>>> Weekend Papers Summary

Weekend Papers Summary

FINANCIAL TIMES

-US stocks saw their best day in over two months after a jobs report undershot expectations, boosting hopes for interest rate cuts later in the year. The US added 175,000 jobs in April, well below the 241,000 forecast and the smallest rise for six months. The cooling labor market led to a 1.3% gain for the S&P 500 index. Federal Reserve chair Jay Powell signaled that rates would remain at a 23-year high of 5.25-5.5% for even longer than anticipated.

-Warren Buffett's longevity has led to potential successors either dying or falling by the wayside. As Berkshire's shareholders gather for the group's annual meeting, the question of the future holds as the legendary investor is no longer in charge is increasingly pressing. The Financial Times examines whether Greg Abel will be able to deliver on Buffett's promise that Berkshire, America's last great conglomerate, was built to outlast a founder whose investment record, folksy charm, and professorial wisdom have made him the country's most admired business leader. Bill Stone, the chief investment officer of Glenview Trust, said that Berkshire has built up goodwill over the years and that it doesn't completely go away when Buffett is gone. Abel, who joined Berkshire in 2000 and was revealed as CEO-in-waiting by Charlie Munger, will be tested on multiple fronts.

-Former Trump aide Hope Hicks testified at his Manhattan criminal trial, revealing that Trump tried to prevent newspapers containing allegations of extramarital affairs from being delivered to his home to avoid angering his wife Melania. Hicks, who worked for Trump's 2016 campaign and followed him to the White House, described how she was ordered to keep copies of the Wall Street Journal, which contained a story about "hush money" payments to a porn actor, from her employer's spouse.

-The US Securities and Exchange Commission (SEC) has shut down the auditor of Donald Trump's social media company, BF Borgers, and its founder, Ben Borgers, for "massive fraud". The SEC accused Borgers and the firm of falsely representing to clients that its audit work would comply with US standards and fabricating documentation. The firm has agreed to pay a $12mn penalty and Ben Borgers to pay $2mn. Borgers, one of the most prolific auditors of US public companies, has expanded rapidly to become auditor to hundreds of small and microcap companies, including the former US president's Trump Media & Technology Group. The SEC said three-quarters of its audits were faulty, and advised Borgers' clients to check past financial statements for errors.

-Private equity firms like Apollo Global, KKR, Blackstone, and Brookfield are boosting their low-risk lending efforts, aiming to originate over $200B a year in new loans. This is compared to $97B issued last year, including to investment-grade companies like Vonovia and Air France-KLM. Apollo's long-term forecasts suggest that US economic growth, driven by increased public and private spending on infrastructure projects, is driving a significant demand for loans. However, the traditional channels of investment-grade public debt or equity may not be suitable for these companies.

-South Korea has imposed a crackdown on "shrinkflation", requiring food and daily necessities producers to inform consumers of any product size reductions or face fines. The Korea Fair Trade Commission has labeled the practice of slimming down products while keeping prices unchanged as an "unfair transaction". The move comes amid international criticism of companies downsizing products to pass on inflation costs to consumers. US President Joe Biden and French finance minister Bruno Le Maire have criticized shrinkflation, calling it a "scam" and requiring supermarkets to label products with reduced volumes.

-The German government has vowed consequences for Russia following intelligence agencies revealing the Kremlin was behind a cyber-attack on the party of Chancellor Olaf Scholz in January 2023. The attack was carried out by the same Russian hacker group that leaked damaging information about Hillary Clinton in her 2016 presidential bid. The German foreign minister, Annalena Baerbock, attributed the attack to the APT28 group, controlled by the Russian secret service GRU. The foreign office is considering punitive measures, including EU sanctions and diplomatic expulsions, to prevent, deter, and respond to Russia's cyber aggression.

-The island of Mayotte has sparked a dispute between two of the EU's largest far-right parties, Alternative for Germany and the French Rassemblement National. The AfD suggested France should hand over control of its impoverished overseas department to the Union of the Comoros, comparing the EU's refusal to recognize independence referendums in eastern Ukraine with its acceptance of similar plebiscites in the island nation. French far-right leader Marine Le Pen reacted furiously, stating that the AfD would better deal with Germany's problems and teach her allies geopolitics lessons. The dispute is part of a series of confrontations between the two parties.

-US regulators have accused former Pioneer Natural Resources CEO Scott Sheffield of attempting to co-ordinate production levels with the OPEC cartel to boost energy prices. The move, which came alongside ExxonMobil's $60B takeover of Pioneer, has sparked tensions in the oil industry, with insiders questioning how past comments could be scrutinized and fears of a broader crackdown before the November presidential election. James Lucier, an analyst at Capital Alpha Partners, said the implications go far beyond Sheffield, as the FTC has not taken an adversarial approach toward oil industry mergers.

-Canada has arrested three Indian nationals for the fatal shooting of a Sikh separatist leader in British Columbia last year. The incident heightened tensions between Ottawa and New Delhi. The Royal Canadian Mounted Police arrested Karanpreet Singh, Kamalpreet Singh, and Karan Brar in Edmonton, Alberta. They were charged with first-degree murder and conspiracy to commit murder for the killing of Hardeep Singh Nijjar outside Vancouver in June. The incident complicated relations between Canada and India, leading to diplomatic removals and temporary visa restrictions for Canadian citizens. Police are collaborating with international partners, including US agencies, to prevent further assassinations.

THE NEW YORK TIMES

-The University of Southern California has announced updated commencement plans, including increased security and modified festivities. The university will host a "Trojan Family Graduate Celebration" at the Los Angeles Memorial Coliseum, where over 100 school-specific graduations and smaller receptions will take place. Access to campus for these ceremonies will be limited to students, faculty, staff, and registered guests. The Trojan Marching Band will perform, and a special gift will be given to the Class of 2024. Security measures will be similar to those at sporting events.

-The University of Chicago's president has stated that the pro-Palestinian encampment on the campus's quad cannot continue, a move that has been closely monitored due to the university's reputation as a national model for free expression. Initially, administrators defended the camp's permissive approach, citing the Chicago statement, but President Paul Alivisatos argued that these protections were not absolute and the encampment violated university policies.

-Tensions over the Gaza war have continued to rise at American universities, with dozens of arrests made in New York and clashes between pro-Palestinian demonstrators and counterprotesters at the University of Chicago. Over 2,300 arrests have been made on US campuses over the last two weeks, according to The New York Times. The wave of student activism has spread to universities outside the US, with some universities agreeing to consider some demands, bringing peaceful ends to demonstrations but also condemning some Jewish groups. Deals have been struck at Brown, Northwestern, Rutgers, and the University of Minnesota.

-Barry Sternlicht, a billionaire real estate mogul, has criticized Brown University's board vote on cutting investments tied to Israel, calling it "unconscionable" and paused donations. Sternlicht criticized the arrangement as sympathy for Hamas and criticized students protesting Israel's actions in Gaza as "ignorant." He argued that no deal with protesters could be fruitful due to disagreements on facts and moral clarity, as well as the scale of Israel's invasion.

-Rebel drone units in Myanmar have disrupted the power balance, using cheap drones to disrupt the civil war. The military, equipped with Russian fighter jets and Chinese missiles, has used crowdsourced instructions and parts from China to add ballast to the conflict. This technology is similar to those used in Ukraine, Yemen, and Sudan. In Gaza, Hamas used low-cost drones to blind Israel's checkpoints, while in Syria and Yemen, drones are used alongside missiles, forcing American troops to make difficult decisions.

-Turkey has announced that it will suspend all trade with Israel until a permanent cease-fire in the Gaza Strip is reached. This move is part of the latest international sanctions against Israel, highlighting the growing global pressure to end the war in the region. Despite this, Israel continues to warn of an offensive in Rafah, which the UN has deemed a "slaughter" in Gaza. Turkey's President, Recep Tayyip Erdogan, has expressed his decision to stand with the persecuted, despite anticipated backlash from Western countries.

-Israeli and foreign officials are concerned that the International Criminal Court (ICTY) may issue arrest warrants against senior Israeli officials, possibly over accusations of preventing aid delivery to civilians in Gaza. The humanitarian crisis in Gaza is escalating due to months of restrictions and the active nature of the conflict, which has curbed aid distribution. The Israeli military has stated that since Hamas's attack, Israel has been "engaged in a war against the terror organization" and has worked in coordination with the U.S., Egypt, and international aid groups to get aid to Gaza residents.

-A cooler-than-expected jobs report in April rekindled hopes that the Federal Reserve may cut rates before the end of the year, as job and wage growth in April came in lower than expected. The S&P 500 rose 1.3%, while the Russell 2000 index of smaller companies rose 1% for the day. This shift in labor market data suggests the Fed may be considering rate cuts.

-Two states with near-total abortion bans are set to have citizen-sponsored measures on the ballot this year, allowing voters to reverse those bans by establishing a right to abortion in their state constitutions. Missouri and South Dakota have already secured signatures for these amendments, more than double the required 172,000. Both groups aim to build on the momentum of other states where abortion rights supporters have prevailed in seven out of seven ballot measures since the Supreme Court overturned Roe v. Wade. Other states, including Arizona and Nevada, are hoping voters' renewed support will help President Biden win re-election.

THE NEW YORK POST

-The Biden administration has warned Iowa Gov. Kim Reynolds that legal action will be taken if she enforces a new law allowing authorities to arrest migrants who were previously denied entry or deported from the US. The Justice Department has called the measure unconstitutional and given the state a May 7 deadline to suspend enforcement of Senate File 2340, which was signed into law earlier this month.

-US employers increased payrolls by 175,000 in April, a slowdown from the average 276,000 new jobs per month created this year. This shift in hiring pace suggests the economy may be heading towards a slowdown worthy of an interest rate cut. April's job growth fell short of analysts' predictions, suggesting a potential slowdown. Unemployment rose to 3.9%, the 27th consecutive month it held below 4%, despite the Dow Jones consensus expecting it to remain unchanged.