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The World
Prior Chinese Balloon Incursions Over U.S. Went Undetected: China previously sent high-altitude surveillance balloons over the U.S. that went undetected until after leaving American airspace, Biden administration officials said. At least three of those occurred during former President Trump‘s term in office and once previously under President Biden. Those previous balloon flights were much shorter in duration, possibly explaining why some went undetected at the time, the senior administration officials said. (Wall Street Journal)
Pentagon reports past Chinese surveillance balloons near Florida, Texas. (Washington Post)
Balloons around the world: In February last year four groups of high-altitude balloons were detected over northern Taiwan, home to most of the country’s population and some of its most important air defense sites. The same month, the US Air Force scrambled fighters to intercept an unmanned balloon off Kauai, a Hawaiian island that has a key missile-testing range. In January 2022 one of the white orbs was spotted over India while another was seen over Taiwan in September 2021. The earliest publicly reported sighting was over the northern Japanese city of Sendai in June 2020. (Financial Times)
Moscow and Tehran are moving ahead with plans to build a new factory in Russia that could make at least 6,000 Iranian-designed drones for the war in Ukraine, the latest sign of deepening cooperation between the two nations, said officials from a country aligned with the U.S. As part of their emerging military alliance, a high-level Iranian delegation flew to Russia in early January to visit the planned site for the factory and hammer out details to get the project up-and-running. (Wall Street Journal)
Ukraine is set to replace Defense Minister Oleksii Reznikov with the chief of its military spy agency, a close ally of President Volodymyr Zelenskiy said, in a reshuffle at the forefront of Ukraine's war campaign. Reznikov's reshuffle would be the highest profile government change in a slew of resignations and sackings following a corruption scandal late last month and Zelenskiy's pledge for Ukraine to meet Western standards of clean governance. (Reuters)
Powerful Earthquake Strikes Turkey: There were reports of destroyed buildings in Turkey and Syria, where tremors also were felt. Significant casualties are likely from the magnitude 7.8 earthquake, the United States Geological Survey said. (New York Times)
The tug of war over getting workers back to the office just reached a key milestone: 50 percent are back at their desks on average, the most since the pandemic hit in March 2020. But that means major corporate offices are only half as full as they once were — and many experts think this could be as good as it gets. But the return-to-office figures are unlikely to go much higher as flexible work becomes entrenched in the lives of white-collar workers, experts say. More companies seem to be moving toward acknowledging that the 9-to-5, Monday-through-Friday in-office job is over. More than half of U.S. jobs that can be done remotely were hybrid as of November, up from 32 percent in January 2019, according to data from Gallup. (Washington Post)
Restaurants can’t find workers because they’ve found better jobs: Nearly 2 million hospitality and leisure jobs remain unfilled in what economists call a ‘deep, profound’ shift in the labor market. (Washington Post)
Economy
States Are Flush With Cash, Which Could Soften a Possible Recession: State governments are entering 2023 with record-high reserves, which could help the overall economy weather a recession this year. The rapid economic recovery from the pandemic combined with an influx of federal stimulus money has filled public coffers, allowing governments to squirrel funds away for emergencies. States will hold an estimated $136.8 billion in rainy-day funds this fiscal year, according to the National Association of State Budget Officers, up from $134.5 billion a year earlier, when they represented 0.53% of gross domestic product, the highest in records going back to 1988. This year’s figure would represent roughly 12.4% of their total spending. (Wall Street Journal)
Traders are betting artificial intelligence and machine learning will have the biggest impact on financial markets in the coming years. More than half of respondents to a JPMorgan Chase & Co. survey of 835 institutional and professional traders said those technologies would have the most influence on trading in the next three years. That’s up from a quarter in 2022. 53% of institutional traders predict AI will be the most influential technology for trading in the next three years; 72% have no plans to trade crypto. (Bloomberg)
Electric vehicles defy price war after Ford and Tesla discounts: Ford discounted the price on its plug-in Mustang Mach-E car last Monday, weeks after Tesla slashed prices by up to 20 per cent across models. The motor industry seemed on the brink of further reductions for electric vehicles. Headlines declared a price war was on. Then other carmakers stayed on the sidelines. General Motors chief executive Mary Barra said on Tuesday that the company’s EVs were priced correctly. Volkswagen declined to cut prices, as did Hyundai and Kia. For now, industry analysts say, EV prices seem likely to stay where they are. “It’s not a price war, it’s a regional skirmish,” said Tyson Jominy, the vice-president of data and analytics at JD Power. (Financial Times)
Banks Borrow Unsecured Cash at Record Clip While Deposits Flee: Banks were chasing away deposits during the depths of the pandemic. Now, some are paying higher rates to shore up cash. Borrowing in the federal-funds market hit $120 billion on Jan. 27, the highest one-day total in Federal Reserve data going back to 2016. Activity in fed funds—used by banks and government-backed lenders to exchange cash reserves parked at the Fed—surged throughout the past year when the central bank raised interest rates at the fastest pace in decades. Some banks are scrambling to borrow, looking to improve their liquidity and satisfy regulatory requirements while customers pull cash from savings accounts in search of higher-yielding products. (Wall Street Journal)
Japan's government has approached Bank of Japan Deputy Gov. Masayoshi Amamiya as a possible successor to central bank chief Haruhiko Kuroda, people familiar with the matter said, as Tokyo prepares for the first change of leadership at the BOJ in a decade. Government and ruling coalition officials said the subject had been discussed with Amamiya. The 67-year-old career central banker is the architect of most BOJ policies under Kuroda. (Nikkei Asia Review)
Technology
Apple has discussed adding a higher end “Ultra” model to its lineup in 2024, in addition to iPhone Pro and Pro Max models: When the iPhone 15 arrives later this year, Apple will further differentiate the product’s tiers with a range of materials, processors and cameras. That includes giving the Pro Max model a periscope lens, which will offer improved optical zoom. Apple’s plan to draw a greater distinction between the Pro and Pro Max has spurred speculation that the company will opt for a new top-end brand: the Ultra. Apple has already used that name for its sporty high-end smartwatch and the top version of the M1 processor. (Bloomberg)
Apple May Not Launch Updated Mac Studio With M2 Ultra Chip Due to Similarity With Upcoming Mac Pro. (MacRumors)
STEM who? The humanities mount a comeback. The pro-STEM movement has gutted high school and college humanities programs — but there's some evidence of a post-pandemic revival afoot. When the University of California, Berkeley, reported an uptick in humanities majors this academic year, there was elation — and shock — at the prospect of a trend reversal. The number of first-year Berkeley students declaring majors in the arts and humanities — which includes English, history, languages, philosophy and media studies — was up 121% over last year. The number of high schoolers applying to Berkeley with the intention of studying humanities was up 43.2% from five years ago, and up 73% vs. 10 years ago. (Axios)
And yet… The STEM workforce is projected to grow faster than all occupations in the next decade. (Axios)
Microsoft’s Activision Deal Tests a New Global Alignment on Antitrust: Until recently, antitrust regulators in Europe and the U.S. took different approaches. Now, they’re on the same page — which some experts say makes closing deals harder. Until recently, the European Commission was often seen as the toughest antitrust regulator, taking a more expansive view of what could harm competition. On the other end of the spectrum was the U.S., where decades of precedent leaned toward a more limited view of the kinds of deals that should be blocked. And so deal makers believed that if they could appease the European Union with a behavioral remedy, their transaction was likely to survive global scrutiny. That has changed. (New York Times)
Thousands of computer systems worldwide were exposed to a ransomware attack in VMware ESXi servers, according to Italy’s national cybersecurity agency, days after a UK derivatives trading operator was subject to a similar hack. The Italian government said the cybersecurity agency, or ACN, will meet with top officials Monday morning to assess the situation. Countries affected also include France, Canada and the US, the agency said. (Bloomberg)
Smart Links
Hong Kong, Saudi Arabia sign 6 deals as Lee vows ‘new level of cooperation’. (South China Morning Post)
EV battery material suppliers brace for gluts as competition heats up. (Nikkei Asia Review)
Cargo plane nearly hits passenger flight in Austin, leading to FAA investigation. (Washington Post)
Can the pioneer of blockchain gaming survive the crypto winter? (Financial Times)