Weekend Papers Summary
FINANCIAL TIMES
-The US is expected to fund a significant increase in its budget deficit with short-term debt, potentially impacting money markets and the fight against inflation. The Congressional Budget Office predicts that aid packages for Ukraine and Israel will push the US deficit to $1.9T this fiscal year, compared to its February prediction of $1.5T. This increase has raised concerns among fiscal hawks, who warn that the US's lack of discipline will increase borrowing costs and that neither President Joe Biden nor his Republican challenger Donald Trump have substantive plans to stabilize the country's finances.
-Between the European parliament elections and the French parliamentary elections, France appears to have returned to a traditional pattern of left against right, with progressives against fascists. The liberal centre, led by President Emmanuel Macron, has collapsed, while the left is dominated by the radical La France Insoumise (France Unbowed), led by Jean-Luc Mélenchon. The Greens provide only a marginal boost for the left. The far right has advanced, with the Rassemblement National (RN) of Marine Le Pen winning 31.5% of the French votes for the European parliament. Macron won the presidency in 2017 by uniting the centre-right and centre-left under his new party, En Marche (now called Renaissance), splitting the Socialists and Les Républicains.
-French President Emmanuel Macron's centrist alliance is gaining ground in the first round of France's snap parliamentary election, according to recent opinion polls. The far-right Rassemblement National is predicted to win the first round vote, with 34% of the vote predicted by IFOP and 33% by Harris. The leftwing Nouveau Front Populaire bloc is at 29% and 26%, respectively. A third poll by OpinionWay put the RN at 35% and the centrists at 20%. Harris' seat projections suggest France is likely heading for a hung parliament, potentially leading to political gridlock. Macron's alliance, which includes his Renaissance party and two others, won 14.6% in European parliament elections on June 9, prompting him to dissolve parliament. Polls in the aftermath showed his party languishing in the mid-teens.
-Apple has ruled out releasing its iPhone's new artificial intelligence features in Europe during its global launch later this year, citing uncertainty stemming from Brussels' new competition rules. The company unveiled features two weeks ago, including Apple Intelligence services and a partnership with OpenAI. However, Apple has said that the complexities of making the system compatible with EU rules, which require critical parts of its iOS software and App Store services to be interoperable with third parties, will result in EU users being denied certain features when they launch in other parts of the world later in 2024. Apple stated that due to regulatory uncertainties caused by the Digital Markets Act, it is unlikely to roll out iPhone Mirroring, SharePlay Screen Sharing enhancements, and Apple Intelligence to EU users this year.
-Wealthy foreigners are leaving the UK due to the abolition of the "non-dom" regime, which allowed them to avoid paying tax on overseas income. The change, supported by both the Conservative and Labour parties, has led to a decline in the UK's attractiveness, according to interviews with wealthy foreigners and their advisers. Other deterrents include Brexit, fiscal and political instability, and concerns around security. A billionaire businessman who has lived in London for 15 years and is now moving his tax residency to Abu Dhabi cites security as a major issue contributing to the tax reasons for leaving. Labour shadow chancellor Rachel Reeves has proposed toughening the planned crackdown, including reversing a Tory decision to permit non-doms to shield foreign assets held in offshore trusts from inheritance tax permanently.
-Chinese term "runxue" or "run-ology" refers to the practice of escaping China and bringing wealth with you. The term originated in 2022 during the Covid lockdown, which prompted people to dream of a life abroad. This year, the "running" has become a concerted sprint for the exit, with record numbers of Chinese millionaires and multimillionaires expected to emigrate from their homeland. An estimated 15,200 Chinese millionaires are predicted to emigrate this year, up from 13,800 who left China last year. This migration is a canary in the coal mine, signaling a profound shift in the global landscape and tectonic plates of wealth and power.
-Four members of the Hinduja clan, the UK's wealthiest family, have been convicted of exploiting their domestic staff and sentenced to lengthy jail terms by a Geneva court. The panel found Prakash Hinduja, his wife Kamal, their son Ajay, and his wife Namrata guilty of serious employment offences related to Indian staff. The case sheds light on the punishing conditions the Hindujas subjected their workers, who were mostly illiterate and flown directly from India to work at the family's Swiss home. The court cleared the Hindujas of the more serious charge of human trafficking.
-Airbus is in talks with Spirit AeroSystems to take over parts of the aerospace supplier's work on its A220 and A350 aircraft programs, allowing Boeing to purchase the rest of the group. The agreement would see Airbus take over Spirit's work at several global sites, including Belfast in Northern Ireland. Boeing is expected to take over the bulk of Spirit's operations, including its main facility in Kansas. The talks are "moving in the right direction," and an announcement could come as early as next week. Boeing has been in talks with Spirit since March to improve the supplier's manufacturing processes after a mid-air blowout of a section of one of its 737 Max aircraft in January. The talks come after Boeing and Airbus admitted to using titanium parts in their jets, purchased from Spirit, whose certification documentation was counterfeit.
THE NEW YORK TIMES
-President Vladimir V. Putin of Russia visited Asia to disrupt the world order and anger Washington, undermining Beijing. He embraced North Korea and signed deals with Vietnam, injecting more potential threats into a region already strained by Taiwan tensions and South China Sea clashes. North Korea, a rogue nuclear state, was at the center of the map of risk in Asia, empowered by Russian promises of military aid and a mutual defense pact. Putin also signed deals with Vietnam, a country of growing importance for both China and the United States as they vie for influence. He insisted that "reliable security architecture" could not be built with closed military-political blocs. Putin's visit to Asia left a redrawn map of risk in Asia, with North Korea at the center of the map.
-As Ukraine expands its military draft, some men are hiding to avoid draft officers who roam the streets. Fearful that conscription is a one-way ticket to bloody trench warfare, these men spend their days holed up at home to avoid draft officers who roam the streets. Military officials stopped men in Kiev, the capital of Ukraine, this month to check whether they have updated their information with the draft office. Vladyslav, a 45-year-old Ukrainian man, stopped going into Kyiv's city center to avoid draft officers checking papers and exercising at the gym due to patrols in his neighborhood. Now, he spends most of his days holed up in his apartment, often using binoculars to watch officers serving draft notices to commuters leaving a nearby subway station.
-Louisiana Governor Jeff Landry has signed bills to expand the presence of religion in the state's public schools, allowing them to hire chaplains and post Ten Commandments in classrooms. The new laws require transgender students to be addressed by the pronouns for gender on their birth certificates, and public schools to employ chaplains. Landry also signed a mandate that the Ten Commandments be hung in every public classroom, demonstrating a new willingness for Louisiana to go where other states have not. Louisiana also became the first state to classify abortion pills as dangerous controlled substances last month. The Ten Commandments law signals a broader Christian agenda, as Louisiana aims to be at the forefront of a national movement to advance legislation with a Christian worldview.
-During the annual Hajj pilgrimage in Saudi Arabia, at least 450 people died due to scorching temperatures and throngs of people. The pilgrims, some of whom have saved their lives for the hajj, spent days walking and sleeping in tents during their journey to Mecca, the holiest city for Muslims. The heat was a contributing factor to many of the deaths, with Indonesia reporting the most deaths at 199, and India at 98. The countries said they could not be sure that heat was the cause of all the deaths, but relatives of the missing and dead and tour operators have said the heat was at least a contributing factor. The hajj is one of Islam's five pillars, and all Muslims who are physically and financially able are obliged to embark on the pilgrimage.
-Pope Francis used an offensive anti-gay slur during a conference with Italian bishops, causing shock and confusion among Catholics. The pope, known for his openness to and acceptance of LGBTQ people, used homophobic slang and cautioned priests about admitting gay men into seminaries. The apparent inconsistency in Francis' messaging reflects the deep contradictions and tensions that underlie the Roman Catholic Church's and Francis' relationship to homosexuality. The church holds that "homosexual tendencies" are "intrinsically disordered," and its guidelines state that people with "deep-seated" gay tendencies should not become priests.
-A Southern California school board president was recalled after his conservative majority approved policies on critical race theory and transgender issues. The conservative board members of the Temecula Valley Unified School District passed a resolution banning critical race theory from classrooms in December 2022. Months later, they fired the superintendent, believing the district needed someone with new ideas. They also passed a rule requiring parents to be notified whenever a student requests to be identified as a different gender at school. The moves were applauded by conservatives, many of them Christian churchgoers who had helped install the new board members, hoping that Temecula Valley could remain an island of traditional values in a liberal state. The culture wars came to a California suburb, and a leader has been ousted.
-Israeli cabinet minister Bezalel Smotrich has been accused of a secret government bid to cement control of the West Bank, despite Israeli judges stating that the territory is a temporary military occupation. In a taped speech, Smotrich, a member of Prime Minister Benjamin Netanyahu's coalition, told settlers in the Israeli-occupied West Bank that the government is engaged in a stealthy effort to irreversibly change the way the territory is governed, cementing Israel's control over it without being accused of formally annexing it. Smotrich suggested at a private event earlier this month that the goal was to prevent the West Bank from becoming part of a Palestinian state. He described the changes as "mega-dramatic" and "change a system's DNA." The speech, which was reviewed by reporters, highlights the government's efforts to change the way the West Bank is governed and cement its control without being accused of formally annexing it.
-A new antiviral drug, lenacapavir, has been found to provide total protection from HIV in a clinical trial of young African women. The injection, given twice a year, was found to be better than the current oral drug for pre-exposure prophylaxis, which is taken as a daily pill. The every-six-months injection was found to be more effective than the current oral drug for pre-exposure prophylaxis. Dr. Linda-Gail Bekker, an investigator in the trial of lenacapavir, described the startling sight of a line of zeros in the data column for new infections as "surreal." Advocacy for Prevention of HIV and AIDS in South Africa leader Yvette Raphael called the news "the best news ever." The study highlights the importance of early detection and treatment for HIV in the population with the highest infection rates.
THE NEW YORK POST
-Former President Donald Trump has announced that Teamsters General President Sean O'Brien has accepted his invitation to speak at the Republican National Convention in Milwaukee. This is a significant win for Trump, who is edging ahead of President Biden in polling with traditionally backed Democrats, including union members. A survey this year found Biden and Trump tied at 47% among union members in the six closest swing states Biden won in 2020, Arizona, Georgia, Michigan, Nevada, Pennsylvania, and Wisconsin. O'Brien has a controversial history, having been criticized by Post columnist Charlie Gasparino last year for failing to compromise with a major union employer, Yellow, which led to 22,000 Teamsters jobs lost. With support from the National Republican Congressional Committee, Pennsylvania House candidate Deb Haaland debuted his campaign's "Battle Station" office.
-Chinese battery manufacturer CATL has become the top recipient of state subsidies among all mainland listed companies, indicating a strategic focus as government support in the West becomes scrutinized. Last year, the company ranked No. 1 in subsidy receipts among over 5,000 mainland businesses, according to data from Chinese information provider Wind and surveyed by Nikkei Asia.
-US stocks could face a dip of 5% or more before the end of this year, according to veteran Wall Street analyst Sam Stovall. Stovall warned that tech is the only outperforming sector, as AI chipmaker Nvidia surged to become the world's most valuable company, worth over $3.3T. He warned that US stocks could fall further due to consumer confidence hitting its lowest level since November. Stovall also compared a possible downturn to a "resetting of the dials" or "digestion" after a big meal. He warned that the tech-driven recent rally of share prices could come to an end as Americans were feeling gloomy about the economy.