the news: At the end of 2022, the average public pension plan had 77.3% of the funding it needed to pay its promised benefits, down from 83.9% after 2021's market peak, according to new estimates published Tuesday by the nonpartisan Equable Institute. Why it matters: About 29 million Americans are depending on a non-federal public pension plan to fund their retirement, according to the Pew Charitable Trusts. For taxpayers, underfunded public pensions could lead to tax increases or spending cuts if market gains can't close the gap. (Axios)
The World Bank sharply lowered its growth forecast for the global economy this year as persistently high inflation has elevated the risk for a worldwide recession. The bank expects global growth to slow to 1.7% in 2023, down from an estimate of 3% growth in June. That would mark the third-weakest pace of global growth in nearly three decades, overshadowed only by the 2009 and 2020 downturns, according to the World Bank. A separate report showed that global inflation, while starting to cool, remains historically high. (Wall Street Journal)
Oil and Gas Are Back and Booming: U.S. production of natural gas—Chesapeake’s focus—has hit record levels. The country’s crude oil production remains shy of the 2019 level but is otherwise at a peak. Exports of both gas and crude are hitting new highs, easily outpacing overseas sales of aircraft, pharmaceuticals, food and cars. Exxon Mobil Corp.’s shares rose 80% last year. The Biden administration has limited drilling on federal lands, but oil and gas companies have tapped the nation’s vast private shale reserves to drive production higher. (Wall Street Journal)
U.S. banking giants are forecast to report lower fourth quarter profits this week as lenders stockpile rainy-day funds to prepare for an economic slowdown that is battering investment banking. Four American banking giants -- JPMorgan Chase & Co, Bank of America Corp, Citigroup Inc. and Wells Fargo & Co -- will report earnings on Friday. Along with Morgan Stanley and Goldman Sachs, they are the six largest lenders expected to amass a combined $5.7 billion in reserves to prepare for soured loans, according to average projections by Refinitiv. That is more than double the $2.37 billion set aside a year earlier. (Reuters)
Geopolitical issues are less likely to drive young consumers to change their purchasing habits. On hot-button domestic topics like abortion access and support for the Black Lives Matter movement, Gen Z adults say they will boycott brands that profess positions antithetical to their own at higher rates than any other generation. But at the same time, younger adults are less likely to single out unethical overseas practices as a reason to change their purchasing habits relative to both domestic issues and other generations. In a surprising result that has held across multiple survey waves, Gen Z and millennial respondents also say they would more likely than not keep buying from brands that operate in repressive countries, such as ones that limit freedom of speech or freedom of the press. And they are lukewarm about boycotting companies that operate in countries actively involved in invading a neighboring nation or territory. Herein lies the paradox: Gen Z adults — and to a lesser extent, millennials — express a readiness to use their purchasing power to push for corporate action in support of the Black Lives Matter movement despite their relatively low support for boycotting companies that do business in repressive countries with similarly strained ethnic or religious tensions. (Morning Consult)
Technology
In a move that could change how more than a billion people write documents, presentations and emails, Microsoft has discussed incorporating OpenAI’s artificial intelligence in Word, PowerPoint, Outlook and other apps so customers can automatically generate text using simple prompts, according to a person with direct knowledge of the effort. These goals won’t be easy to accomplish. For more than a year, Microsoft’s engineers and researchers have worked to create personalized AI tools for composing emails and documents by applying OpenAI’s machine-learning models to customers’ private data, said another person with direct knowledge of the plan, which hasn’t previously been reported. Engineers are developing methods to train these models on the customer data without it leaking to other customers or falling into the hands of bad actors, this person said. The AI-powered writing and editing tools also run the risk of turning off customers if those features introduce mistakes. (The Information)
Microsoft’s Satya Nadella is weighing the company’s biggest-ever startup investment, seeking to give the software giant an advantage against Google in the race to weave advanced artificial intelligence tools into fields like search and apps. The company is in discussions to invest as much as $10 billion in OpenAI, the creator of viral AI bot ChatGPT. The proposal under consideration calls for Microsoft to inject the cash over several years, though final terms may change. (Bloomberg)
Tesla has applied to expand its gigafactory in Texas with an investment totaling $775.7 million, government filings showed, marking one of its largest expansion drives since setting up the $5.5 billion gigafactory in Germany last year. It plans to add five new facilities at its Austin site, including a cell test lab and a unit named "Cathode", according to the company's filings on the Texas state department of licensing's website on Monday and Tuesday. (Reuters)
Several top executives at Rivian Automotive Inc. including the vice president overseeing body engineering and its head of supply chain, have left the EV startup in recent months, as the company exits a year in which it fell short of its production targets. The departures, confirmed by a Rivian spokeswoman, are the latest developments in what has been a challenging period for Rivian, which has been rolling out its first all-electric models but last year missed a critical milestone of manufacturing 25,000 vehicles. The company said it was off its goal by about 700 vehicles in part because of difficulty getting parts. (Wall Street Journal)
Smart Links
Private jet business booms despite commercial airline revival. (Financial Times)
Europe has avoided energy collapse. But is the crisis over? (Associated Press)
2022’s seismic shift in US tech policy will change how we innovate (MIT Technology Review)
The industries where you’re most likely to be laid off as a recession looms. (Fortune)
Chicago commuters lost more hours to congestion in 2022 than drivers in any other major U.S. city. (Chicago Tribune)
FedEx to reduce Sunday operations as pandemic-era demand cools. (Financial Times)