Weekend Papers Summary
FINANCIAL TIMES
-US jobs growth fell sharply in July, raising concerns that the Federal Reserve is slowing down to lower borrowing costs for Americans, potentially risking a recession. The employment report showed that companies added 114,000 jobs last month, lower than the 215,000 average gain over the past 12 months. The unemployment rate rose 0.2 percentage points to 4.3%, triggering the Sahm Rule, which links recession to a three-month moving average of the jobless rate rising at least half a percentage point above its low over the past 12 months. The data comes two days after the US central bank chose not to lower its benchmark interest rate.
-Big Tech companies have increased their capital spending by 50% to over $100B this year, despite growing Wall Street skepticism about the returns on their unprecedented investment. Microsoft, Alphabet, Amazon, and Meta all reported massive increases in spending in the first six months of 2024, totaling $106B. Meta chief Mark Zuckerberg predicted Facebook parent's capital spending could hit $40B this year. Collectively, their AI-related investment could more than double by year-end. Analysts at Dell'Oro Group now expect up to $1T to be channeled into infrastructure such as data centers within five years, despite the companies failing to convince investors that their customers are willing to spend big on AI products and services.
-US defense secretary Lloyd Austin has withdrawn plea deals with the mastermind behind the September 11 2001 terror attacks and two accomplices, marking a significant change in politically charged cases. The move follows the Pentagon's announcement that Khaled Sheikh Mohammed, Walid Muhammad Salih Mubarak Bin Attash, and Mustafa Ahmed Adam al Hawsawi had reached deals with the head of the military tribunal in Guntánamo Bay. Austin also revoked the authority of retired Brigadier General Susan Escallier, who oversaw the Guantánamo war court, to enter into agreements with the three prisoners, reserving the power for himself. Escallier was appointed to her post in 2023.
-Venezuela's President Nicolás Maduro has reportedly used a Bible to address a "violent, criminal, fascist counter-revolution" he claims is organized by the US and funded by Colombian drug traffickers. Maduro claimed that the truth about the recent election was the truth. He ordered the deployment of 1,000 troops to find and jail the people involved, even if it takes a month. Maduro has been using these tactics since being anointed as his successor by Hugo Chávez in 2013. He has been accused of imagining external demons, cracking down on his enemies, and portraying himself as a heroic defender of his oil-rich homeland. His ministers applauded his actions.
-President Emmanuel Macron has defended Thomas Jolly, artistic director of the opening ceremony of the Paris Olympic Games, after he reported online harassment and death threats. Prosecutors have opened an investigation into Jolly's allegations, which include death threats and hateful messages about his sexual orientation and "wrongly assumed Israeli origins." Macron praised the opening ceremony as an "audacious" performance that made France proud and praised the artists who accompanied him. Jolly, a 41-year-old theatre director, designed the opening ceremony as a parade of boats carrying athletes down the Seine, accompanied by artists, dancers, and musicians performing along the quays and on top of monuments.
-Revolut, a fintech company, is set to sell up to $500M worth of existing shares at a $45B valuation, aiming to solidify its position as Europe's most valuable start-up. Staff who have been with the company for at least a year and are not on gardening leave will be eligible to sell 20% of their vested share options at $865.42 a share. Former employees are not eligible. Revolut is committed to enabling its employees to become shareholders and providing them with regular opportunities to sell shares. The company is currently conducting a secondary share sale to support this goal, and it is expected to close in the next month. The announcement comes after Revolut was granted a banking license in the UK, where it has 9M customers.
-The assassinations of senior figures in Hezbollah and Hamas have raised concerns that the two arch foes are sliding towards an all-out war. A full-blown conflict would pit the Middle East's most sophisticated military against arguably the world's most heavily armed non-state actor. The capabilities of Israel and Iran-backed Hezbollah have evolved since the last conflagration 18 years ago, making the next conflict likely to draw in others even more destructive. Sanam Vakil, head of the Middle East program at the Chatham House think-tank, said that a war today would not be a conflict just between Israel and Hezbollah, but would involve other members of the Iran-led "axis of resistance" that includes Yemen's Houthi rebels, militias in Iraq and Syria, and Hamas.
-The US is sending additional warships and fighter jets to the Middle East to strengthen its defenses in anticipation of a possible Iranian attack on Israel. The Pentagon announced the reinforcement after US President Joe Biden informed Israeli Prime Minister Benjamin Netanyahu about Washington's plans to protect Israel in case of an attack. The Biden administration also urged a de-escalation of regional tensions and a ceasefire in Gaza. US Defense Secretary Lloyd Austin has ordered adjustments to US military posture to improve force protection, increase support for Israel's defense, and ensure readiness to respond to contingencies. Additional warships and fighter jets will be directed to the region and Europe.
-Vietnam's ruling Communist party has appointed President To Lam as its general secretary, succeeding Nguyen Phu Trong, who died two weeks ago. Lam, a former public security minister, was elected unanimously by the party's central committee. He ascended to the role of president just two months ago. The appointment comes at a crucial time for Vietnam, as companies diversify from China amid geopolitical tensions. Concerns about Vietnam's ability to attract more investment have grown due to a corruption crackdown led by Lam, which has triggered bureaucratic paralysis and political instability. Lam pledged to continue the fight against corruption and maintain Vietnam's foreign policy, stating he would "inherit and promote" the legacy of Nguyen Phu Trong.
-The Department of Justice and the Federal Trade Commission have filed a civil lawsuit against TikTok, its Chinese parent ByteDance, and their affiliates, alleging widespread violations of US child privacy law. The lawsuit alleges that TikTok has allowed children to create accounts and share content on the app without their parents' consent since 2019. The complaint claims that TikTok has knowingly and repeatedly violated kids' privacy, threatening the safety of millions of children across the country. The lawsuit aims to prevent TikTok from collecting and using young children's private information without parental consent or control.
-Manchester University's National Graphene Institute is set to begin a clinical trial for the first graphene brain implant. The implant, discovered 20 years ago, aims to create more sensitive interfaces between the human brain and external computers. The trial could lead to improved treatments for neurological conditions like Parkinson's disease and stroke, as well as translating disabled people's thoughts into speech or movement. The first trial patient will be placed with a flexible interface with 64 graphene electrodes during neurosurgery to remove a glioblastoma tumor. The implant will stimulate and read neural activity with high precision, preserving functional parts of the brain after cancer removal. The primary objective is to demonstrate the safety of graphene electrodes applied to the brain in eight to ten patients.
THE NEW YORK TIMES
-Iran has initiated a comprehensive investigation into the assassination of Hamas leader Ismail Haniyeh, a significant security breach that allowed the assassination of a top Hamas leader. The high-level arrests, including senior intelligence officers, military officials, and staff workers, were made in response to the incident. The high-level arrests came after Haniyeh's assassination in an explosion early Wednesday, which occurred at a heavily guarded compound in Tehran, Iran's capital. The response to Haniyeh's death underscores the devastating security failure for Iran's leadership, as the assassination occurred within hours of the swearing-in ceremony of the country's new president. The perception that Iran cannot protect its homeland or key allies could be fatal for the Iranian regime, as it signals to its foes that if they cannot topple the Islamic Republic, they can decapitate it.
-Defense Secretary Lloyd J. Austin III has ordered additional combat aircraft and missile-shooting warships to the Middle East in response to threats from Iran and its proxies in Gaza, Lebanon, and Yemen to attack Israel in the coming days to avenge the death of Ismail Haniyeh. The military will send one additional squadron of Air Force F-22 fighter jets, an unspecified number of additional Navy cruisers and destroyers capable of intercepting ballistic missiles, and, if needed, more land-based ballistic-missile defense systems. Austin directed the aircraft carrier Abraham Lincoln, now in the eastern Pacific, to relieve the aircraft carrier Theodore Roosevelt in the next couple of weeks when it is scheduled to return home. Some ships already in the western Mediterranean Sea will move east, closer to the coast of Israel to provide more security.
-Defense Secretary Lloyd J. Austin III has overruled the overseer of the war court at Guantánamo Bay and revoked a plea agreement reached earlier this week with the accused mastermind of the Sept. 11, 2001, attacks and two alleged accomplices. The Pentagon announced the decision with a memorandum relieving the senior Defense Department official responsible for military commissions of her oversight of the capital case against Khalid Shaikh Mohammed and his alleged accomplices for the attacks that killed nearly 3,000 people in New York City, at the Pentagon, and in a Pennsylvania field.
-Former President Donald J. Trump has taken the strategy of casting opponents as outsiders to the next level by repeatedly making false assertions about Vice President Kamala Harris's racial identity. This is a tactic that has long been part of the underside of American politics: presenting an opponent as somehow "other" or "not one of us," someone who cannot be trusted or truly known. Trump's comments on Harris's racial identity were a response to the idea that she is not one of us. This tactic has long been part of the underside of American politics, as politicians have long used to present their opponents as outsiders.
-Kamala Harris has won enough delegates to secure the Democratic Party's nomination, making her the first Black woman and person of South Asian heritage to win the top spot on a major political ticket for president. The party chair, Jaime Harrison, announced that Harris's nomination would become official after the party's highly unusual, virtual roll call vote ends on Monday.
-Former President Donald Trump has agreed to a Fox News debate with Vice President Kamala Harris on September 4, marking the second presidential debate this election cycle and the first between Trump and the new Democratic candidate. The debate is scheduled to take place in Pennsylvania, a crucial battleground state, and will be moderated by Fox News anchors Bret Baier and Martha MacCallum. It is unclear whether Harris has agreed to the debate and its terms, and representatives of her campaign and Fox News have not responded to requests for comment. The event is expected to take place in a to-be-determined location in Pennsylvania, a crucial battleground state.
-Germany's Chancellor Olaf Scholz has overcame opposition to the idea of freeing a convicted Russian killer in a prisoner exchange with Russia. Scholz stated that no one made this decision to deport a murderer sentenced to life lightly. The convicted Russian killer bounded off a plane in Moscow on Thursday, hours after Germany freed him in a wide-ranging prison exchange with Russia. President Vladimir V. Putin hugged him on the tarmac, in a hero's welcome.
-The International Olympic Committee has condemned misinformation that cast doubt on the gender of Algerian boxer Imane Khelif, who is competing in the women's boxing competition in Paris. The chief spokesman for the International Olympic Committee stated that the Algerian boxer was born female, registered female, lived her life as a female, boxed as a female, and has a female passport. He emphasized that this is not a transgender case and that if suspicions are not addressed, there could be a gender-testing regime.
-Hawaii's largest utility, Hawaiian Electric, has agreed to pay the largest share of a legal settlement totaling just over $4 billion, compensating over 10,000 homeowners, businesses, and other plaintiffs. The proposed agreement was filed in a Maui-based state court six days before the anniversary of the disaster. The settlement, which remains subject to court approval, will cover less than half of the overall cost of the disaster, estimated at nearly $12 billion. The settlement covers less than half of the damage caused by the wildfire, which destroyed over 3,000 homes and structures, and injured thousands of residents. Governor Josh Green pushed for a single global agreement among all parties to litigation to swiftly compensate fire victims and ward off a potentially devastating financial hit to Maui County and the bankruptcy of Hawaiian Electric.
-UK Prime Minister Keir Starmer has criticized social media groups for spreading misinformation that led to violent clashes in several towns. He called out these groups for the misinformation that sparked the unrest, but holding them accountable remains a challenge. The prime minister announced a crackdown on "gangs of thugs" who instigated the unrest. However, the question of how to confront the flood of online misinformation about a deadly stabbing attack remains largely unanswered. Starmer directly called out online companies after false information about the identity of the 17-year-old suspected in the attack spread rapidly on their platforms, despite multiple attempts by police and government officials to challenge the claims. The question remains whether social media companies will act to hold these groups accountable.
THE NEW YORK POST
-The Biden-Harris administration's "Chips Act" aimed to bring the semiconductor industry back home from Taiwan, China, and Singapore, resulting in a $280B corporate welfare bill. Intel, Micron, Global Foundries, Polar Semiconductor, Taiwan Semiconductor Manufacturing Company, Samsung, BAE Systems, and Microchip Technology were the direct beneficiaries of the law. However, the failures far outweigh the successes, and in spectacular fashion. Intel was one of the biggest beneficiaries of the Chips Act, receiving an $8.5B grant announced in March, a $25B sweetheart tax incentive, and likely the lion's share of an $11B federal loan program. In exchange, Intel announced it was laying off 15% of its workforce, resulting in a loss of billions of dollars and thousands of jobs.
-The US economy experienced a significant slowdown in hiring last month, causing fears of a recession and causing a massive sell-off on Wall Street. The Dow Jones Industrial Average fell over 600 points, extending its two-day loss to over 1,100. The tech-heavy NASDAQ moved into correction territory by shedding nearly 2.5%. The economy created just 114,000 new positions last month, well off from analyst estimates of 175,000 jobs. Unemployment rose to 4.3% last month, worse than the 4.1% predicted by analysts. The Federal Reserve, which kept interest rates unchanged after their two-day meeting, now faces the prospect of the "soft landing" chair Jerome Powell has tried to engineer. Anthony Scaramucci, founder of Skybridge Capital, believes the Fed has left rates too high for too long to fight high post-COVID inflation.