China has told operators of "critical information infrastructure" not to purchase US firm Micron Technology's products due to 'serious potential network security issues.' While this could just be a security review, it also raises concerns that it is a political move in the trade war between the US and China. Although Micron are the world’s third-largest supplier of dynamic random-access memory chips, DRAM, China is struggling to compete in the semiconductor market. Efforts in other areas, such as chip design, have also shown little result. This move will have a marginal effect on Micron as they received just 11% of their revenue from China last fiscal year and the majority of their chips sold in China are exported. However, it is short-sighted on the part of China as memory is a commodity and can be provided by other firms and it could weaken its capabilities while also playing into the hands of the US.
Activist investors are submitting record numbers of shareholder proposals for Japanese companies as Tokyo Stock Exchange pushes for better valuations. The number of proposals submitted for this year’s shareholder meetings has risen 60% from last year. Investors including Aya Murakami and Oasis Management’s Seth Fischer say the Tokyo Stock Exchange’s campaign to improve valuations is serving as a tailwind for their own efforts. Bourse operator Japan Exchange Group announced in January that it will urge companies that trade below book value to release plans to boost share pricing. The Topix index, Japan’s benchmark equity index, is at its highest since 1990.
JPMorgan's CEO, Jamie Dimon, will discuss the bank's future growth plans at its investor day conference on Monday. Although the bank has had a strong year, becoming one of the US's largest deposit holders with over 4,800 branches, the bank must try and maintain its momentum heading forward. Mr. Dimon is not expected to step down in the near future, but potential successors include Marianne Lake and Jennifer Piepszak. Nevertheless, shareholders may ask about Anglo-Irish investigation JPMorgan is embroiled in over its ties to Jeffrey Epstein and a failed $175m acquisition of fintech startup Frank. They could also ask about JPMorgan being barred from buying more lenders after angering Washington with its purchase of First Republic.
Russia's seaborne crude oil exports to China and India continue to rise and show no sign of the output cuts promised by the country in March, in response to Western sanctions and limits on oil price exports. Four-week average seaborne shipments rose for a sixth straight week to 4 million barrels a day, and flows are now up 15% since the start of April. Last week, Putin reiterated Russia's commitment to the OPEC+ producer group and the output cuts agreement, saying that all actions, including voluntary production cuts, are connected to the need to support global market prices. However, analysts have suggested that Russia is using stockpiles to maintain its current level of exports.
It is feared that Russia’s reliance on a shadow fleet of ageing tankers to transport its oil to China and India may be becoming increasingly problematic, as a Chinese port increases checks on older vessels, causing some cargoes to get held up and creating concerns around this group of vessels. A Moscow-based thinktank, cited by the FT, claims that Russia’s long-haul destinations to Asia are more costly and time-consuming than its previous northern European short-haul routes, however. Russia’s exports to northern European countries fell to zero in the four weeks to 19 May.
The differential between Greek and Italian government bond yields has widened to its highest level since 1999 after Prime Minister Kyriakos Mitsotakis secured an election victory. Investors believe Athens is now less risky than Rome. Interest payments for 10-year benchmark Greek debt fell by more than 0.15 percentage points to 3.85% on Monday, reflecting the positive response to Mitsotakis just missing out on securing a parliamentary majority. The move means the spread on Italian bond yields above Greek bond yields is at its widest level since at least 1999.
China's focus on pig breeding technology is seen as a long-term bet on national security by the nation's leadership, due in part to the importance of pork consumption to the Chinese population, the world's largest. The majority of the country's pigs — more than 90%, according to the government — are derived from imported breeds, leaving China exposed to potential food shortages and disease vulnerabilities. China has invested heavily in home-grown agricultural research and development as it seeks to reduce reliance on foreign food and technology. However, US public funding cuts in such research threatens that country's ability to compete. Between 1948 and 2019, total US agricultural output grew 175% as a result of public investment, with spending per head remaining largely flat since 1970. The US Congress, however, last year appropriated billions to boost the US semiconductor industry, but only $1m in 2022 and 2023 for the hoped-for Agriculture Advanced Research and Development Authority.
Chinese developers Logan Group and KWG Group are facing creditors over their exhibitionist Hong Kong property spruik, The Corniche, where just three of the 295 units have been sold since it opened its sales office in January. The developers bought the building land overlooking the South China Sea for HKD16.9bn ($2.2bn) in 2015 with high hopes of selling into mainland China's rising middle class. Chinese regulatory tightening on excessive overseas borrowing has grounded numerous developers and exacerbated liquidity shortages for companies that were already licking financial wounds.
Oracle will soon have access to the source code, algorithm and content moderation material for TikTok, the popular social media app. The move is part of TikTok's Project Texas plan to section off US users' data and allow external partners such as Oracle to assess security risks. The development is part of attempts to address criticism from international governments about security risks stemming from TikTok's ownership by Chinese tech firm, ByteDance. TikTok is currently subject to federal and state-level legislation seeking to ban or limit use of the app on national security grounds.
A new study published in Nature has revealed that extreme heat levels, which would see humans migrate out of areas, will affect 2 billion people by 2100. The next biggest markets for air conditioning units for developing countries, Nigeria and India, will be among the worst affected by the 2.7C temperature increase. Exposure to extreme heat will have existential consequences for the human food supply chain, and could spur conflict and troublesome refugee situations if migration becomes necessary.
The S&P 500 index has resisted breaking through the 4,200 point barrier despite flirting with the figure several times, a development which Stockton University's Nathaniel Warner linked to "the markets [being] a game of psychology" and "specific landmarks [being] self-fulfilling" in terms of traders anticipating failure at key levels. Wall Street strategists had been braced to predict a 5% decline by the end of the year after the past 12 months' roiling instability but were taken aback by the coterie of tech giants generating the lion's share of market growth, leaving smaller (usually more vulnerable) companies out in the cold. This situation is leading to qualms among asset allocators, who are remaining cautious even as many increasingly think that the tech stocks are no longer overpriced having enjoyed a several-month-long boom over the past year. Meanwhile, Credit Suisse's equity strategist, Patrick Palfrey, attributed their successful rally to fund managers reversing their decision to underweight the tech firms.
Worldcoin, a cryptocurrency initiative backed by Silicon Valley luminaries such as Marc Andreessen and Sam Bankman-Fried, is gaining renewed momentum with its plan to create “World ID,” which will use the biometric data of iris scans to distinguish between people and bots. The scheme garnered negative feedback for scanning half a million irises during its “field test” using a chrome sphere named “the orb,” though it still has a valuation of $1bn and is allegedly about to secure a further $100m. Critics claim the Worldcoin Foundation, which was established by its digital-token allocation system and claims a database of 1.7 million iris-originated codes, lacks transparency, as it is based in the Cayman Islands. Some hackers have also stolen credentials from its employee "operators," including recruiters who sign people up. The company now hopes to integrate its app, which offers crypto transactions, with more traditional financial services in future.
Economists Daron Acemoglu and Simon Johnson argue in their book "Power and Progress: Our Thousand-Year Struggle Over Technology and Prosperity" that powerful elites are using, and intend to further use, artificial intelligence (AI) to enrich themselves while controlling the populace. While former gains have usually generated benefits for wider society, AI is different as it is expected to enable its users to simultaneously manipulate people and take their jobs, the economists said. They suggest a raft of remedies, including taxation of internet giants, revocation of some patent laws and statutory interference, in an effort to counteract these trends.
Melanie Mitchell, a computer science professor at Portland State University, described the book as riveting and eye-opening. Co-author Johnson is a former chief economist of the International Monetary Fund and Acemoglu is the co-author, with James Robinson, of the book “Why Nations Fail: The Origins of Power, Prosperity, and Poverty”. In their new book, the authors argue that digital revolution has been appropriated by a group of self-serving elites, creating an oligarchy of technology companies that use machines and algorithms to replace workers. They believe that “machine intelligence” can be shifted toward “machine usefulness” through public policy, which they hope will be influenced by public opinion and a revitalised democracy.
The book details how, throughout history, improvements to productivity have frequently led to the enrichment of powerful landowners or industrialists, while leaving ordinary people worse off. While change is often driven by challengers, they inevitably become co-opted by the status quo, the authors argue. Countervailing forces such as electoral competition, trade unions, politicians and reforming intellectuals can redirect technology towards creating shared gains, the book also states.
UK Home Secretary Suella Braverman is facing allegations of impropriety after reportedly asking a civil servant to help her flout protocol and avoid taking a speed awareness course or points when she was caught speeding. Reports suggest that the civil servant declined because they cannot act on private matters or in a way that might appear politically partisan, while her party office was also unable to arrange for a private course. Braverman subsequently received points on her licence. Although the revelations may initially seem minor, they come as the government is due to release figures expected to show a significant increase in immigration levels. Braverman is an architect of the Illegal Migration Bill, which criminalises anyone arriving in the UK without permission, and has also spoken about limiting overseas recruitment and training more domestic workers to cut immigration.
