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The World
China plans a joint military-training facility in Cuba: U.S. officials said reference to the proposed facility in the Caribbean country—just 100 miles off Florida’s coast—is contained in highly classified new U.S. intelligence, which they described as convincing but fragmentary. It is being interpreted with different levels of alarm among policy makers and intelligence analysts. The Biden administration has contacted Cuban officials to try to forestall the deal, seeking to tap into what it thinks might be Havana's concerns about ceding sovereignty. (Wall Street Journal)
Indian Prime Minister Narendra Modi arrived in the U.S. for a state visit that has been projected as a milestone in ties between the two countries that would deepen and diversify their partnership. Modi has been to the U.S. five times since becoming prime minister in 2014 but his visit this week that runs until Saturday will be his first with the full diplomatic status of a state visit. Modi landed in New York on Tuesday afternoon, where he has business meetings and will mark the International Day of Yoga on Wednesday before heading to Washington. There he has a private dinner scheduled with Biden on Wednesday, followed by talks at the White House and a state dinner on Thursday. (Reuters)
Modi sees unprecedented trust with the U.S.: In an interview with WSJ ahead of his first official state visit to Washington after nine years in office, India’s prime minister hailed growing cooperation between the two countries in defense, trade, technology and energy. Modi sought to portray New Delhi as the natural leader of the Global South and called for changes to the U.N. and other international organizations to make them more broadly representative of the world’s less affluent nations. Overall, Modi’s message was that—from India’s role in global politics to its contributions to the world economy—the country’s time has come. (Wall Street Journal)
Top tech execs get ready to meet Modi as China’s economy falters: Apple CEO Tim Cook, Google CEO Sundar Pichai, Microsoft CEO Satya Nadella and Fedex CEO Raj Subramaniam will be among the several U.S. CEOs attending the White House state dinner on Thursday, sources tell CNBC. A separate Modi meeting with tech leaders is also in the works for this Friday, where technology transfer and finding ways to diversify away from China will be discussed, per multiple sources. (CNBC)
Slovakia’s president Zuzana Čaputová, a standard bearer for liberal politics in central Europe, will not seek re-election next year, adding to doubts over the country’s pro-western politics. The decision by Čaputová, a former human rights lawyer who became her country’s first female president in 2019, comes after a year of political turmoil in Slovakia that has boosted the Moscow-friendly ex-premier Robert Fico. (Financial Times)
French police raided the offices of the organizing committee and the state-backed building company behind the Paris 2024 Olympic Games as part of an investigation into alleged corruption in the awarding of contracts. The national financial prosecutor confirmed the searches were under way on Tuesday in two separate probes. The first inquiry targeting the Paris 2024 organizing committee began in 2017 and involves allegations including potential conflicts of interest and embezzlement of public funds. A second inquiry began in 2022 into both the organizing committee and Solideo, which carries out infrastructure projects such as construction of the athletes’ village and the aquatic centre outside Paris. That investigation was launched after an audit by the French Anti-Corruption Agency. (Financial Times)
U.S. Loses Ground in World Competitiveness Ranking: Denmark, Ireland and Switzerland have been named the world’s most competitive economies in the 2023 World Competitiveness Ranking published by the International Institute for Management Development (IMD) on Tuesday. While Denmark managed to stay in first place after its rise to the top last year, Ireland leapt from 11th to second place, with Switzerland stuck in neutral in third place. The U.S. ranks ninth this year after sitting in 10th place from 2020 through 2022. With five economies in the top 10, Europe once again excelled in the 2023 ranking, even though the region’s economic powerhouses Germany, France and the UK are notably absent from the top 10, and the top 20 for that matter. (Statista)
U.S. is rejecting asylum-seekers at much higher rates under new Biden policy: The Biden administration said that the number of single-adult migrants who are able to pass initial screenings at the border has dropped from 83% to 46% under the new policy. (Los Angeles Times)
The College Board is refusing to change its long-standing Advanced Placement Psychology course after the Florida Department of Education requested that the course and all others offered by the organization — be audited and modified to fit state laws restricting instruction on sexual orientation and gender identity. the College Board said it doesn’t plan to modify any of its 40 AP courses — including AP Psychology — in response to efforts spreading in various states to regulate LGBTQ+ and race-related content. (K-12 Dive)
The climate crisis is taking an enormous toll on Europe, which was ravaged by extreme heat, drought, wildfires and glacier melt last year, a new analysis has concluded. A joint report by the World Meteorological Organization and the European Union’s Copernicus Climate Change Service found that last summer was the hottest on record for Europe and caused more than 16,000 excess deaths, according to the report. “Unfortunately, this cannot be considered a one-off occurrence or an oddity of the climate,” said Carlo Buontempo, the director of the Copernicus Climate Change Service. (CNN)
The summer solstice in 2023 will take place on Wednesday 21 June at precisely 3:58pm BST in the UK and 10:58am ET / 7:58am PT in the US. Contrary to popular belief, the solstice is an exact moment and not the entire day. The event takes place on the first day of the astronomical summer season and marks the exact point the northern hemisphere is pointing directly towards the Sun. It also marks the longest day of the year, with the highest number of daylight hours seen in a single day in 2023. Expect at least 16 hours of daylight in the UK and in the US. The summer solstice takes place at the exact moment the Sun reaches its highest point in the sky, which is when the northern hemisphere is tilted most towards the Sun. Essentially, it marks the point when the Sun’s rays hit this part of the Earth most directly. (Science Focus)
Economy
Wall Street is betting against America’s downtowns. Investors are paying less for bonds linked to New York subways and buses. Downtown-focused real-estate investment trusts trade at less than half their prepandemic levels. Bondholders are demanding extra interest to hold office-building debt. Downtowns have been a mother lode for American cities over the years, providing billions of dollars in tax revenue along with their distinctive skylines. In turn, investors who bet on downtown office towers, or on the trains and buses delivering workers to them, could generally trust they held a winning hand. Now, with white-collar workers spending more time in their home offices, a phenomenon that shows few signs of ending, investments linked to downtowns are trading at falling prices in volatile markets. (Wall Street Journal)
Deserted office when you’re new to office life? Probably not ideal. Forty-one percent of U.S. employees who can work remotely choose to do so at least part of the week. According to “The Power of Proximity to Coworkers,” a paper co-written by the Harvard economist Amanda Pallais, beneficial teamwork and important collaborations take a hit when employees work from home. Moreover, younger employees, particularly women, may be hurt most by remote work. (Harvard Gazette)
In Pallais’ study, which focused on a group of software engineers at a Fortune 500 company, engineers working in the same building as all their teammates received a whopping 23 percent more online feedback on their codes than engineers with distant teammates. Young women were especially more likely to ask follow-up questions when working in person, “zeroing in on pain points in their programming.” In remote scenarios, that back-and-forth dynamic vanished.
Without this kind of feedback, younger employees were more likely to quit, the researchers found. Their paper notes that going remote made engineers under 30 five times more likely to quit than when working in the same building as their co-workers pre-pandemic, and female engineers four times more likely to quit.
But the paper also identifies a tradeoff. For senior engineers, onsite work reduced coding output by 21 percent, possibly because more of their time was devoted to giving feedback to younger colleagues. As with junior employees, women saw the greatest effect.
In other words, tension exists between short-term productivity and the long-run development of younger employees, suggesting a hybrid model might be best.
Corporate America is feeling the pinch from the slowdown in Wall Street’s $1.4tn market for junk-rated loans, with a growing list of companies forced either to pay more or abandon borrowing plans. Borrowers have been hit by shifts in the market for collateralized loan obligations, or CLOs, the investment vehicles that own roughly two-thirds of lowly rated US corporate loans. More generally, many CLOs are reining in their debt purchases — restricting the financing possibilities of lower-rated borrowers — because of limits on when and what they can buy as well as the broader economic environment. That, in turn, is pushing up the cost of borrowing for many US companies. (Financial Times)
FedEx Quarterly Sales Fall 10% as Shipping Struggles Continue: FedEx posted its third-straight drop in quarterly revenue as shipping demand remains weak while costs continue to rise. (Wall Street Journal)
Technology
Investment in military tech start-ups is booming as the war in Ukraine and geopolitical tensions with China leads to growing confidence that the US government will give lucrative contracts to Silicon Valley companies making cutting-edge defence systems. US venture capitalists have agreed more than 200 defense and aerospace deals in the first five months of this year worth nearly $17bn — more than the sector raised during the entire of 2019, according to data from PitchBook. This boom has mirrored the gold rush also experienced by the artificial intelligence sector, even as investment in start-ups in other parts of the tech industry has plummeted in recent months amid a broader downturn. (Financial Times)
A world-beating rally in Chinese tech stocks this month is shoring up confidence that the once-beleaguered sector may finally see its fortunes reverse. Not only are they besting shares in their own market — Hong Kong’s Hang Seng Tech Index outperformed the benchmark Hang Seng Index by the most since December last week — they’re also narrowing the gap with American rivals. The Nasdaq Golden Dragon China Index has beaten the broader Nasdaq Composite Index market for three consecutive weeks, the first time that’s happened since January. Month-to-date, both the Hang Seng Tech and Nasdaq Golden Dragon gauges are up at least 15%, beating the majority of equity indexes tracked by Bloomberg. (Bloomberg)
Texas said it will require electric vehicle charging companies to include both Tesla's NACS standard as well as the CCS standard if they want to be part of a state program to electrify the state's highways using federal dollars. The move comes in response to GM, Ford and Rivian adopting the Tesla standard and shunning efforts by the Biden administration to make CCS the dominant charging standard in the U.S. (Reuters)
Spotify is planning a more expensive subscription option that’s expected to include high-fidelity audio in an effort to drive more revenue and placate investors who’ve been saying the company should raise its prices. Dubbed “Supremium” internally, according to people familiar with the strategy, the new tier will be Spotify’s most expensive plan and likely offer a HiFi feature the company first announced it was working on in 2021. Spotify delayed that product’s rollout after two of its competitors, Apple Music and Amazon Music, began offering the feature for free as part of their standard plans. The new tier will launch this year in non-US markets first. (Bloomberg)
OpenAI—an early mover in releasing chatbots powered by large-language models—is contemplating another initiative to extend its influence in the world of artificial intelligence. The company is considering launching a marketplace in which customers could sell AI models they customize for their own needs to other businesses, according to people with knowledge of discussions at the company. (The Information)
OpenAI Lobbied the E.U. to Water Down AI Regulation. (Time)
Smart Links
Gannett, the largest U.S. newspaper chain, sues Google over its advertising dominance. (Washington Post)
Top federal lobbyist at PhRMA leaves. (STAT News)
New US home construction surges by most in 3 decades in May. (Reuters)
FDA is testing new nutrition labels on the front of food packages. (STAT News)
Jack Ma Ally to Take Helm of Alibaba. (Wall Street Journal)