FT : China’s cash-strapped shoppers drawn to second-hand luxury items

China’s cash-strapped shoppers drawn to second-hand luxury items
Price-conscious buyers hunt for deals while others seek goods that can hold value in times of uncertainty

At a cavernous underground store near Shanghai’s Hongqiao airport, shoppers peruse aisles stacked with goods from some of the biggest names in the world of luxury — Louis Vuitton, Dior and Gucci.

But in contrast to the gleaming malls downtown, the items here are not brand new. “Here are gift-ready items . . . with most of their original packaging,” says one sign. “Be yourself,” says another, “and think second-hand first.”

The ZZER store is a bricks-and-mortar incarnation of a thriving online second-hand market for luxury goods, at a time when the wider industry has come under mounting pressure in what was once a booming market.

Luxury groups including Cartier owner Richemont, Gucci parent Kering and LVMH reported third-quarter sales drops in the Asia-Pacific region outside Japan, which is dominated by China. Richemont’s chief Nicolas Bos has said that the Chinese consumer slowdown “is probably a mid- to long-term phenomenon”, while Kering warned profits would halve this year.

While concerns over demand for new luxury products in China are growing amid heightened fears over the economy, there are signs of a strong appetite for second-hand goods. In September, luxury resale platform Hongbulin was acquired by Zhuanzhuan Group, an online marketplace for used goods.

The wider market surpassed Rmb1tn ($138bn) in 2020, compared with just Rmb300bn in 2015, according to a report from consulting firm Frost & Sullivan and Tsinghua University.

Although there is a lack of recent data on the second-hand luxury market, there has been a rise in users of online platforms such as ZZER and Xianyu that provide a venue for users to resell luxury goods for a commission.

The ZZER store in Shanghai, which opened its doors in 2022, alone says it receives 5,000 new products a day, highlighting the sheer volume of handbags and high-end clothing circulating the country.

On Xianyu, users comment on aggressive bargaining, suggesting heightened price sensitivity among consumers.

Jacob Cooke, chief executive of Beijing-based marketing group WPIC, pointed to “growing interest in second-hand luxury as a cost-effective alternative” during the Covid-19 pandemic, given its economic pressures and travel restrictions that prevented people from buying goods abroad.

“We’re still seeing economic pressures post-pandemic,” he added.

“People like us who are close to the middle class, who have a salary of over Rmb10,000 a month, might be reluctant to invest in luxury goods,” said a 28-year-old shopper at ZZER who gave her name as Li and was visiting Shanghai from Xi’an. “[We might prefer] to save money.”

While some price-conscious buyers such as Li are looking for deals, others are searching for high-end products that can “preserve their value or even appreciate”, according to Mark Tanner, managing director of Shanghai-based marketing agency China Skinny. Tanner noted that there was a preference among Chinese second-hand luxury goods buyers for “the higher end of the market”.

In ZZER, a bag labelled Louis Vuitton is on sale for Rmb4,762, compared with an original price of Rmb14,300.

A few miles away in Shanghai’s French Concession neighbourhood, many shops specialise in second-hand bags. In one, a Chanel bag dating from about 2014 is on sale for Rmb35,800, down from Rmb41,000 originally.

As with a distinct grey luxury market that relies on new products brought in from overseas, some question the authenticity of the products on sale. ZZER, which started as an online app, allows sellers to list goods at prices they select and has its own authentication process. The company declined to comment.

For Li, it was her first time in a second-hand store, which she discovered on the Chinese social media app Xiaohongshu. “It’s not that I can’t afford luxury goods, but I think the value for money here is very high,” she said. “If such a store opened in Xi’an, I’d probably go after work.”

Li added: “They did not have this kind of business model before the pandemic.”

The second-hand market “saps demand” from new products, Cooke suggested, and could “hurt brand equity”.

But it at least attracts customers who might never have made luxury purchases, said Federica Levato, a partner at Bain who leads the consultancy’s global luxury and fashion practice. “[It shows] that a big chunk of the population has the willingness to buy these products,” she said.

Deep in the heart of the Shanghai store, next to handbags branded as Hermès and Chanel, one woman said she heard about the store after her friend sold items there.

One shop assistant, gesturing to a T-shirt, said some of the goods had “never been worn”. The company declined to comment.

ZZER’s Shanghai store has also attracted international customers hunting for bargains. “There’s nothing like this where we are . . . nothing to this scale,” said Conor McLernin, 27, who was visiting Shanghai from Australia.

FT : Russia recruits Yemeni mercenaries to fight in Ukraine

Russia recruits Yemeni mercenaries to fight in Ukraine
Mysterious Houthi-linked company duping men into joining Moscow’s war machine

Russia’s armed forces have recruited hundreds of Yemeni men to fight in Ukraine, brought by a shadowy trafficking operation that highlights the growing links between Moscow and the Houthi rebel group.

Yemeni recruits who travelled to Russia told the Financial Times they were promised high salaried employment and even Russian citizenship. When they arrived with the help of a Houthi-linked company, they were then forcibly inducted into the Russian army and sent to the front lines in Ukraine.

The appearance of the rag tag group of — mainly involuntary — Yemeni mercenaries in Ukraine shows how the conflict is increasingly sucking in soldiers from abroad as casualties rise and the Kremlin tries to avoid a full mobilisation. They include mercenaries from Nepal and India and some 12,000 North Korean regular army troops who arrived to take part in combat against Ukrainian forces in the Russian province of Kursk.

The Yemeni recruitment effort also underscores how Russia, driven by its confrontation with the west, is growing closer to Iran and allied militant groups in the Middle East. The Houthis, a militant group backed by Tehran, disrupted global supply chains with a missile campaign targeting shipping in the Red Sea after the start of the war in Gaza last year.

US diplomats say the entente between the Kremlin and the Houthis, unimaginable before the war in Ukraine, is a sign of how far Russia is willing to go to extend that conflict into new theatres including the Middle East.


An oil tanker on fire in the Red Sea after it was attacked by Houthi rebels © Eunavfor Aspides/Handout/Reuters
US special envoy for Yemen Tim Lenderking confirmed Russia is actively pursuing contacts with the Houthis and discussing weapons transfers, though he declined to be more specific.

“We know that there are Russian personnel in Sana’a helping to deepen this dialogue,” he said. “The kinds of weapons that are being discussed are very alarming, and would enable the Houthis to better target ships in the Red Sea and possibly beyond.”

Maged Almadhaji, the head of the Sana’a Center for Strategic Studies, a Yemen-focused think-tank, said Russia too is taking an interest “in any group in the Red Sea, or in the Middle East, that is hostile to the US”. He said that the mercenaries are organised by the Houthis as part of an effort to build links to Russia.

A spokesman for Ansar Allah, the official name for the Houthi movement, did not respond to a request for comment. Mohammed al Bukhaiti, a member of the Ansar Allah politburo, told the Russian news website Meduza earlier this month that they were in “constant contact” with the Russian leadership “to develop these relations in all areas, including economics, politics and the military”.

Few of the Yemeni mercenaries have any training and many do not want to be there, according to Farea al Muslimi, an expert on the Gulf region at Chatham House. “One thing Russia needs is soldiers, and it’s clear the Houthis are recruiting, [for them]” Muslimi said, describing it as an overture to Moscow. “Yemen is a pretty easy place to recruit. It is a very poor country.”

Contracts signed by the Yemenis, seen by the FT, listed a company founded by Abdulwali Abdo Hassan al-Jabri, a prominent Houthi politician. Registered in Salalah, Oman, the Al Jabri company’s registration documents identify it as a tour operator and retail supplier of medical equipment and pharmaceuticals.

The recruitment of Yemeni soldiers appears to have begun as early as July. One enlistment contract seen by the FT was dated July 3, and was countersigned by the head of a selection centre for contract soldiers in the city of Nizhnii Novgorod.

One recruit called Nabil, who exchanged text messages with the FT, estimated that he was part of a group of around 200 Yemenis conscripted into the Russian army in September after arriving in Moscow.

While some were experienced fighters, many had no military training. They were tricked into travelling to Russia and signed enlistment contracts they could not read, he said.

Nabil — who asked that his real name not be used — said he was lured by promises of lucrative employment in fields such as “security” and “engineering”, hoping to earn enough to complete his studies.

A few weeks later, he was holed up with four other recently arrived Yemenis in a forest in Ukraine, dressed in military fatigues with Russian insignia, their faces masked by scarves. “We are under bombardment. Mines, drones, digging bunkers,” said one of the men in a video shared with the FT, adding that one colleague had attempted suicide and been taken to a hospital. 

The men in the video said they were carrying wooden planks through a mine-infested forest, apparently to build a bomb shelter. “We don’t even get five minutes to rest, we are so tired.”

Another message sent a few days later said they had no winter clothes. Nabil’s uncle who lives in the UK said last week his nephew was recently injured and in hospital, but was unable to share more details.

Abdullah, another Yemeni who asked that his real name not be published, said he was promised a $10,000 bonus and $2,000 per month, plus eventual Russian citizenship, to work in Russia manufacturing drones.

Arriving in Moscow on September 18, Abdullah said his group was forcibly taken from the airport to a facility in a place five hours from Moscow where a man, speaking in simple Arabic, fired a pistol over their heads when they refused to sign the enlistment contract, which was in Russian.

“I signed it because I was scared,” he said. They were then put on buses to Ukraine, given rudimentary military training and sent to a military base near Rostov, near the Ukrainian border.

Many of the original group of arrivals died in Ukraine, Abdullah said, brought to the war by “scammers who traffic in human beings”. “It was all a lie.”

Al Jabri General Trading & Investment Co SPC did not respond to several phone calls and emails sent to the address listed on its corporate registration documents. Al Jabri, its founder, was also unreachable on his phone number.

Al Jabri is a prominent politician, and member of the Yemeni parliament which was split in 2015 by the civil war, during which he sided with the Houthis. He is a major general in the faction of the army allied with the Houthi Supreme Political Council, and was one of 174 Houthi leaders sentenced to death in absentia by a military court representing the pro-Saudi, UN-recognised government in Aden, in 2021 for his role in a Houthi-led coup in 2015.

The Houthis have sent at least two official delegations to Moscow this year, meeting with senior Kremlin officials such as Mikhail Bogdanov, the Kremlin’s envoy to the Middle East.

US diplomats have said Moscow provides a range of help to Houthis, including targeting data for some missile launches and has been discussing arms sales, including advanced anti-ship missiles, though experts say there is no evidence any weapons sales have gone ahead.

“We’ve seen report that there are discussions around [anti-ship missiles] and other types of lethal equipment that would augment what the Houthis are already able to do,” said Lenderking.

On the subject of Russian recruitment of Yemeni mercenaries, Lenderking said he had seen reports. “I would say that it definitely concerns us,” he said. “It is part of this trend, and it’s not something that would necessarily surprise us.”

Yemen’s ambassador to Moscow Ahmed Salem Wahishi, who represents the Saudi-backed Yemeni government, referred questions about the Russian army’s recruitment of Yemenis to the embassy’s military attaché, who did not respond to phone calls and messages. 

Abdullah was one of 11 Yemenis who was allowed to leave Russia for Yemen via Oman earlier this month, thanks largely to the efforts of the International Federation of Yemeni Migrants, who put pressure on the Yemeni government after a public outcry. 

Ali Al-Subahi, the chair of the Federation’s board, said “this is a humanitarian issue that unites all Yemenis, regardless of political affiliation”. He stressed that hundreds of Yemenis are still in Russia. “We are following up on their removal from the battlefields,” he said.

FT : Western miner Eramet sees no profits in nickel without Chinese partners

Western miner Eramet sees no profits in nickel without Chinese partners
Amid falling prices for metal, French group’s Indonesia head says Chinese partners have become expert in cost efficiencies

The head of French miner Eramet’s Indonesian operations has said it has become impossible for western companies to run profitable nickel operations without partnering with their Chinese counterparts, amid a slump in prices for a metal critical to electric vehicle batteries. 

In a Financial Times interview Jérôme Baudelet, chief executive of Eramet Indonesia, said Chinese technology, expertise and equipment were essential to produce nickel at competitive prices. 

“I don’t think you can do without [Chinese companies],” he said. “The risk is not being competitive and to have a much higher capex. So you have to be pragmatic.” 

Eramet is one of a handful of western companies in the nickel industry in Indonesia — the world’s biggest producer of the silvery-white metal essential for stainless steel as well as EV batteries. It operates the Weda Bay mine in Indonesia with its partner, the Chinese nickel company Tsingshan Holding Group.

Earlier this year, Eramet and Germany’s BASF cancelled plans for the joint development of a $2.6bn nickel-cobalt refinery complex in Weda Bay, saying there were adequate supplies of battery-grade nickel in the market. The project was set to be the only nickel plant in Indonesia with 100 per cent western ownership.

Baudelet said the Eramet-BASF project no longer made economic sense due to “difficulties” in the market. Nickel prices have been depressed for two years due to slowing demand growth and Indonesian supplies continuing to increase. 

Eramet remains open to nickel processing opportunities with a partner but the project would have to be associated with mining, he said. 

“You can actually be profitable as a western company if you have the plant built by a Chinese [company], and maybe get the operations done in that particular plant by the Chinese, because they have built a lot of expertise,” said Baudelet. 

He added that Chinese companies’ high-pressure acid leach (HPAL) technology — extracting battery-grade nickel from low-quality ore — was essential for building nickel processing plants. “They also have economies of scale in all the equipment they build for those plants,” he said. 

Over the past two decades, HPAL projects by western companies in New Caledonia, Australia and elsewhere have failed due to high costs and technical issues. But new Chinese technology has enabled such plants to be built quickly and in a more cost-efficient way.

Chinese companies dominate nickel processing in Indonesia, which has the world’s largest nickel reserves. They invested billions of dollars in south-east Asia’s largest economy after Jakarta banned nickel ore exports in 2020 — a move that forced foreign companies to set up refineries onshore.  

Western companies are far fewer. Last year US carmaker Ford partnered with Vale Indonesia and China’s Huayou Cobalt to build a nickel smelter. The FT reported earlier this year that Stellantis was in talks with Huayou for another smelter. 

Indonesia now accounts for 57 per cent of global refined nickel production, and its share is forecast to rise to 69 per cent by the end of the decade, according to Benchmark Mineral Intelligence.

The decline in prices and Indonesia pressing ahead with nickel production has triggered mine closures in other countries. 

Baudelet said Eramet would focus on opportunities primarily in mining and exploration as part of its expansion plans in Indonesia. “All that capacity installed in Indonesia will require additional ore in the coming years, and we believe there’s a need for more exploration,” he explained.

Baudelet also said the US was making a mistake by not signing a critical minerals agreement with Jakarta to make Indonesian nickel eligible for incentives under the Inflation Reduction Act. President Joe Biden’s IRA seeks to curb Beijing’s influence in the EV supply chain — though its fate remains uncertain under a Donald Trump presidency.

Currently, most Indonesian nickel does not benefit from the IRA due to the dominant presence of Chinese companies, but the country has been taking steps to qualify. 

“When you have a country that will soon be producing 70 per cent of the world’s nickel . . . and if you just don’t qualify them as a potential supplier, you somehow shoot yourself a little bit in the foot,” Baudelet said. “That’s the most competitive nickel on the planet.”

FT : Japan’s $250bn stimulus plan seeks to encourage more work and spending

Japan’s $250bn stimulus plan seeks to encourage more work and spending
Sharp raising of threshold before earnings are taxed is key measure in first major initiative of new Ishiba government

The newly formed government of Prime Minister Shigeru Ishiba has approved a $250bn economic stimulus package aimed at giving Japan a “sense of wellbeing” as households battle rising prices and the country adjusts to the idea of life with inflation.

The giant stimulus plan, which envisages support for the AI and semiconductor industries along with cash handouts and energy subsidies for lower-income households, comes as financial markets have become increasingly confident that the Bank of Japan will raise interest rates at its meeting in December.

The scale of the package, and the debate over its necessity, will now be a key focus of a draft supplementary budget that will be submitted to the extraordinary session of parliament being convened later this week.

The package in its current form includes a large and potentially transformational rise in the minimum salary threshold for income tax from its current $6,640 — a level that has remained unchanged for 29 years and one that critics claim has discouraged large parts of the population from fully joining the workforce. 

By setting the threshold to $11,500, argue its proponents, huge numbers of Japanese — especially women — who currently tailor their work and earnings to come in just below the income tax trigger-level will work longer, earn more and consequently push more disposable income into an economy facing long-term pressures of a shrinking, ageing population.

Critically, the income tax plan is the signature initiative of a small opposition party — the Democratic People’s Party — on which Ishiba’s government now depends. The inclusion of the policy, said analysts, highlights the fragility of the new prime minister’s position and his forced reliance on populist initiatives.

“The most important thing is to raise wages for all generations,” Ishiba told reporters on Friday, ahead of the stimulus package being approved by the Cabinet Office.

The DPP’s proposal has triggered fierce debate within the ruling coalition and beyond, particularly because tax revenue would fall by about $45bn under the new threshold, according to a government estimate. Critics see the idea as reckless fiscal expansion, and as a source of greater income inequality. Others fear it could stoke too rapid an increase in inflation.

Ishiba is the latest Japanese prime minister to make wage growth a stated focus of his government, as the country continues to step away from its decades of deflation and attempts to lock in a cycle of rising incomes and moderate inflation.

A recent Reuters survey, said analysts, offered grounds for optimism: 51 per cent of the companies surveyed said they planned to raise wages by at least 3 per cent in the financial year that began in March, up from 37 per cent who had said that in the previous year’s survey. Japanese companies have raised wages by an average 5.1 per cent this year — the largest in three decades.

The stimulus package is Ishiba’s first major initiative since he won an internal party vote to become prime minister in October, then immediately jeopardised that position with a disastrous snap general election in which the ruling bloc lost control of parliament. 

Ishiba survived, but his Liberal Democratic Party and its junior coalition partner Komeito now rule with the co-operation of the DPP, leaving the prime minister on shaky ground. He flipped from fiscal hawk to dove almost immediately on being elevated to prime minister; political analysts already question whether Ishiba will last a full year in the top job.

The ¥39tn stimulus plan, of which roughly a third will be driven by spending from the government’s general account and a significant portion coming from projected private sector spending, is the latest in a long line of vast stimulus packages that have rekindled concerns around fiscal discipline and Japan’s status as the developed country with the largest ratio of public debt to GDP at 263 per cent.

Stefan Angrick, senior economist at Moody’s Analytics, said that while Japanese fiscal packages always look enormous, the actual fiscal expansion was typically smaller than the headline numbers suggested.

The current hand-wringing among domestic media and politicians on the topic of the income tax threshold reflected the fact that Japan is not yet accustomed to thinking about a world with inflation, he said. Inflation boosts tax revenue, shrinks the budget deficit and erodes the debt stock, he added, meaning the changes the DPP has pushed for could be seen as an effort to slow the fiscal contraction. 

“That doesn’t mean this is the right policy. Raising the threshold for personal income tax collection should strengthen consumer spending and generate demand-driven price pressure. But this comes at a time when the supply-driven inflation surge has yet to fully wear off,” said Angrick.

Prices of energy and food in Japan are continuing to feel the effects of the weak yen, which has fallen further against the dollar since the US presidential election victory of Donald Trump. Masamichi Adachi, chief Japan economist at UBS, is among a growing number of analysts who expect the BoJ to raise its policy rate from 0.25 per cent to 0.5 per cent at its next meeting on December 19. 

“The only condition that the BoJ needs for the rate hike should be market stability . . . and we do not expect significant market turmoil through 19 December,” said Adachi.

>>> Weekend Press Summary

FINANCIAL TIMES
-Donald Trump has appointed Scott Bessent as his US Treasury secretary, a top economic official for his second administration. Bessent will oversee Trump's economic pledges, including tax cuts, while maintaining the stability of the world's largest economy, bond market, and the dollar. Trump's economic philosophy aims to bridge traditional free-market conservatism with populism. Bessent has defended Trump's threat of raising tariffs against accusations of upending relations with allies and raising consumer prices. Trump described Bessent as a respected international investor and geopolitical strategist. Trump praised Bessent for helping usher in a new golden age for the US, strengthening its position as the world's leading economy, center of innovation, and capital destination. Trump also emphasized the importance of reinvigorating the private sector and curbing federal debt.
-Elon Musk's criticism of the federal government's inefficiency is echoed by many, but most presidents have struggled to streamline the administrative state. The proposed government department, Doge, will be more of an advisory committee than a government department. Musk faces significant administrative and legislative hurdles, but the biggest obstacle may be maintaining his reformist zeal. The business of government is dull compared to launching rockets, which Musk dislikes bureaucracy and has a short attention span. However, if anyone can solve the problem, perhaps Elon Musk can. In 2017, after statewide power failures in South Australia, Musk promised Tesla to build the world's largest lithium-ion battery, which he completed in 63 days, beating his own deadline.
-US President-elect Donald Trump's strong dollar could negatively impact emerging market bonds, leading to further outflows from the sector. Investors have pulled nearly $5B from funds investing in dollar and local currency denominated bonds this month, bringing this year's total net outflows to over $20B. Global markets have been dominated by Trump trades, with expectations that his tax cuts and tariffs will fuel inflation and push the dollar and Treasury yields higher. Analysts and investors warn that US tariffs could exert downward pressure on emerging market currencies, as demand for their exports falls, wiping out debt investors' returns in dollar terms. Emerging market debt managers at fund firm GAM believe that all of this is going to be negative for emerging markets.
-Israeli military and Hezbollah are engaged in intense fighting in Chamaa, a hill village near Lebanon's southern border. The village is known for the ruins of a crusader citadel and a significant religious shrine. UN peacekeeping force UNIFIL reported that four Italian peacekeepers were admitted to hospital after two rockets hit its base in Chamaa for the third time this week. This marks some of the deepest known advances of Israeli forces into Lebanon since the ground invasion. Israeli Prime Minister Benjamin Netanyahu admitted to parliament that there has been a "certain expansion" of the ground campaign, suggesting that troops are now extending beyond the "first belt" of Lebanese villages closer to the border.
-The Federal Reserve has attributed the sudden increase in market volatility in August to highly leveraged hedge funds selling down their positions to meet internal volatility targets, rather than margin calls from bank lenders. The sell-off in US equities was a result of concerns over the US economy and rising interest rates in Japan, which turned against investors who had borrowed cheaply in yen in a popular trade known as the yen carry. The Fed blamed the liquidity deterioration in the Treasury market and other markets on these hedge funds, stating that measures of leverage averaged across hedge funds in the first quarter of 2024 were at or near the highest level since 2013.
-Italian producers of Parmesan cheese, olive oil, and other delicacies are rushing to ship their products to the US before President-elect Donald Trump can impose new tariffs on imports. The US imported €4.4bn worth of Italian food, wine, and spirits in 2023, but producers fear price hikes following any new levies will curtail American appetite for their products. Michele Buccelletti, a family business producer of olive oil and wine in Tuscany and Umbria, says that producers are rushing to stock up their warehouses before Trump arrives. However, a shortage of cargo space in the run-up to Christmas is constrained, making it difficult to find refrigerated containers. Buccelletti aims to have 50,000 liters en route this month.
-Jaguar Land Rover, owned by Tata Motors, has defended its bold rebranding after a backlash over a new corporate logo and promotional video that did not feature cars. The 30-second clip on X and Instagram featured models dressed in brightly colored outfits to unveil a new company logo that did not feature the iconic "leaper" big cat. The Jaguar campaign drew over 160M views on social media but also angered car enthusiasts, activists, and influencers who were angered that the 90-year-old brand was "going woke" and "throwing away heritage." Jaguar managing director Rawdon Glover said the intended message had been lost in "a blaze of intolerance" on social media and denied that the promotional video was intended as a "woke" statement. He emphasized the need to re-establish the brand and move away from traditional automotive stereotypes.
-A wealthy Italian businessman, Alessandro Bazzoni, was placed on the US Treasury's sanctions list in January 2021 for allegedly trading Venezuelan oil. The US Treasury described him as a "core facilitator" of a network attempting to evade sanctions against PDVSA, Venezuela's state-owned oil company. Despite being listed, Bazzoni continued to run an "important organization" in English polo, acting as patron of two professional teams. He played against Prince William, now Prince of Wales, in a charity polo tournament in July 2022.
-Cuba's annual visitor numbers have nearly halved in six years, dropping from 4.7M in 2017 to 2.4M last year. The country's economy is severely impacted by sanctions, particularly tourism, which is Cuba's third-biggest source of scarce foreign exchange. Last year, tourism generated $1.3B out of total hard currency earnings of $8.4B, well behind the $4.4B earned from exporting state employees, mainly doctors, on contract to friendly countries. Tour operators have experienced significant cancellations from worried tourists during the high season, which stretches from November through March. The country's economy has been strained by a US trade embargo and a new wave of sanctions imposed since 2017. European and US tour companies have attributed the difficulties to regular power cuts and logistical issues, making it increasingly difficult to operate on the island.

NEW YORK TIMES
-President-elect Donald J. Trump has chosen Scott Bessent as the Treasury secretary, a hedge fund manager, to lead the Trump administration's tax plans through Congress. Bessent will be responsible for raising tariffs and cutting taxes. In addition to Bessent, Trump made several other appointments, including Russell T. Vought as the Office of Management and Budget, Lori Chavez-DeRemer as labor secretary, Dr. Martin A. Makary as the Food and Drug Administration, and Dr. Dave Weldon as the director of the Centers for Disease Control and Prevention. A New York judge postponed Trump's sentencing in his Manhattan criminal case, confirming that he would not receive his punishment on Tuesday as planned.
-At a conference in Paris, corporate chiefs, finance ministers, and top politicians called for a "Europe First" policy to counter Donald Trump's protectionist agenda. European business leaders have been watching as Trump doubled down on an "America First" economic policy, putting protectionism and business-friendly tax and regulatory pledges high on the agenda. With the U.S. presidential inauguration less than two months away, they are furiously lobbying policymakers in Brussels with an appeal of their own: Put Europe First. The prospect of a second Trump presidency has galvanized the European business community, as Trump wields bolder promises to disrupt the global economic order, threatening to leave Europe lagging even further behind.
-US officials have been summoned to the White House to discuss strategies for overhauling the security of the nation's telecommunications networks amid growing alarm at the scope of a Chinese hack. The hack was considered so severe that President Biden took it up directly with President Xi Jinping when they met in Peru last weekend. The meeting in the Situation Room came after weeks of officials grew increasingly alarmed by what they had uncovered about the hack. They now believe hackers from a group called "Salt Typhoon," closely linked to China's Ministry of State Security, were lurking undetected inside the networks of the biggest American telecommunications firms for more than a year.
-New York City has been granted federal approval for a congestion pricing plan, the first of its kind in the nation, which will require most drivers to pay $9 to enter the heart of Manhattan. The Federal Highway Administration approved the plan on Friday, but it could still be stopped by lawsuits. President-elect Donald Trump is also opposed to the plan. The plan will join a small club of global capitals around the world that have installed similar tolling restrictions around their gridlocked centers and seen traffic and air quality improve. New York will now join a small club of global capitals that have installed similar tolling restrictions around their gridlocked centers. The plan is expected to be implemented in January 2024.
-Elon Musk, the founder of Tesla, has built businesses in high-tech manufacturing sectors that are now targeted by Beijing for Chinese dominance. His company, Tesla, makes half its cars in China, selling more cars in China than anywhere except the United States. However, Chinese regulators have not yet allowed Tesla to offer its latest assisted-driving and self-driving car technology, while allowing Chinese automakers to race ahead with similar systems. Musk has personally appealed to China's premier, Li Qiang, for permission to proceed with what Tesla calls Full Self-Driving as the company's market share in China has dwindled. Some experts suggest that Beijing may be able to turn Musk into an influential ally in trying to persuade President-elect Donald Trump to take a more conciliatory approach on trade. Musk has strong business ties in China, and his company's market share in China has dwindled, making it difficult for Tesla to compete with Chinese automakers.
-The terms of a potential cease-fire agreement between Israel and Hezbollah in Lebanon are beginning to take shape, according to officials from Lebanon, Israel, neighboring countries, and the United States. The officials cautioned that critical details around implementation and enforcement needed to be worked out, and that disagreements could still scuttle or delay any deal. However, some officials cited reasons for cautious optimism. The proposed agreement calls for a 60-day truce, during which Israeli forces would withdraw from southern Lebanon and Hezbollah fighters would pull back to the north of the Litani River, which runs roughly parallel to the Lebanon-Israel border. The officials from Lebanon, Israel, neighboring countries, and the United States spoke on condition of anonymity to discuss sensitive and evolving negotiations.
-Prime Minister Narendra Modi's party has been accused of using "resort politics" to take over Indian state governments. A lawmaker in Maharashtra, India, Nitin Deshmukh, was detained and pressured to join rebel politicians in an uprising. Deshmukh, who represented a district 350 miles away, planned to take an overnight train but was thwarted by an invitation to have dinner in the suburbs with a senior official from their party. Deshmukh was then kidnapped and held in a hotel behind locked gates. The car was heading across state lines, where he would be restrained and drugged after trying to flee. The incident highlights the power dynamics in Modi's India, where cash, kidnappings, and luxury resorts are used as a means to gain power.
-Alcohol deaths have more than doubled in two decades, with Americans dying of illnesses related to alcohol at roughly twice the rate seen in 1999. Alcohol was involved in nearly 50,000 deaths among adults aged 25 to 85 in 2020, up from just under 20,000 in 1999. The biggest spike was observed among adults aged 25 to 34, whose fatality rate increased nearly fourfold between 1999 and 2020. Women are still far less likely than men to die of an illness caused by alcohol, but they also experienced a steep surge, with rates rising 2.5-fold over 20 years. The rate of alcohol-related deaths has been a significant concern for the health and well-being of Americans.
-A recent study by researchers at the University of Southern California and Cleveland Clinic found that a Covid-19 infection doubled the risk of a major cardiovascular event for up to three years afterward. The study also found that infections severe enough to require hospitalization increased the likelihood of cardiac events as much as or more than having previously had a heart attack did. This has led to a growing body of research suggesting that this risk can last until well after the infection has cleared. Dr. David Goff, director for the cardiovascular sciences division at the National Heart, Lung and Blood Institute, said that many people are at even greater risk of heart attack than they were before. Heart disease is already the leading cause of death on our planet before the pandemic, making this situation concerning.
-The Environmental Protection Agency (EPA) has proposed a rule to update emission limits for nitrogen oxides, harmful air pollutants from burning fossil fuels. These gases can contribute to asthma and respiratory infections, especially in children, older people, and those who are immuno-compromised. The rule, for the first time in almost two decades, would update emission limits for nitrogen oxides. The rule aims to better protect communities against pollution from natural gas plants and ensure that the power sector has shown that additional pollution controls can be affordably and reliably implemented. Joseph Goffman, the EPA's assistant administrator for air and radiation, stated that these stronger standards are necessary to better protect nearby communities' health.

NEW YORK POST
-A new report by taxpayer-transparency group OpenTheBooks reveals that President Biden's administration spent $267M on studying "misinformation" since his presidency, as President-elect Donald Trump pledges to remove the term from the federal lexicon and make significant spending cuts. The funding was directed towards universities, nonprofits, and companies, peaking at $126M in 2021. The scope of the "misinformation" grant-making emerged as Trump's advisory Department of Government Efficiency (DOGE) seeks to trim wasteful spending. Entrepreneur Vivek Ramaswamy, who leads the DOGE with billionaire Elon Musk, said that the truth is often stranger than fiction when it comes to government spending. OpenTheBooks does not account for the cost of in-house efforts by the Biden White House and executive branch agencies to fight alleged incorrect speech, including pressuring social media companies to censor content.
-TJ Maxx CEO Ernie Herrman has suggested that the discount retailer may benefit from Trump's proposed tariffs. Under the proposals, a universal 10%-20% tariff could be imposed on imports from all foreign countries, and an additional 60%-100% tariff could be imposed on imports specifically from China. This could create additional availability of goods at advantageous prices for TJ Maxx, as manufacturers could bring in goods early. Herrman declined to speculate on what will happen with tariffs but said that the company is "set up to ensure that we maintain our value gap" between its competitors. No matter what happens with tariffs, the company will ensure its values are proportionately below them as they always have been. TJ Maxx also owns Marshalls, HomeGoods, HomeSense, and Sierra.

>>> Barron’s weekend Summary

Cover:
-The US government has proposed remedies to break Google's hold on search, causing Alphabet's stock to fall 4.7% to $167.63. This comes amid concerns about the rise of generative artificial intelligence (AI), which can answer complex questions in plain language. This has created an opening for competitors like ChatGPT, Perplexity, and Microsoft, which could siphon users away from Google and potentially damage its advertising business. Without search and ad dollars, Alphabet's stock would collapse. However, Alphabet is more than up to defending itself, having navigated the internet's shifting terrain since going public in 2004. As generative AI continues to grow, it has the potential to add revenue as Gemini, Google's AI tool, becomes more powerful. The government's attempt to break Alphabet apart could be an overhang, but it appears to be reflected in the stock, which is the cheapest of the Magnificent Seven and even cheaper than the S&P 500 index. Despite the future, Google's search business remains dominant and cash-generating, and this is unlikely to change as people find information.

Interview:
-US economic growth has exceeded expectations this year, despite cooling inflation and a softening labor market. The outlook for 2025 is for more growth, but the incoming Trump administration's fiscal policies could potentially lead to inflation, posing challenges for the Federal Reserve. John Williams, president and CEO of the Federal Reserve Bank of New York, is an expert in the neutral rate of interest, a theoretical rate that neither stimulates nor restricts economic growth. Williams' insights will be particularly valuable as the Fed moves to bring interest rates to a level that balances the US economy. He recently spoke with Barron's about his economic and inflation outlook, the Fed's goals, and the global implications of China's struggle to maintain growth.

Tech Trader:
-Nvidia's AI growth story is not over, as the company's new Blackwell graphics processing unit has seen limitless demand, boosting its stock price. The company reported a 94% year-over-year growth in sales to $35 billion for the three months ending in October, with the data-center business growing 112%. Net profit doubled to $20 billion over the prior year, and the company provided a robust outlook for the current quarter, slightly exceeding Wall Street expectations. Nvidia shares fell in after-hours trading following the report, but investors should focus on the big picture and not overlook the unprecedented magnitude of Nvidia's performance. The main question is whether Nvidia can produce another big growth year in 2025, satisfying Wall Street's forecast for 54% revenue growth. Nvidia's executives suggest the answer is yes, with Chief Financial Officer Colette Kress stating that Blackwell demand is staggering and the company is racing to scale supply to meet the incredible demand. CEO Jensen Huang said that Blackwell revenue for the current quarter would exceed the company's prior guidance of "several billion dollars."

The Trader:
-Pinterest, a website that provides ideas for recipes and clothes, has experienced a 15% drop in shares to $29 following its third-quarter earnings report. The company's guidance for fourth-quarter sales was criticized for a 16% increase, a touch slower than the 18% growth expected in the previous quarter. This raised concerns about the business's ability to maintain profitability and potential decrease in profit margins. However, management has often underpromised and overdelivered on sales, with better third-quarter growth than its earlier 17% midpoint guidance. The company has surpassed sales estimates in 18 out of the past 20 quarters, according to FactSet. Pinterest could be setting expectations low to deliver a pleasant surprise when it reports its fourth-quarter numbers in February.
-Anti-obesity drugmakers Eli Lilly, Novo Nordisk, and Amgen have experienced a drop in stock prices due to concerns over the potential impact of a Robert F. Kennedy Jr.-run Department of Health and Human Services. The market has been tumultuous, with the selling starting as profit-taking and picking up steam after the Federal Reserve cut interest rates and the election approached. When President-elect Donald Trump appointed RFK Jr. to lead the agency, panic selling set in. Kennedy is not fond of Novo Nordisk's weight-loss treatment Ozempic, which costs the government too much to insure. Investors are concerned that he may push for less insurance coverage or lower GLP-1 prices. Amgen stock has dropped 9% in November, while Lilly has fallen 17% and Novo Nordisk has declined 10%. However, the agency doesn't have unilateral power to change drug coverage and pricing, and it would require an act of Congress to allow Medicare to pay for anti-obesity drugs.

Features:
-Chinese businesses are preparing for the potential trade protectionist policies that could come from the second Trump administration, as exports grew at the fastest pace in over two years in October. Most of that growth was due to factories rushing inventories to major markets in anticipation of further tariffs from the US and the European Union, as the threat of renewed trade wars grows. Chills are being felt from upstream shippers all the way down to the sales segment, including firms that sell domestically. China's exports to the US are dominated by electronic equipment, machinery, vehicles, plastics, irons and steel, furniture, apparel, and toys and games. Export-dependent business owners are preparing for the worst, as they are preparing for the worst.
-Pam Bondi, the former Florida attorney general and President-elect Donald Trump's new nominee for US Attorney General, faces potential questions about her investment in Trump Media & Technology Group, the publicly traded owner of Truth Social. Bondi owns 106,250 shares of DJT, which went public in March following a merger with Digital World Acquisition Corp., a blank check special purpose acquisition company. At current prices, that stake is worth nearly $3.3M. Bondi also owns 31,250 warrants to purchase DJT common stock. Bondi, now a partner in the Washington, DC, office of lobbying firm Ballard Partners, will undoubtedly face questions about her investment in DJT. Bondi's brother Brad Bondi, a lawyer at Paul Hastings, also worked on the deal to bring Trump Media public but isn't listed as owning any DJT shares.

Europe:
-The growing tensions between Russia and the US over the Ukraine war are posing significant risks to global security and the US nuclear power plants. On November 14, Russia halted the export license for a company that sends enriched uranium to the US for use in nuclear reactors. As a result, all shipments of enriched Russian uranium, which accounts for 40% of the global supply, are stalled. Uranium prices and stocks of uranium miners have spiked, with shares of US miner Uranium Energy up 14% and Canadian miner Cameco 11%. Centrus Energy, which imports Russian uranium for US utilities, initially fell but has since rebounded. A shortage of certain types of enriched Russian uranium could pose significant risks for the ramp up of small modular reactors in the US. Although America's 94 existing nuclear reactors have supplies of enriched uranium stored up, the future of US nuclear plants could be in jeopardy if imports from Russia are banned indefinitely and the US cannot develop a domestic uranium supply chain. Centrus Energy, based in Bethesda, Maryland, has received notice from Russian uranium exporter Tenex that the latter's license to export uranium to the US has been revoked by the Russian government.

Emerging Markets:
-No update

Commodities:
-President-elect Donald Trump is considering restarting the Keystone XL oil pipeline from Canada to the US, according to three unnamed sources who spoke to Politico. Trump wants to greenlight the pipeline on his first day in office. Chris Wright, Trump's pick for Secretary of Energy, believes restarting the pipeline is one of the most important things the government can do to boost energy supplies. Restoring the pipeline would be a monumental task, as the pipeline has been abandoned and parts are being sold off. Water company Cadiz recently bought 180 miles of steel that had originally been purchased for use in the pipeline, which Cadiz plans to use to transport water through the Mojave Desert. Rob Thummel, senior portfolio manager at Tortoise Capital Advisors and an expert in pipelines, told Barron's that the chances of Keystone XL being revived are very low and probably zero.
-Gold has experienced a significant surge this year, surging more than 28% to nearly $2,650 an ounce, thanks to central bank buying and other factors. This has made gold historically expensive compared to other assets, including commodities like oil and base metals. However, US stocks are enjoying their own historic rally, with the S&P 500 at its highest level since the dot-com bubble. North American gold exchange-traded funds hold about 1,640 tonnes of gold today, down from a 2020 peak of over 2,000 tonnes. Analyst Mike McGlone argues that sentiment could shift at any moment due to the high prices of U.S. stocks.

Streetwise:
-Cristiano Amon, the CEO of Qualcomm, has been tasked with expanding the company's revenue into new areas to boost its stock price. The company's growth in the artificial-intelligence market is largely due to Nvidia, the artificial-intelligence world beater, which has seen a 185% increase in just one year. The PHLX Semiconductor index, which tracks Nvidia and other chip-making companies, is trailing the S&P 500 index. Intel, the worst performer, is losing market share in data centers and personal computers. Qualcomm, on the other hand, has seen a 10% increase this year and a 17% increase since Amon took over. The majority of Qualcomm's revenues come from mobile devices, which contributes to its slow growth. This is why Qualcomm trades at less than 15 times projected earnings compared to Nvidia's more than 50 times. Additionally, some handset makers like Apple and Samsung Electronics have the financial and manufacturing resources to produce more components in-house. Apple plans to drop Qualcomm for 5G chips in two new iPhone models next year.