'Yield Inversion'
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The World
China should not be surprised Washington and its allies in Asia are deepening military ties given Beijing’s aggressive behavior toward many of its neighbors, the US ambassador to Japan Rahm Emanuel said. “You look at India, you look at the Philippines, you look at Australia, you look at the United States, Canada or Japan. They (China) have had in just the last three months a military or some type of confrontation with every country. And then they’re shocked that countries are taking their own steps for deterrence to protect themselves. What did they think they were going to do?” Emanuel said. The US envoy listed a string of what he said were aggressive military actions by China, including “attacks” against India along their shared Himalayan border, Chinese coast guard ships aiming lasers at Philippine vessels in the South China Sea, the firing of missiles into Japan’s exclusive economic zone and the harassment of US, Canadian and Australian aircraft by People’s Liberation Army ships and planes. (CNN)
Germany moves toward restrictions on Huawei, as Europe sours on China. (NPR)
Netherlands to restrict chip exports after US pressure over China threat. (Financial Times)
Beijing ‘seriously concerned’ as Taiwan’s Tsai Ing-wen reportedly set to meet US House Speaker on transit stop. As Beijing voices ‘serious concern’, Chinese observers say military drills like those following Nancy Pelosi’s Taipei visit cannot be ruled out. (South China Morning Post)
Lab Leak Theory Gains Credence Across the Political Spectrum: A record-high 51% of U.S. adults believe COVID-19 originated from a virology lab in China following the Energy Department's low-confidence conclusion to the same effect. That's up from 44% in late February, and while Republicans are still by far the most likely to believe it, Democrats saw the largest increase in adherents, rising 10 percentage points to 42%. (Morning Consult)
An experimental Eli Lilly & Co. drug failed to prevent cognitive decline in people at risk for Alzheimer’s disease in a closely watched drug trial backed by the company and the US government. The drug, solanezumab, “did not slow the progression of cognitive decline” in a trial of more than 1,100 people, Eli Lilly said. The participants were between 65 and 85 and were at risk of the devastating brain disorder because they had high levels of a toxic protein called amyloid in their brains. (Bloomberg)
California will no longer renew a $54 million contract with Walgreens Boots Alliance Inc. following the drugstore chain’s decision to stop dispensing abortion pills in several states, according to Governor Gavin Newsom. The action comes a day after the Democratic leader said California would stop doing business with the company. (Bloomberg)
Officials in California are imploring residents to prepare for a powerful storm set to lash the region with torrential rain later this week as the state continues to recover from colossal amounts of snow that trapped mountain communities. About 16 million people across central and Northern California, including the San Francisco Bay Area and Sacramento, were under flood watches Wednesday ahead of a storm set to drench the region Thursday with dangerous amounts of rain in most of the places that currently have existing layers of heavy snow from previous brutal storms. (CNN)
American women are staging a return to the workforce that is helping propel the economy in the face of high inflation and rising interest rates. Women have gained more jobs than men for four straight months, including in January’s hiring surge, pushing them to hold more than 49.8% of all nonfarm jobs. Female workers last edged higher than men on U.S. payrolls in late 2019, before the pandemic sent nearly 12 million women out of jobs, compared with 10 million men. (Wall Street Journal)
Women struggle to close corporate America’s gender gap: Cultural and societal barriers continue to frustrate efforts to make diversity stick in white-collar fields. (Financial Times)
Study: Women accounted for 33% of protagonists in the top 100 grossing US domestic movies in 2022, up from 31% in 2021, and accounted for 37% of speaking roles. (Variety)
Europe still has a long way to go to achieve full equality for women, according to an index based on the performance of EU countries in six categories: work, money, education, time, power and health. Factors such as violence against women are also included. Whereas in the 2015 Gender Equality Index it was 64.4 points, seven reports later it is just 4.2 points higher. (Statista)
Economy
President Joe Biden's budget proposal on Thursday will aim to cut U.S. deficits by nearly $3 trillion over 10 years, far more than the $2 trillion the administration previously targeted. The Democratic president will propose raising taxes on companies and people earning over $400,000 a year in an effort to curb government red ink, while protecting Social Security, Medicare and Medicaid from cuts. "It proposes tax reforms to ensure the wealthy and large corporations pay their fair share while cutting wasteful spending on special interest interests, like Big Oil and Big Pharma," White House spokesperson Karine Jean-Pierre told reporters on Wednesday. (Reuters)
President Biden’s budget blueprint will lay out plans to save hundreds of billions of dollars by seeking to lower drug prices, raising some business taxes, cracking down on fraud and cutting spending he sees as wasteful, according to White House officials. (Wall Street Journal)
US consumers starting to struggle to pay off credit cards, Citi CFO says: Mark Mason said the bank, one of the nation’s largest issuers of credit cards, was seeing an increase in US consumers slowing or being unable to repay their growing credit card debts. He said average balances on the company’s credit cards were rising and that the bank has had an uptick in credit losses, particularly to borrowers with lower credit scores. (Financial Times)
Deepest Bond Yield Inversion Since Volcker Suggests Hard Landing. (Bloomberg)
Global monthly funding fell to $18 billion in February 2023. Not since February 2020 has global funding dipped below $20 billion in a single month. (Crunchbase News)
Tennessee Governor Seeks To Make One Of The Nation’s Best Tax Climates Even More Hospitable: Lawmakers and governors in nearly half of the states have cut income tax rates over the past two years and more are now following suit. Before the second month of 2023 came to a close, noteworthy income tax cuts had already been introduced and passed in a number of states. A couple of reasons help explain why tax relief has been enacted in most states in recent years and why governors like Jim Justice are so eager to get in on the action. One reason is that states are financially well-positioned to do so, with many sitting on sizable budget surpluses. Another motivating factor is that lawmakers in states that already have a low overall tax burden and hospitable business tax climate — places like Florida, Texas, North Carolina, and Tennessee — continue to pursue further reforms that will provide more relief to taxpayers and make their tax codes even more conducive to job creation than they already are. (Forbes)
Three Years After Covid Hit, Restaurants Are Still Desperate for Workers. Americans are rushing back to restaurants after staying away during the pandemic. To catch that demand, chains are opening thousands of new locations. It has the makings of a boom, except for one glaring problem: there aren’t enough workers. Three years after Covid hit the US, the $900 billion US foodservice industry still can’t recruit enough employees. It has boosted pay and benefits, but that hasn’t worked. Chains including Jack in the Box Inc. and Domino’s Pizza Inc. say the labor woes are hurting business. In a recent survey, more than 60% of establishments said they’re understaffed. (Bloomberg)
Technology
The Perk-Cession Is Under Way: Companies are cutting back on prized employee perks from fancy coffee to free cab rides as they vow to trim costs and prioritize efficiency. These extras, above and beyond traditional healthcare and retirement plans, were meant to make workers want to join companies and stay there. They’ve grown to be seen by some as a form of compensation, so the cuts can sting. The cuts sometimes run alongside layoffs. Before Facebook parent Meta Platforms Inc. laid off 11,000 workers, it ended free laundry and dry cleaning services for employees. Twilio Inc., which has had two rounds of job cuts in five months, slashed its employee allowances for spending on wellness and books. Salesforce, which is cutting 10% of global staff, is also dialing back a bevy of coveted benefits. Specialty-coffee baristas at the company’s San Francisco tower were shown the door. The company cut ties with Trailblazer Ranch, a 75-acre wellness retreat that mixed skills training with yoga and hiking. Also gone: the extra paid day off every month Salesforce gave employees for well-being. (Wall Street Journal)
Tech giants' cuts heavily impacted staff working on big bets and moonshots, like Alphabet's X and Amazon's Alexa and drones; Meta's Reality Labs is an exception. (New York Times)
Work Phones Make a Comeback as Offices Ban WhatsApp, TikTok: In a throwback to the BlackBerry era, telecom-service providers are seeing strong growth from companies handing out phones to employees. The phenomenon, which started during the pandemic, picked up recently thanks to new compliance policies around the use of WhatsApp and TikTok. It’s provided a “tailwind” for subscriber gains at AT&T, CFO Pascal Desroches said. (Bloomberg)
A core pillar of LinkedIn’s revenue growth in recent years, its recruiting services business, is under pressure as customers rebel against the company’s prices. LinkedIn has hiked the fees it charges for recruiter subscriptions so much that in recent months, as companies have slowed hiring, some tech firms and specialist recruiting agencies are cutting their spending on the social network, LinkedIn customers and people who work with them say. In some cases, they’re switching to cheaper alternative services such as Indeed and SeekOut. (The Information)
Spark Capital is leading a $300 million investment in artificial intelligence startup Anthropic, one of the primary startup challengers to OpenAI, at a pre-investment valuation of $4.1 billion, according to two people familiar with the matter. The deal follows a $400 million investment in the startup by Google, one of the people said. The valuation for the two-year-old company, which has made very little revenue, reflects the recent fervor in venture capital for stakes in generative AI companies fueled by the rise of OpenAI, the maker of chatbot ChatGPT. At the same time, bigger companies like Google and Microsoft are investing in AI startups either to gain access to cutting-edge technology or secure future customers of their cloud-server rental businesses. (The Information)
Smart Links
Apple to Shake Up International Sales Operations to Make India Its Own Region. (Bloomberg)
GM’s EV Push Stalls Amid Slow Rollouts for GMC Hummer, Cadillac Lyriq. (Wall Street Journal)
Appeals court could upend the leveraged loans market. (Axios)
The 10 worst places to live in US for air pollution. (The Guardian)
The economics of thinness. (Economist)