Apr 16 FT HK's China education, Citi to cut Asian business, TSMC +VE outlook, Huarong test case?


16 Apr

MARKETs @ 3:15pm Hong Kong time
AUSTRALIA 
Opened flat but trended lower to 7,030 around 1pm in choppy trading but then rallied back just into the green at 7,066 before trending slightly lower to close +5pts (unch) @ 7,064
JAPAN
Nikkei opened higher following the US and the good Tankan data but saw selling pressure and sold down to test Thursday’s close in the first hour, bounced but then retested before ticking slightly higher into lunch.  PM opened higher but again sold down to test support, which hold and then bounced and traded sideways to close +41pts (+0.1%)@ 29,683 Topix opened higher and sold down to 1,953 saw a small bounced and then traded sideways in the red into lunch. PM opened higher in the green but sold down to Thursday’s close and traded sideways with a small uptick at the end to close +2pts (unch) @ 1,961
DataTankan Index Apr 13 vs 6 Mar (F/cast was 8)
Monday pre market we get Trade Data and then later Industrial Production data
S KOREA  
New covid cases reported were 673 remaining significantly above 600 for a second day; -VE for sentiment. Finance Ministry reported the economy is on a recovery track as exports remain robust and a slump in domestic demand has gradually eased amid the pandemic.
Kospi opened higher and tested 3,200 level a couple of times in early trades but failed to hold above and trended lower in choppy trading to 3,185 mid morning. Tested a couple of times before bouncing back to flat only to revisit 3,190. But from 1:30pm worked higher to close +4pts (+0.1%) @ 3,199
Kosdaq opened higher tested Thursday closing level after an hour but then worked better first to 1,020 and then to 1,022 which it tested the several times in the last 25 minutes to close +8pts (+0.8%) @ 1,022.
TAIWAN 
Opened lower and traded sideways in a tight range around yesterdays closing level until the last hour when it rallied to 17,100 and then traded sideways to close +82pts (+0.5%)@ 17,159
CHINA 
CSI300 opened higher but sold down initially on the mixed data; GDP growth and Industrial production were less than expected but House Prices and Retail Sales remained strong. Saw some initial support at 4,940 and bounced but Thursday close was a resistance and it then sold down to 4,918 bounce to test Thursday's close but failed and sold down but then bounced again into lunch Flat. PM market rallied top 4,980 but then eased into the close.Closed +17pts (+0.4%) @ 4,966. Looks like Team China were very active today
Data
FDI (YTD) Mar +39.9% YoY vs 31.5% Feb
House Price Index Mar +4.6% YoY vs +4.3% Feb (F/cast was +4.4%)
Fixed Asset Investment Mar +25.6% YoY vs +35% Feb (F/cast was +25.1%)
GDP Growth Rate Q1+0.6% QoQ vs +3.2% Q4 revised (F/cast was +1.7%)
GDP Growth Rate Q1+18.3% YoY vs +6.5% Q4 (F/cast was +16%)
Industrial Production Mar +14.1% YoY vs 35.1% Feb (F/cast was +25%)
Industrial Capacity Utilisation Q1 77.2% vs 78.0% Q4 (F/cast was 77.4%)
Retail Sales Mar +34.2% YoY vs 33.8% Feb (F/cast was +25%)
Unemployment Mar +5.3% vs 5.5% Feb (F/cast was +5.5%)
HONG KONG 
Pre mareket opened @ 28,827 +34pts vs +52pts ADR’s
Pre market Geely strong on Polestar news and Chinese consumer names +VE.
Market traded in a tight range around flat through the morning with Ecommerce names seeing interest. PM the market rallied strongly after lunch to 29,000 and then higher following China. Currently +225pts (+0.8%) @ 29,023
EUROPE 
Opened slightly higher following the good US data but with some caution on the mixed data out of China and ahead of the Eurozone data. Autos leading in early trading with Household goods weak
Finnish retail conglomerate Kesko +6.2% in early trade after reporting 16.9% sales growth YoYin March.
German meal-kit delivery firm Hellofresh +4.7% after a strong first-quarter earnings report.
WH Smith +4.3% after RBC upgraded the stock to “outperform” and raised its target price.
Data due
EUROZONE Balance of Trade, Core Inflation, Inflation
US Futures Opened in Asian time Dow +10pts, S&P flat NDX -0.2% and are little changed
AHEAD Housing Starts, Building Permits,  Michigan Consumer Prelim data (Inflation Expectations, Consumer Sentiment, 5yr Inflation Expectations, Consumer Expectations, Current Conditions), Baker Hughes Rig Count
Earnings: Morgan Stanley, PNC Financial, Kansas City Southern, Bank of NY Mellon, Citizens Financial, Ally Financial, State Street

Print
Front Page
HK schools feel China grip
Children are the latest to be swept up in the national security law imposed by Beijing on the territory in an effort to crush its pro-democracy movement.
The law now reaches into schools, warning teachers and students against “subversion”. See Page 3 Schools fear censorship
Biden move to impose sanctions ramps up tension with Moscow
• Hacking and election meddling cited • State debt targeted • Kremlin warns on summit10 diplomats expelled and sanctions on 38 entities and formally accused of carrying out the hack of SolarWinds. Prompted selling of companies with Russian exposure or assets. ‘The measures ban US financial institutions from trading in newly issued Russian state debt and bonds issued by the Russian central bank and National Wealth Fund. The ban comes into force for debt issued after June 14 this year.’The weaponisation of finance continues and I would expect China will watch the events carefully as it seeks to attract more foreign capital into its bond markets. The index providers will probably be equally interested.
Activist Elliott paves way for GSK fight with multibillion-pound stake
Elliott Management has built a multi-billion-pound stake in GSK, laying the ground for a battle over the future of the UK drugmaker, which has underperformed peers in the race to develop a Covid-19 vaccine.  
Lex GSK/Elliott Management: unpleasant medicine
Concludes 'Other shareholders fret about more mundane issues. Holders of GSK have grown accustomed to a hefty 6 per cent dividend yield. On a typical 50 per cent payout for global biopharma groups, holders of this unit could see their incomes slashed by 40 per cent. If shareholders want blockbusters, they must be willing to sacrifice dividends for investment. News of Elliott’s intervention has revived GSK’s sickly shares, up 5 per cent on the day. If this refocuses attention on the latent value within GSK, that is good news.’

Page 2
Greece plans economic reset for EU funds
Programme hailed by PM as country looks to recover from pandemic
Putin’s sabre-rattling wins Biden’s attention
Talks over Ukraine are prize for president who craves seat at world’s highest negotiating table.
Human rights ombudsman must leave office, rules Polish court
Poland’s top court has ruled that the country’s human rights ombudsman must leave office, clearing the way for the removal of a figure who has often been a thorn in the side of the ruling Law and Justice-led coalition.
Race for French centre-right presidential nomination heats up
Xavier Bertrand has already declared his intention to run without waiting for a party primary. When two-thirds of French voters are shown by opinion polls to be as conservative as they are today, the leaders of the country’s centre-right movement should be contemplating next year’s presidential election with relish.
Page 3
Hong Kong schools fear censorship as Beijing crackdown reaches classrooms
Books deemed politically incorrect weeded out ahead of new curriculum that warns against subversion.
Quotes a teacher “worried that if a parent quotes us out of context or just distorts a message from a single screenshot of our class they capture”, their jobs, even their freedom, could hang in the balance, she said. “It feels like there is a noose over my head.”
The 'curriculum that will force teachers to warn primary and secondary students against “foreign interference” and committing “subversion” as outlined in the national security law.’'
All schools will receive a 48-volume box set of mainland-produced picture books called My Home is in China. The book includes entreaties to favour countries that are part of China’s Belt and Road Initiative to build infrastructure.’
It notes that International Schools will be 'exempt from fully integrating the national security curriculum. But the schools will still have to tell their students about the law and ensure there are no violations on campus.’ It will be interesting to see if more local parents try to get their children into such schools. The two track approach would suggest that Beijing is aware of the potential international skill's loss to Hong Kong if the children of expats were forced to adhere to Beijing’s system. Which itself suggests the system is wrong.
Behind the move it Beijing’s thinking that liberal studies in Hong Kong have undermined belief in the communist party. It also believes that just as only patriots can stand in the Hong Kong elections; people can only be teachers if they don’t have political ideas that are not inline with party thinking.
'Guidelines released by Hong Kong’s education authorities this year outlined how national security should be integrated into subjects from geography to biology. The government has produced videos, stickers and other materials featuring a cartoon owl to instruct young children on the national security law.’
Schools have reviewed their teaching materials and even their libraries to ensure their books conform.
It concludes 'For some parents, leaving Hong Kong has become an increasingly serious possibility. “This year the school may say that they won’t follow [the security curriculum],” said Lai, an accountant with two children at an international school. “But what about next year?”’
Like so much of the recent legislation it shows more about the paranoia of the authorities and their insecurity. It is that, which could in the end undermine the success of Hong Kong.

Norway puts AstraZeneca vaccine on hold to assess blood clot riskThe Norwegian government has resisted advice from its public health authority to drop the Oxford/Astra-Zeneca vaccine and has appointed an expert committee to further examine risks associated with that shot and the Johnson & Johnson vaccine, after a number of blood clot-related deaths.

Antibiotics pipeline is falling behind in war on superbugs
The World Health Organization has warned that none of the antibiotics currently being developed against antimicrobial resistance are enough to tackle drug-resistant bacteria that are expected to kill millions by 2050.
As if the threat of covid was not bad enough superbugs are on the rise too.
Turkey frees journalist after European human rights ruling
Turkey has released prominent journalist Ahmet Altan from jail after almost five years on charges relating to a failed military coup, one day after the European Court of Human Rights ruled he had been wrongfully detained.
Germany’s highest court rules out Berlin rent cap
Germany’s constitutional court has struck down the city of Berlin’s controversial rent cap, after a year of legal battles between supporters of landlords and real estate companies, and grassroots campaigners fighting rising rents in the capital.The announcement prompted a rally in German property stocks yesterday.

Page 4
US vaccine rollout aids retail rebound
Sales jump nearly 10% and jobless claims decline as stimulus cash kicks in
Yesterday’s data was much stronger than expected and the spending in part was put down to the arrival of new stimulus cheques. It has also raised some expectations that the US GDP growth will be stronger than had been forecast; especially as the retail report showed spending rose across all areas.The jobs data showed some encouraging pockets around the country but the concern will be that the long term unemployed, over 6 months, remains stubbornly high.
I would think that the expectations for inflation would also rise although bond yields actually drifted lower on the data; suggesting the market had already priced in the strong recovery data.

End in sight for golden age of rich America’s tax evasion
A trillion here, a trillion there and pretty soon you are talking real money. Were the US Internal Revenue Service to collect all that it is owed under current law, the $1tn yearly shortfall would pay for President Joe Biden’s infrastructure bill four times over. Most of this evasion is carried out by the top 1 per cent of US taxpayers, the group that complains most about headline rates. In practice, the rich pay considerably less than advertised.
An interesting read into the failings of the current system and its abuse by both the wealthy and successful businesses whilst the less well off are subject to automated probes.
It suggests that 'Every dollar he puts into the IRS could get up to $10 in return, according to one very credible estimate. Moreover, every dollar in better enforcement would be a dollar less pressure to raise the headline rate. Even if the rebooted IRS could close just a fifth of that gap, it would almost fully pay for Biden’s $2.3tn infrastructure bill.’
It concludes 'Surveys show that a clear majority of Americans, including Republicans, are happy to pay their taxes. What enrages them is the idea that others are not paying their fair share.Anyone who drives round the country has seen suburban gardens with grazing livestock, a tax break meant for actual farmers. They know that tax complexity is a friend of those who can afford lawyers and accountants.
At 4m words, the US tax code is four times longer than JK Rowling’s Harry Potter book series and offers far more scope for wizardry. Now that is a top line worth studying.’

Biden unwavering on US troop withdrawal
Policies have always focused on achieving military goals rather than overseeing social change.
No doubt a tough decision but at its base is the realisation that military action cannot make peace and it cannot change the hearts of the locals unless they want to change.Something that China should be aware of in its treatment of Xinjiang, Tibet, Hong Kong and its overtures on Taiwan.

Brazil’s military police grow increasingly uneasy about enforcing strict Covid rules
Looks at the stresses associated with the lockdowns and their enforcement. An interesting read

Companies & Markets
Citigroup to sell most of its Asia consumer businesses
• Response to pressure for cost cuts
• Regional focus moves to wealth arm
Citigroup yesterday put its consumer operations in 13 markets across Asia and eastern Europe up for sale, appeasing investors who have pressed the bank to boost profitability by cutting costs in its underperforming retail network.
Looking to offload consumer franchises in Australia, Bahrain, China, India, Indonesia, Korea, Malaysia, the Philippines, Poland, Russia, Taiwan, Thailand and Vietnam.
It will focus 'on wealth management in those regions through four hubs: Singapore, Hong Kong, the United Arab Emirates and London. Fraser said: “We have decided that we are going to double down on wealth.”
Notes the move was seen as positive by Banks analyst and long time critic Citi Mike Mayo, of Wells Fargo Securities. But whilst he notes its a good move, there is a lot more to be done.
Lex Citigroup: city skipper. Views the move as a good one. Concludes 'Wealth management has become the bright shiny object in financial services given the high potential fees, relatively low capital costs and the burgeoning pockets of wealth around the world. Citi has termed this reboot a “strategy refresh” and there will undoubtedly be more shoes to fall.A change in sentiment would lift the valuation multiple, as with BofA and other peers.'

Kicking off Italian football at war over €1.6bn private equity deal on broadcasting rights
A group of elite Italian football clubs has demanded the resignation of the president of the country’s top league over his handling of a radical €1.6bn deal to bring outside investors into one of the world’s best-known competitions.
Difficult for me to get upset because I do feel the amount of money involved in the sport is out of kilter with normal life.

BlackRock assets under management surge to $9tn
BlackRock’s assets under management ballooned to a record $9tn in the first quarter, boosted by record fund inflows across its investment platform, led by fixed income.
It says '“In conversations with fixed income clients, the questions of inflation and deficits are prominent,” said Larry Fink, chief executive of BlackRock. “As is the question of equity valuations. The dialogues are very robust now.”
And 'Fixed-income clients sought floating interest rate products and short-term bonds that were less vulnerable to the sharp rise in long-dated market rates during the quarter, BlackRock said. There was also demand for income via the high-yield bond market, an area of fixed income that has recorded a positive performance this year.’
Interestingly “There is an incredible amount of money on the sidelines. Overall, our clients are still sitting on pools of money and they are underinvested,” Fink said.
Interesting that there are still large pools of money on the sidelines, that suggests to me that people are still expecting further fallout opportunities as the economic recovery continues. Which would make sense. I don’t expect the road to recovery to be a steady event, I think a number of the SME’s are only just currently hanging on and if they fail that could be a disruptive cog in larger supply chains. After all the supply chain is only as strong as its weakest link.

Data-harvesting incentives and opportunities multiply
Starts with 'Is there anything left to be revealed about the extent and the frequency with which large volumes of personal data leak from Facebook?’
Key is 'the case touches on a deeper issue: the growing volume of data that people release publicly as part of their digital lives, often after being nudged by the companies who benefit from the disclosures, can later be used in ways that hurt their own interests.’
An interesting and maybe worrying read about how much information can be ‘scraped’.
It concludes 'Facebook tacitly put some of the blame on its users, saying they could protect themselves better by thinking more about what information they share publicly, and doing regular “privacy check-ups”. This ignores the fact that few people have the time or inclination to indulge in such digital hygiene, and are in no position to judge how what they disclose today might be used against them tomorrow.’

Gupta split empire to secure Covid loans
Magnate incorporated companies in effort to tap emergency scheme.More insight into the business practices of the company, this time to milk the system of tax payer loans.
An interesting read. Notes that a number of investigations are being undertaken to see if the loan application were compliant. Even if the loans were compliant it reveals as is so often seen that companies can and will often structure themselves to take advantage of government schemes, especially those quickly drawn up to deal with crisis. It underlines the importance for lawmakers not only to deal fairly with the crisis but to be more aware about the potential for abuse.

Darktrace IPO filing contradicts statement on Lynch’s role
Darktrace has issued contradictory information about the role of Mike Lynch, the British tech billionaire who has been charged with fraud in the US, complicating the cyber security company’s efforts to distance itself from the Autonomy founder ahead of its potential £3bn float.
An interesting read into the company; that does at the least raise some questions about its honesty.

Death-by-overwork claims hit Korea online retailer
Families mourning trio of staff at Coupang logistics centre consider lawsuit
Coupang has been the subject of much coverage regrading pay and conditions for workers and its use of subcontractors. It is also coming under some political pressure according to the article. Of more interest will be whether ESG pressures will be brought to bear by shareholders who include SoftBank, Sequoia and BlackRock,It also highlights that under the S Korean labour laws if the company doesn’t admit to the work injuries claimants face a difficult task to prove they are.
A worrying read; the company’s recent listing was seen as a big success and it is difficult to see whether this news will impact the share price performance of more interest would be whether the major institutional shareholders are concerned enough to put pressure to the management.

BofA jumps on bumper earnings bandwagon
Bank of America kept the bonanza earnings season for US lenders rolling by beating first-quarter forecasts and announcing a $25bn share buyback against a backdrop of soaring revenues for investment arms and an improving outlook for loan losses.
Basically mirroring the results already seen from the other banks
'BofA’s investment banking fees rose to $2.25bn from $1.39bn a year earlier, better than the 57 per cent reported by JPMorgan Chase but worse than the 73 per cent rise at Goldman Sachs.
BofA’s trading fees were up almost 10 per cent but its equities desk failed to capture the big lift enjoyed by rivals.'

UniCredit investors narrowly back pay policy
More than 40 per cent of UniCredit shareholders voted against the Italian bank’s pay policy, which will make new chief executive Andrea Orcel one of the highest-paid bankers in Europe.
The pros and cons but one hopes for a salary of €2.5m and the potential award of as much as €5m in stock in 2021, regardless of his or the bank’s performance that shareholders get value for money.
US oil drillers’ private funding source runs dry
Scores of producers ‘dying on the vine’ after losing out on regular cash infusions despite price recovery to $60.
Attributes the loss of funding to private equity and other investors being put off by 'notorious for poor returns and weak environmental, social and governance performance.’
It concludes '“This business is broken,” said Waterous. “The industry is going through a multiyear process of wringing capital out of the sector, not bringing new capital in.”Specialist funds will remain in the sector, some investors say, but the generalists are moving on, seeing greater opportunity outside a volatile fossil fuel business and in fast-growth and low-carbon businesses favoured by ESGminded investors.
It is the end of an era in which private equity was often the shale sector’s crucial financier. The available cash pile has dwindled. “There’s not a lot of dry powder left,” said VanLoh. “And once it gets spent, these guys aren’t going to be able to go reload.”’

CureVac seeks approval for its Covid vaccine by June
The German biotech CureVac hopes to win regulatory approval for its Covid-19 vaccine within the next two months and will aim to produce 300m doses this year and 1bn in 2022.
'CureVac’s jab uses mRNA technology, but, while its rivals have raced ahead after winning emergency regulatory approval, the Tübingenbased company has fallen almost six months behind schedule.'

PepsiCo expects sales spurt to extend beyond lockdown
PepsiCo’s sales rose faster than expected in the first three months of the year, driven by shoppers stocking up on snacks during the pandemic. The company behind Gatorade sports drinks and Doritos tortilla chips said yesterday that sales growth was likely to accelerate in the second quarter as it was expected that the rise in Covid-19 vaccinations would lead to more consumers eating out again.
Interestingly it concludes 'Some trends from the pandemic era were here to stay, including the shift towards shopping for food online, Johnston said. PepsiCo’s ecommerce business is about three times larger than it was two years ago.PepsiCo expects its Quaker business to moderate, but consumers who have grown accustomed to eating breakfast at home will continue to stoke demand for products such as oatmeal and pancake mix.’

TSMC raises growth outlook on back of buoyant demand
Taiwan Semiconductor Manufacturing Company, the world’s biggest contract chipmaker, raised its spending and revenue growth targets for this year even as its overstretched factories struggle to meet huge global demand.
An interesting read; it warned the chip shortage could last into next year; as customers, especially Chinese ones build stockpiles as China/US relations continue to sour.
The article says that some think demand for chips will fall as inoculations are rolled out while some think there will be another wave of office tech upgrades, 5G and increased usage in auto which will keep demand high.
I think I believe TSMC as they obviously have better insight from talking to their clients.Shares traded lower today (TWD 605 -2.3%) having ticked higher ahead of the results but are still trading just off all time highs (TWD 679 in Feb).

Brighter Europe outlook casts shadow over region’s bonds
Peak pessimism has passed as countries accelerate vaccine programmes, argue investors
'some analysts say improving economic news arriving in Europe will herald another shift higher in government bond yields, which set the baseline for borrowing costs, and boost the euro against the dollar.’
An interesting read and importantly the ECB meets next week so what is said there will be key for the market to gauge what their position is.

Chinese ratings group cuts Huarong outlook to negative as debt price slides
A mainland Chinese credit rating agency has warned over the health of Huarong Asset Management, the state-backed distressed debt manager, which has become the focus of a market sell-off in Asia this week.
Follows the delay in publishing its results and its former chair being sentenced to death for corruption and bigamy. An interesting fall for a company originally set up to clean-up the Chinese banking system after the Asian crisis in the late 1990s.
The potential restructuring will be closely watches especially with regard to the offshore assets. It is seem as a test case of how the Chinese government will deal with investors facing defaults.
In the past there has been as assumption of government support but that is now being questioned. However the government is also hoping attract more foreign investors.
It quotes Wei He and Xiaoxi Zhang, economists at Gavekal, they said 'the Chinese government was “walking a fine line”, adding: “On one hand, they are keen to reduce moral hazard by forcing investors to take a haircut. On the other, they want to prevent any disorderly knock-on effects in the domestic financial system and to limit the damage to confidence in China’s offshore market.”'

Hedge funds achieve best first quarter since before financial crisis
Hedge funds have navigated the GameStop short squeeze and the collapse of Archegos to post their best first quarter since before the financial crisis.
Many moved into value and re-opening stocks early along with active trading strategies to take advantage of recent market swings.An interesting read.
Good performers mentioned include Lee Ainslie’s Maverick and Crispin Odey’s Odey European fund, along with Odey’s James Hanbury’s LF Brook Absolute Return fund.

Turkish lira slips after rates held at new central bank governor’s first meeting
Turkey’s central bank has left its benchmark interest rate unchanged at its first rate-setting meeting since a new governor was installed but signalled that it could loosen policy if inflation showed signs of slowing.

Europe makes an underappreciated corporate comeback by Haim Israel;  Bank of America’s head of global thematic research.
Sets out that Europe has lagged the US and China, for the past 20 years its exposure to legacy industries has held it back.
Going forward success will be determined by three things; people, technology and climate action.
On the first two Europe has no advantage but on the third Europe has an advantage but the US's and China’s focus on the green agenda to assert economic dominance will pose new tests.
He concludes 'From the land of autos, fossil fuels and tobacco has emerged a new series of high-growth companies and industries defined by tech — specifically health-tech, fintech, foodtech, medtech and, of course, cleantech.’An interesting read and those sectors are set to be increasingly important in investor portfolios.

The Big Read Nuclear talks intensify power struggleThe country has weathered the most extensive sanctions in its history, which cost the economy at least $200bn. Hardliners are now seeking to ram home their political advantage over reformist rivals.

Editorial
Toshiba takeover is a test for corporate Japan
Competing bids should be handled in a fair and transparent wayIt presumes that the board is open to accepting takeover proposals which could be wrong. But if its right it hopes that the board and the Japanese government will be both transparent and fair to shareholders.
There is every reason for the board and government shouldn’t act that way but historically the track record is not good. So this presents itself as another test of whether Japan is prepared and able to change.

Banking on the regions after the pandemic
What Goldman’s new Birmingham office says about levelling up
Goldman Sachs’ chief executive, David Solomon, believes working from home is an “aberration” to be urgently rectified. His staff may have to return to the office but the bank’s decision to open an outpost in Birmingham means that professional life, even for Goldmanites, need not ape its pre-pandemic form.
Notes that Ireland is looking at spreading jobs including government ones across the country. As is the UK government.Key it notes are 'improving links, including better public transport, to satellite towns to create regional agglomerations. Devolving more power to the regions is also key, as the business-friendly Tory mayor of Birmingham, Andy Street, can attest.'
It concludes 'Brexit and the pandemic mean that the UK desperately needs to solve its regional inequalities, and there are both economic and political imperatives for doing so. The government should not waste this crisis.'In my view it will also require better IT infrastructure but as Biden is hoping; that sort of spending is money well invested.

Opinion Biden will not change Putin but is right to talk to him
An interesting read on what drives Putin.
It concludes 'The notion of a binary choice between realism and idealism has never held much credibility. The argument that usefully can be had is not about the fact of engagement, but about its nature. Where does the line fall between securing interests and compromising values?The idealists have a point when they say that the some of the overtures to Moscow in recent years have looked more like capitulation than engagement. Biden seems to have got the balance about right. Where it can, the west should work with Russia. Just not on Putin’s terms.’

Wall Street pulls ahead once again by Gillian Tett
Says the Coinbase listing resulted in a wave of mail predicting 'that fintech will challenge fiat money and legacy financial groups, such as Wall Street banks.'
Looks at the results which have been good but largely due to write-backs of provisions and the rise in fee income. Notes the risk as loans growth continues to be poor.
All of which contrasts with Europe.
She mentions the positive implications of steepening yield curves in the US but asp highlights the risk as demonstrated in 1994 when ‘rising rates blew up investment groups like Orange County’s treasury, which had big, poorly understood holdings of interest rate swaps.‘
Given the size of that market today there is a risk lurking as seen in the Archegos incident.
She concludes
'the big US banks have enough reserves to cope with idiosyncratic market ructions. They have enough of a fair wind to respond to some of fintech’s competitive threats, such as the possibility that when small companies start borrowing money again, they turn to fintech platforms instead of banks.They are also racing to co-opt crypto wherever they can, not least by putting their wealthy clients into bitcoin investments. They have another advantage too: while progressives in President Joe Biden’s administration are rightly upset about abuses of corporate power in America, their ire is focused more on Big Tech than Wall Street.
So one message to crypto kids is this: don’t assume that the finance world’s “boomers” are dead yet. Big banks may not strut publicly as they did pre-2008. In today’s world, though, that is wise.'

Flying cars finally prepare for take-off


Focus on the corporate tax free riders to save the planet
Looks at the international tax discussion as being a key for saving the planet from global warming. Key is 'The fundamental economic problem is the same for both global warming and taxing multinationals: free riders. Both have the same emerging solution, based on principled and muscular unilateralism. It is clearer and easier in the case of taxation than the climate. For this reason, an agreement in Paris along the lines the US is now proposing could point the way towards the kind of environmental solutions that have so far proved elusive.'
An interesting read

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