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The World
Wealthy people ramped up borrowing in the first half of the year despite rising rates and a stock-market rout that hit the value of their portfolios. The wealth-management units at Morgan Stanley and Bank of America posted double-digit loan growth in the second quarter. The increase came from well-heeled clients taking out mortgages and loans backed by assets like stock-and-bond portfolios, executives said. Morgan Stanley said mortgages rose 30% in its wealth unit from a year earlier to $50 billion, while securities-backed and other loans grew 23% to $93 billion. At Bank of America, wealth-management loans rose 12% from a year earlier to $222 billion, outpacing a 4% increase in the bank’s consumer division. The growth is another sign that U.S. consumers—admittedly a wealthier subset—aren’t hunkering down in preparation for a recession. (Wall Street Journal)
China’s new Belt and Road Initiative (BRI) investments in Russia have fallen to zero for the first time, signaling Beijing’s reluctance to incur sanctions in the wake of the Ukraine war. Beijing struck no new deals with Russian entities under the BRI program in the first half of 2022, according to a report by the Green Finance & Development Center at Fudan University in Shanghai reviewed by the Financial Times. (Financial Times)
FBI investigation determined Chinese-made Huawei equipment could disrupt US nuclear arsenal communications. (CNN)
The US military’s top officer said China was becoming more aggressive in intercepting military aircraft and undertaking unsafe aerial manoeuvres over the past five years. General Mark Milley, chairman of the US joint chiefs of staff, said China was conducting “dangerous intercepts” against American military aircraft and ships, and was also targeting Canada, Australia, Japan and other US partners. (Financial Times)
The battle between Rishi Sunak and Liz Truss to become Britain’s next prime minister switched to immigration over the weekend, as the two Tory leadership contenders vowed to outdo each other in tightening up control of the country’s borders. Sunak, the former chancellor, hinted he would clamp down on the number of people fleeing war and persecution who would be allowed to enter the UK should he win, saying he wanted to introduce “a healthy dose of commonsense into the system”. Truss, the UK foreign secretary, said she would seek to strike more deals with third countries to process asylum claims made in the UK, following the controversial partnership agreed with Rwanda. (Financial Times)
Toronto Airport Is World’s Worst For Delays Amid Current Travel Chaos: Pearson International has won top honors for airport service for years, but now is at the epicenter of a global air-travel meltdown. Over 53% of flights departing Toronto Pearson between June 1 and July 18 arrived late at their destinations — the highest rate among the world’s top 100 airports by number of flights. (Wall Street Journal)
Nobody wants to be in the office on Fridays: Employers are still divided on how to deal with this new reality, where just 30 percent of office workers swipe in on the last day of the workweek. (Washington Post)
Greek firefighters battled wildfires on the island of Lesbos for a second day as well as new fires in the western Peloponnese and in northern Greece, evacuating nearby settlements as a heatwave set in. A wildfire that started in mountainous forests on Lesbos in the Aegean Sea near Turkey on Saturday, burning properties at the beach resort of Vatera, was still raging, forcing the evacuation of two more villages - Vrisa and Stavros. (Reuters)
Economy
Investors appear to be taking disappointing earnings reports in stride. After a punishing start to the year, the S&P 500 has climbed nearly 5% in July, including last week’s 2.5% rise. Even some companies that have posted sharply lower quarterly results have seen their shares rally in the following days. So far this reporting season, shares of companies in the S&P 500 that have missed Wall Street’s earnings expectations have slipped 0.1% on average in the two days before their report through the two days after, according to FactSet. That compares with the five-year average of a 2.4% decline. (Wall Street Journal)
Former Treasury Secretary Lawrence Summers said Federal Reserve officials need to stay the course to quell inflation that’s proving persistent at a four-decade high. Former Treasury chief says US unlikely to see soft landing; he also says there is a high likelihood of recession in the US. (Bloomberg)
Janet Yellen says "economy is slowing down" but not in a recession. (Axios)
UK Inflation could surge to 15 per cent in the winter, according to forecasts from the consultancy arm of EY, highlighting the scale of the challenges facing businesses and households in the months ahead. The worst-case scenario from the wellregarded economists at EY-Parthenon is based on the premise that President Putin blocks gas supplies to Europe, food prices soar and inflation expectations become entrenched among the population. (The Times)
Rising rents mean no shelter for Americans from inflation storm: Double-digit cost boosts for housing are hampering the Fed’s efforts to contain consumer price increases. (Financial Times)
Technology
Apple Begins to Show Rare Vulnerability Ahead of Economic Slowdown: The economy is catching up with Apple Inc. For the first time in a while, the company seems to be vulnerable to outside factors like rising inflation, increasing interest rates, the surging US dollar and the threat of a recession. I reported this past week that Apple plans to slow spending and hiring across some teams next year in anticipation of an economic slump. Later this week, the company will report its fiscal third-quarter sales, which most analysts anticipate will be roughly flat with last year. Apple also continues to see some kinks in its supply chain, which may limit availability of some of its next devices. As part of the hiring slowdown, Apple won’t fill some roles when employees leave and will keep headcount flat for certain teams. (Bloomberg)
New “Pro” Apple Watch will have about 7% larger screen, a new design, and a case with a more durable formulation of titanium to make it extra rugged. (Bloomberg)
Tesla Looks to Open Its EV-Charging Network: The big electric-vehicle maker is applying for public dollars in the U.S. that would allow non-Tesla drivers to use its fast chargers. (Wall Street Journal)
DoorDash and Uber Eats are moving beyond food, focusing on groceries and alcohol, as users cut spending due to high inflation and a potential economic downturn. (Wall Street Journal)
Google Fires Blake Lemoine, Engineer Who Called Its AI Sentient. (Big Technology)
Smart Links
Battered Bitcoin Devotees Begin to Contemplate a Market Bottom. (Bloomberg)
Travelers should act now to capitalize on a strong dollar for trips abroad. (CNBC)
Europe’s stretched tourist workforce struggles to meet surge in demand. (Financial Times)
Want to know how much your colleagues make? California might crack open companies' books. (Politico)
The $9 Bottle of Trader Joe’s Sunscreen That Ignited a Summer War. (Wall Street Journal)
Disney Shows First R-Rated Movies on Disney+. (Wall Street Journal)