Geopolitical Business Communications
Happy Tuesday.
Here’s today’s ITK Daily.
To be ITK, know this:
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Kyiv strike disables bridge between Crimea and Russia: WSJ reports a Ukrainian strike hit the only road link from the Crimean peninsula to Russia, while Kyiv’s ground offensive makes limited progress.
WP: Ukraine hits Crimean bridge, but railway undamaged; Russia halts grain deal
Russia seizes assets of two Western conglomerates: WSJ reports Russia's seizure of the local operations of Carlsberg and Danone, two of the world’s largest consumer-goods companies, escalates economic hostilities.
The Times: Wagner mercenaries prop up puppet leader in Central African Republic
One reason China is willing to engage again: Its troubled economy: China was on track to recover after closing itself off during the pandemic. Now the country’s growth is staggering, and Beijing is signaling it is open to talking. NYT
+ Official data released Monday revealed that the annual pace of growth in China’s economy tumbled to just a little over 3 percent in the spring, well below the government’s target.
+ The Chinese government has also been on a charm offensive directed at domestic and international business leaders.
+ “China’s decision making is as hidden from our view as it has ever been, but China’s economic weakness is obvious for all to see, even China’s leaders, which can’t help but be one source of the recent moderation in foreign policy and willingness to engage Washington,” said Scott Kennedy, a China specialist at the Center for Strategic and International Studies in Washington.
+ For China, the latest batch of data suggests that economic pressures could continue to intrude on geopolitical objectives. A key index of housing prices declined last month, sapping consumers of wealth. Exports — a crucial driver of China’s economy — are suffering.
+ The geopolitical environment is central to the decisions that companies and investors make about whether to put money into China or rely on it as a base for exports.
+ China has a lot at stake economically. Tens of millions of Chinese jobs depend on global trade. Its sales of manufactured goods to other countries are more than triple its purchases of these goods from other countries.
+ “As it is now the world’s largest trading nation, China has a special responsibility for making the system work,” said Alan Wolff, a former deputy director general of the World Trade Organization.
Real estate and job worries slow China's economy: Nikkei reports uncertain consumers shift to saving as private-sector profits slump.
China’s floundering economy is a test for Xi Jinping: As growth falters and the country flirts with deflation, will stimulus arrive? Economist
Does Xi Jinping need a plan B for China’s economy? As growth has failed to pick up post-Covid, calls are growing louder for the president to launch a weighty stimulus package. FT
+ Xi Jinping and his top policymakers are adhering to a stance they call dingli, or “maintaining strategic focus.”
+ Many economists take this to mean continuing to reduce debt, especially in the heavily overleveraged property sector while pursuing global leadership in advanced technology and other strategic areas of the economy, such as a transition to green energy.
+ “Xi Jinping does not define economic success in terms of GDP growth,” says Arthur Kroeber, founding partner and head of research at Gavekal Dragonomics. “He defines it in terms of tech self-sufficiency.”
+ This year, as western central banks raised interest rates to combat inflation, demand for China’s exports fell.
+ “The authorities have tried to assure the private sector about the normalisation of regulations. The private sector is probably waiting for more concrete specific policies to support that kind of rhetoric and even when those specific policies are implemented, it will probably take them some time to feel reassured.”
+ Many economists believe, however, that things will have to get worse before Xi Jinping yields and announces a significantly bigger stimulus effort.
Where is China’s foreign minister? Beijing won’t say: SMH reports after China’s leader, Xi Jinping, catapulted Qin Gang into the post of foreign minister in December, Qin set a frantic pace, meeting dozens of foreign officials as he pressed Beijing’s agenda in a divided, war-stricken world. Then Qin went silent.
How will NATO’s stress on global security play out in Asia? Patrizia Cogo Morales
+ ‘Security is global’ was the oft-repeated mantra at the Nato summit in Vilnius, although Ukraine understandably garnered much attention.
+ While a liaison office in Japan was not mentioned in the communique, an individually tailored partnership was firmed up, and similar agreements could follow with other countries in the Indo-Pacific region.
US, Japan, and Australia can aid Taiwan with words, not war: A public pact to guarantee peace across the Western Pacific could deter Beijing without violating the “one China” policy. Hal Brands
+ The greatest weakness of America’s position in the Indo-Pacific is the lack of a multilateral alliance for deterring aggression. One of the key opportunities for the US in the coming year is to start piecing such a framework together.
Detroit of Asia targets battery makers to stay ahead in EV race: Thailand is readying an incentive package to encourage battery makers to set up manufacturing plants. Bloomberg
Nikkei: Japan seeks UAE investments in chips, batteries via new framework
AFP: Clean energy on agenda of Japan PM talks in UAE ahead of COP28
Nikkei: Japan and India to discuss joint chip, hydrogen development
How United Arab Emirates seeks to leverage its influence in Europe: The United Arab Emirates and Qatar are battling for influence in Europe. A data leak has revealed how Abu Dhabi has sought to discredit its rival with the help of a private intelligence company in Switzerland – an effort that extends into Germany. Der Spiegel
Bloomberg: Sunak signs up AstraZeneca, Shell CEOs for new business council
AFP: Élisabeth Borne will stay on as French PM despite fallout from pension unrest, riots
Macron keeps Borne as prime minister, will address the nation this week: A government reschuffle is expected in the coming days and the Elysée said Macron will speak before the end of the week, 100 days after the enactment of his contested pension reform. Le Monde
Bloomberg: IMF approves $1 billion for Kenya after latest loan review
AFP: Israel recognizes Moroccan sovereignty over Western Sahara
Biden invites Netanyahu to US, easing tensions: NYT reports President Isaac Herzog will meet with President Biden this week and address Congress. And Prime Minister Benjamin Netanyahu said he also got a presidential invitation.
Chip CEOs to meet Brainard, Sullivan over China restrictions Bloomberg
+ National Economic Council Director Lael Brainard and National Security Adviser Jake Sullivan are joining a White House meeting Monday with the chief executive officers of America’s largest semiconductor makers to hear their concerns over new restrictions that threaten sales to China.
BBC: Typo sends millions of US military emails to Russian ally Mali
Typo leaks millions of US military emails to Mali web operator: Common spelling error has misdirected sensitive Pentagon messages to a company running Mali’s internet domain. FT
Can DeSantis do what Bush, Huntsman, Harris, and Lieberman couldn’t? Shaking up a presidential campaign hasn’t brought much past success, but the Florida governor is trying to buck the trend. Philip Bump
+ "It’s possible he could still pull off what McCain did in 2008. But it is hard not to assume that the more immediate comparison, for a lot of reasons, is Jeb Bush in 2016."
DeSantis group attacks Trump directly for the first time in Iowa ad: Bloomberg reports the Florida governor is trying to reboot campaign amid disappointing polls.
Retrospective approval of JFK rises to 90%; Trump at 46%: John F. Kennedy remains the most highly rated former president when Gallup asks Americans whether, in retrospect, they approve or disapprove of the job each did as president. Ninety percent of US adults now approve of the job Kennedy did, 21 percentage points higher than second-place Ronald Reagan’s rating. Gallup
How Gretchen Whitmer made Michigan a Democratic stronghold: The Governor’s strategy for revitalizing her state has two parts: to grow, Michigan needs young people; to draw young people, it needs to have the social policies they want. The New Yorker
John Harris named top editor at Politico: NYT reports Harris, who helped found the media outlet in 2007, will succeed Matt Kaminski as the publication’s editor in the United States, with additional oversight of international editions.
US homeowners are tapping $9 trillion in real estate wealth: Higher mortgage rates have made cash-out refinancing less attractive and pushed more people to take out home equity lines of credit. Bloomberg
WSJ: Ford cuts price of lightning electric truck by up to $10,000
How Palantir stock developed a weird, passionate, meme-crazy fan base: For Palantir’s loyal fans, PLTR is more than just a stock symbol—it’s an invitation to make memes. FC
+ “There are two stocks on the internet that have the biggest fandom. The first one is Tesla and the second one is Palantir,” explained Amit Kukreja, a 25-year-old from New Jersey who runs the site Daily Palantir, as well as daily YouTube videos and live streams about Palantir.
+ Lin Peng, a professor of finance at CUNY Baruch College, coauthored a paper on the affects of social media hype on retail investors of cheap but risky stocks that offer high-reward potential (like Palantir). “The thing we typically observe is that the more intense the social media discussions, the greater the attention from the retail investors,” she tells Fast Company. “You tend to observe greater miscalculation, meaning more overvaluation.”
WSJ: AT&T’s stock closes at lowest level since 1993
Telecom stocks are shedding billions in market value. Here’s what’s happening: Shares of AT&T, Verizon, and other industry giants have taken a hit since last week, when the Wall Street Journal published a series on lead-covered cables. FC
+ According to a report Monday by analyst firm MoffettNathanson, four major telecom firms have shed a combined $18 billion in market cap since July 9.
Ben McKenzie takes on crypto with a probing new book: The star of ‘The O.C’. and ‘Gotham’ also has an economics degree. He saw early on that crypto was largely a scam. Now he’s pulling the curtain back completely. FC
+ "It started with the word currency. It’s not a currency; it’s a security. It’s an unregistered, unlicensed security. [Cryptocurrencies] can’t be a store of value or a unit of account, because the volatility is so crazy."
+ "Crypto is like Vegas without the drinks or dinners or shows. And you’re playing an unlicensed, unregistered casino."
The new workday dead zone when nothing gets done: Late afternoon, when many colleagues vanish, is why so many managers hate hybrid work. WSJ
+ The hours that bookend the traditional close of business have become a dead zone at many companies, but employees aren’t just blowing off work to relax for the rest of the day.
+ Workers say the 4-6 p.m. flex time they use to take a turn in the kids’ carpool, hit the gym or beat traffic often requires a third shift at night to finish the day’s tasks.
+ Microsoft researchers have documented what they call a “triple peak” phenomenon in which workers’ keyboard activity spikes in the morning and afternoon, then a third time around 10 pm. The tech giant predicts this pattern is here to stay.
+ The 4-6 p.m. dead zone is one reason so many executives are cranky about hybrid work.
+ Colette Stallbaumer, general manager of Microsoft’s Future of Work initiative, sums it up: “How do we make it so that my flexibility isn’t your challenge?”
+ “I hate meetings after 4. My brain is done.”
From Paris to Marseille, France's cities are facing creeping gentrification: Soaring property prices, proactive urban renewal policies and 'Airbnbization': Across Europe, urban areas are undergoing profound changes, risking uniformity and the exclusion of certain parts of the population. Le Monde
+ There is no universal, inexorable pattern to gentrification. This phenomenon, first documented in London in the 1960s by sociologist Ruth Glass, initially described the changing social composition of neglected areas, coveted by the youngest and most highly educated people.
+ At the end of the 1970s, Scottish geographer Neil Smith interpreted it differently, saying it was capital that reinvested in urban centers, not people. The significant housing depreciation in a neighborhood attracted investors, who sought financial gain.
+ It is more appropriate to talk about 'gentrifications' in the plural, according to the collective of researchers Marie Chabrol, Anaïs Collet, Matthieu Giroud, Lydie Launay, Max Rousseau and Hovig Ter Minassian in their book Gentrifications: Views From Europe. According to geographer Jean-Pierre Lévy, pitting old and new against each other is pointless. He argues that yesterday's "gentrifiers" may well be tomorrow's "gentrified." He claims that gentrification is "part of the contemporary urban phenomenon, and to understand it is to understand the city."
+ Could the "Airbnbization" of cities be the ultimate stage in gentrification?
+ Paris has crossed the threshold of €10,000 per square meter.
+ Paris and its eastern suburbs are often referred to as the stronghold of the bobos, with all that this implies: the "creative" and intellectual classes are driving out the most vulnerable.
+ Paris's western suburbs remain a ghetto of the wealthy – and one that continues to grow stronger.
+ In Bordeaux, it's clear: The line follows the completion of projects initiated during former mayor Alain Juppé's era.
+ On the left bank of the Garonne, in the Bacalan district, between 2011 and 2019, the percentage of executive-level workers rose from 10% to 18%.
How Amsterdam wants to change its image: Amsterdam has banned smoking cannabis in public and is imposing fines to get rid of party tourists. DW
+ "No smoking cannabis in public!" read signs hung around Amsterdam's red light district, or De Wallen, as it is called in Dutch.
+ The volume of tourists is just one of Amsterdam's problems.
+ To combat the excess of party tourism, new rules were put in place this February — among them, a law that states that window brothels, bars and pubs in the red light district must close two hours earlier.
+ Several months ago, the city also launched a "Stay away" campaign to deter rowdy visitors. It initially targeted British men between the ages of 18 and 35 and featured a series of short videos depicting nights out gone wrong.
Taylor Swift now has more No. 1 albums than any woman in history: NYT reports the pop superstar’s “Speak Now (Taylor’s Version)” debuts at No. 1 this week as the year’s biggest new album, and three of her other titles also made the Top 10.
An action movie about scientists talking: Christopher Nolan’s Oppenheimer plays out across the landscapes of Los Alamos and of Cillian Murphy’s face. Bilge Ebiri
I can’t believe how good this Tour de France is: Respectful rivals Tadej Pogacar and Jonas Vingegaard trade spectacular attacks into the race’s final days. Jason Gay
Enjoy the ride + plan accordingly.
-Marc
Marc A. Ross | Chief Communications Strategist @ Caracal
Caracal produces ITK Daily.
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