WSJ : The Apple Device You Shouldn’t Buy Right Now—and the Ones You Should

The Apple Device You Shouldn’t Buy Right Now—and the Ones You Should
Do not buy an iPhone. MacBook Air? Go for it. A guide to which Apple products are in season.

Never double dip a chip.

Never talk on speakerphone in public.
Never buy an iPhone in the summer.


These seem like obvious life rules and yet every year around this time people ask: Should I wait for the new iPhone? And every year I repeat my iPhone No-Buy Rule™: No buying when school’s out—wait until September.

A change coming to the phone’s charging port makes this advice especially timely.The next iPhone—presumably called the iPhone 15—is expected to ship with a USB-C connector, marking the end of the Lightning port’s 11-year run.
The EU has mandated that electronic devices sold in the 27-nation bloc must have USB-C ports by the end of 2024.An Apple AAPL -0.59%decrease; red down pointing triangle spokeswoman declined to comment but in October when I interviewed Apple marketing head Greg Joswiak he said the company would comply.

Over the years I’ve expanded this annual column to other Apple gear, since the company’s fall events are packed with Apple Watch, AirPod and iPad announcements, too.

I know what you’re thinking: Why wait? This stuff doesn’t even get that much better year after year. You’ve said it yourself!

True, but with all the product categories, there are two S’s at play: savings and software. Apple and other retailers typically drop prices on the older models when the new ones hit. That’s also when trade-in deals can get crazy good. And if you go with the latest and greatest, it means an additional year—or more—of software updates ahead.
Apple declined to comment about any future products.

iPhone
PHOTO ILLUSTRATION: THE WALL STREET JOURNAL, APPLE

Those of us who lived through The Great 30-Pin Retirement—that wide port that charged iPods and the first few iPhones—remember the pain of moving to Lightning. All those perfectly good speaker docks and charging cables, worthless. The USB-C transition should be smoother.

USB-C is already used to charge Android phones, MacBooks, Windows laptops, iPads, really any modern electronics.“Do you have an iPhone charger?” will become “Do you have a charger?” Yes, that means you should also stop buying Lightning accessories—microphones, earbuds, etc.

The new phones will get more than just a new port.The high-end Pro Max model is expected to get a crazy zoom lens (a la Samsung) and the Dynamic Island multitasking trick introduced on the iPhone 14 Pro will come to all the models, according to longtime Apple supply-chain analyst Ming-Chi Kuo.

Maybe you’re wondering if it’s OK to buy a used or refurbished iPhone now.They do tend to sell below market price all year long, according to Ben Edwards, chief executive of Swappa, an electronics resale marketplace. So yeah, if you just want a basic iPhone 12 or 13, go for it. Just bear in mind that prices on the older Pro models tend to drop when a new iPhone is announced.If you want a discounted iPhone 14 Pro, it’s still best to wait.

Apple Watch
PHOTO ILLUSTRATION: THE WALL STREET JOURNAL, APPLE

Like “Simpsons” seasons, no one can remember what Apple Watch we’re on.

Last year’s Series 8 was like the year-before’s Series 7, except with a temperature sensor and car-crash detection.This is why I’m not going to say you must wait for the new models, which will get a faster processor, according to Bloomberg’s Mark Gurman.And waiting may not save you money. When Apple announces the Series 9, it will likely discontinue the Series 8 rather than keep selling it. You may be able to find deals on refurbished or used models after the announcement, though.

If you’re looking for a lower priced Watch, there’s the $249-and-up SE. It really does everything you need, including fall detection, heart-rate monitoring and recording outdoor activities. Plus, it’s water-resistant for swimming—or in my case bathing children.

The big $799 Apple Watch Ultra is also fine to buy now.The rugged watch introduced last year doesn’t appear to have big changes coming soon. Everyone I know who has bought one loves the multiday battery life and the giant screen. Plus, the biggest upgrades coming to all the watches this fall may be in software.WatchOS 10 has redesigned apps, new widgets and improved workout tracking for cyclists.

AirPods
PHOTO: THE WALL STREET JOURNAL, APPLE

The AirPods Pro is a tricky one. On the one hand, these were updated in September 2022 with better noise canceling. And the case has a speaker so you can sound an alert when your kid hides it in the freezer. A software update coming this fall will include more adaptive and situationally aware noise reduction.

On the other hand, the case still has a Lightning port.According to Kuo, Apple plans to update that by year-end.If you’re wanting to go full USB-C, you’re best waiting it out.

The regular AirPods, last updated in October 2021, are due for an upgrade but it’s unclear when they will arrive.
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I don’t know what’s up with Apple’s AirPods Max, those big over-the-ear headphones.The company hasn’t updated them since they were announced in 2020 and they still cost $550—and they’ve still got a Lightning connector!I just bought a pair of Sony WH-1000XM4s, in part because they still have an old-school headphone port for plugging into my laptop.

iPad
PHOTO ILLUSTRATION: THE WALL STREET JOURNAL, APPLE

Now we arrive at a crazy four-way intersection in iPadtown.

The 10th-generation regular iPad (starting at $449) is a green light if all you need is a tablet for watching movies. The iPad Air (starting at $599) is another green light.Last updated in March 2022, it’s the best all-around iPad, especially if you want accessories like the Pencil and keyboard.And the 11- and 12.9-inch iPad Pro models?Green! Starting at $799, both were updated in October 2022 with faster M2 chips and wireless capabilities.

It’s a yellow light for the iPad Mini. Its redesign happened in 2021, so it could be due for a new processor.

Mac
PHOTO ILLUSTRATION: THE WALL STREET JOURNAL, APPLE

I’ve been testing the just-announced $1,299 15-inch MacBook Air.It’s a no-brainer to buy now if you’ve been wanting a more affordable MacBook with a larger screen. (See my newsletter this week for a short review.)
The smaller M2 MacBook Air, with a newly reduced price, is also fair game.

College students should make use of the $100 education discount.If you really want to save, you could try to score a refurbished M1 MacBook Air for as low as $849.(That laptop, which Apple still sells for $999, has the old design and lower-resolution webcam.)
Proceed with the 14- and 16-inch MacBook Pros, too, which got M2 Pro and Max chips in January.

In the market for a 24-inch iMac? I’d advise you to buy a diamond-encrusted spatula instead.The M1 iMac hasn’t been updated for two years, and reports suggest an update is coming this year.

For the past few years my inbox has been flooded with “Where’s the 27-inch iMac?!” emails. Apple insiders believe it may come—though it’s hard to tell if they’re like kids who also believe Santa will stay for breakfast.

As for HomePods and AppleTVs, those rarely change much and there’s a lot of great competition, so do what you gotta do.

Just remember what Alice Cooper said: No more iPhones, no more iMacs…when school’s out for summer.

WSJ : China’s Small Businesses Are Hit Hard as Economic Recovery Falters

China’s Small Businesses Are Hit Hard as Economic Recovery Falters
Beijing pushes banks to extend loans to small businesses, with limited success

China’s small businesses are cutting staff, struggling to pay off debt and nervous about the future. Their plight paints a grim picture of the country’s flagging recovery.

The country’s small and medium-size enterprises are crucial to the economy; they employed around 233 million people by the end of 2018, which was the last time this data was made public. But official data, recent disclosures from lenders and interviews with small-business owners show that many of these companies are suffering.

“The biggest problem for small and micro enterprises now is survival,” said Ji Shaofeng, the founder of a micro loan trade association based in China’s eastern Jiangsu province.

The struggles of China’s small businesses make clear how far the country has to go before it fully recovers from a series of lockdowns, which were part of Beijing’s strict response to the coronavirus.

When the government finally brought an end to its strict zero-Covid policy late last year, many economists expected a strong recovery. It hasn’t arrived. Consumer spending, factory orders and exports are among many indicators showing signs that the recovery is losing steam.

A recent survey of manufacturing purchasing managers in China showed a second consecutive month of contraction for small companies. China’s small-enterprise purchasing managers index is now at 47.9; a reading below 50 shows business activity is slowing.

Scott Yang, a wine and tea seller in Wenzhou, a city in China’s wealthy Zhejiang province, said many local business owners he knows are laying off employees and trying to cut costs, in response to a drop in factory orders.

Small enterprises started to add jobs at the end of the first quarter, when there was still some optimism about a recovery. But a PMI subindex showed employment at small enterprises was 48.7 in May, meaning these companies are either cutting staff or not replacing those who leave.

Huang Yiwen, who sells furniture online in Foshan, in southern China’s Guangdong province, said his business has been hurt by the weak property market, since new-home buyers are a reliable source of demand for furniture makers.
Annual home sales fell to a six-year low in 2022, after a slump in the property sector that also led to debt defaults by some of China’s largest developers.

“It’s so hard to sell,” said Huang, regarding furniture.

Less than 40% of small and medium-size enterprises are operating at full capacity, which means producing all of the goods they can, according to the latest survey conducted by the China Association of Small and Medium Enterprises, which sends questionnaires to 3,000 SMEs in the country every month.

Economists warn that the problems facing small businesses can’t be isolated from the wider economy. Because small businesses are such a major source of employment, particularly in large cities, their struggles reflect—and could worsen—wider economic strains.

“If SMEs do not recover, it will be difficult for urban areas to create enough employment and income, which will have a significant impact on low- and middle-income families,” said Dan Wang, chief economist of Hang Seng Bank (China).

Chinese government officials are becoming uneasy about the economy and are planning a series of moves to stimulate growth, The Wall Street Journal recently reported. That could include billions of dollars of infrastructure spending and a loosening of rules in the property sector.

So far, Beijing’s attempts to prop up small businesses have focused mainly on making it easier for them to get funding. That has had limited success.

Since early 2020, Chinese regulators have pushed banks and other financial institutions to extend loans to small businesses that were hurt by the pandemic. In some parts of the country, local divisions of China’s central bank have sought to help small businesses by establishing teams to answer funding-related questions, as well as visiting factories and farms to assess their needs. The government has provided other targeted-relief measures such as tax exemptions and temporary rent reductions.

The total outstanding balance of loans to small and micro enterprises has been climbing, reaching the equivalent of $9 trillion at the end of March, according to data from China’s banking regulator.

Many small businesses in China don’t want to secure new financing unless it helps them clear previous debts. Yang, the wine seller, said that while financing is relatively cheap and easy to get, most local businesses he knows are borrowing only to stay afloat and not to expand.

Lufax, a Chinese internet-lending platform that caters mostly to small-business owners, said last month that about 5.7% of the total loans it facilitated were more than 30 days past due at the end of March. Its loan-delinquency rates, which are higher for unsecured loans, have risen for six consecutive quarters.

MYbank, an internet lender that serves small businesses, said in its latest annual report that the balance of its loans that were more than 30 days past due more than doubled last year. The company, an affiliate of the Chinese fintech giant Ant Group, said the impact of the pandemic and weak consumption last year caused many small- and micro-business owners to face continuous pressure.

Many commercial banks have given borrowers more time to repay their loans, extending their forbearance for small businesses to this year. Small businesses whose loans were due in the fourth quarter of 2022 will have until the end of this month to repay, according to a notice from the central bank and a group of regulators.

Chinese banks have allowed some small businesses to roll over their loans, but if these small businesses are unable to repay in the future, they will eventually have to be recognized as bad loans, said Jay Guo, a former banker and current dean at the Ningbo China Institute for Supply Chain Innovation.

“It only makes sense to extend loans if the economy rebounds and SMEs are able to sell their goods,” said Guo.

Ji, of the micro loan trade association, said that while some sectors such as tourism and catering have rebounded in the past few months, small businesses in manufacturing, trade and other industries are still under pressure as demand remains well below where it used to be.

Small businesses are falling victim to a vicious cycle that is affecting the wider economy, said Xiangrong Yu, chief China economist at Citigroup. The poor performance of some private companies is leading to a loss of confidence, and that low confidence is making it hard for those companies to do better, he said.

“Lack of confidence is both a symptom of the problem and the root cause of the problem,” said Yu.

FT : Italy strips China’s Sinochem of its influence as Pirelli’s largest investo

Italy strips China’s Sinochem of its influence as Pirelli’s largest investor
Rome removes right to appoint chief executive or set strategy because of worries about Chinese state interference

Italy has stripped China’s Sinochem of its influence as the largest shareholder in Pirelli, removing its right to appoint the CEO or set the tyremaker’s strategy in response to worries about interference by the Chinese state.

Italian Prime Minister Giorgia Meloni’s government has invoked national security concerns about the potential for misuse of Pirelli’s chip technology, as well as Chinese Communist party interference, to justify the new restrictions on Sinochem, which owns a 37 per cent stake in the business.

The details of the restrictions come after an unprecedented announcement from the Italian government on Friday night that it would impose a “network of measures to safeguard Pirelli’s independence”.

The government’s order, which has been seen by the Financial Times, gives Camfin — the private investment vehicle of Pirelli chief executive Marco Tronchetti Provera, which owns 14 per cent of the company — the indefinite right to appoint the chief executive.

Sinochem, which owns its stake though China National Rubber Company, will also be barred from involvement in decisions about Pirelli’s “mergers and acquisitions, sales, spin-offs or listings of financial instruments”, according to the order.

Under a previous shareholder agreement between Sinochem and Tronchetti Provera, who has run the company since 1992, the CEO was entitled to pick his successor.

But Sinochem had proposed a new agreement eliminating that provision, amid rising tensions between Tronchetti Provera and his Chinese partners. This updated agreement was presented to the Italian government in March, triggering a review.

Italy’s sweeping “golden power” over investments in strategic national assets allows it to veto takeovers, force stake sales or impose other restrictions on foreign investors in certain assets.
At the time of Sinochem’s Pirelli investment in 2015, these powers were not so expansive and the deal was not subject to a national security review.

On Friday, the government said it wanted to safeguard Pirelli’s independence and management, amid allegations that the Chinese Communist party was attempting to exert tighter control over its operations.

Sinochem has so far declined to comment on the measures, with lawyers saying Beijing is still reviewing the decision and its implications. Pirelli declined to comment but is expected to publish a statement later on Sunday.

A senior Italian official familiar with the case described Rome’s intervention as “minimal”, in light of the possibility that the government could have ordered Sinochem to reduce its shareholding in Pirelli or even sell out completely.

“I think they will be relieved to learn that their shares haven’t been touched,” the official said, noting that Sinochem also retains its representation on Pirelli’s board. 

However, Rome has also mandated that Pirelli appoint another Italian citizen, vetted by the Italian government, to the board to ensure its rulings are followed. 

It has also told Pirelli to refuse any requests from China’s state-owned Assets Supervision and Administration Commission of the State Council, including for information sharing. The two companies will also have to keep their treasury and cash pooling functions separate.

Sinochem has been ordered to refrain from any intervention that might suggest Pirelli’s decisions are “a consequence of impositions” from Beijing.

Michele Geraci, who as under-secretary in Italy’s ministry of economic development pushed for Rome to join Beijing’s Belt & Road Initiative, warned that the intervention in Pirelli would “irritate” Beijing, and increase risks for Italian companies operating in China.

“[China] will show discontent and disapproval in words, but they are smart and do not retaliate immediately, in a clear, visible way,” Geraci said. “But when an Italian company has problems in China, it will pay the price for the Italian government’s decision.”

He added that the grounds for intervention seemed unconvincing.

“This golden power thing is driven by the need of Meloni and [finance minister Giancarlo] Giorgetti to be seen as anti-China, pro-US and pro-Nato,” he said.
“This is not a national security or strategic asset.
If you track a lorry driver — where he goes, how fast he goes and if he stops to go to the toilet, it’s not a state secret.”

He also said it would send a damaging signal to other foreign investors. “The rest of the world will see an Italian government that plays dice with the investment rules,” he said. 

FT : Ørsted warns about rising costs of UK wind development

Ørsted warns about rising costs of UK wind development
Danish power group wants more British support for world’s largest offshore project

Danish power group Ørsted is set to press ahead with its major UK offshore wind project despite rising costs, but warned that the British government needs to do more to support the sector.

Ørsted’s chief executive Mads Nipper said the company was working “very hard” to make viable its planned Hornsea 3 project off the Yorkshire coast, the world’s largest offshore wind project, after warning in March it could be derailed by financial pressures.

But he added that the electricity prices the UK government offers to developers are not high enough to absorb surging costs and ministers may struggle to secure the rapid capacity growth they need to hit climate targets.

“If a project which is by far the biggest in the world, with all these opportunities, can only become investable after having worked intensively for a year with everything, it’s hopefully also a stark reminder to the British government that something must change,” he said.

Global wind developers are facing major challenges due to rising interest rates and supply chain costs over the past year.

Sven Utermöhlen, chief executive of RWE’s offshore wind business, told the Global Offshore Wind 2023 conference in London this week that the costs of developing offshore wind have risen 20-40 per cent since Russia’s invasion of Ukraine. He added that he did not expect costs to fall anytime soon.

Ørsted, which is listed in Copenhagen and 50.1 per cent owned by the Danish state, had its most profitable year last year.
This month it confirmed plans to develop 50GW of renewable energy by 2030, tripling its portfolio. It also increased its return targets.

However, rising costs have caused problems for Ørsted and other developers at projects where costs cannot easily be passed on because they have a fixed-price contract to sell the electricity.

Ørsted’s Hornsea 3 project, which will have a capacity of almost 3GW, or enough to supply almost 3mn homes, last year secured a government contract fixing most of its electricity at £37.35 per megawatt hour in 2012 prices, indexed to inflation.

But with costs having risen so sharply, Ørsted’s UK head Duncan Clark in March said there was a “real and growing risk” projects could be put on hold or abandoned.

Speaking to the Financial Times at Ørsted’s capital markets day earlier this month, Nipper said it was now “likely” Hornsea 3 would go ahead, after the company worked to cut down and boost revenues. It is expecting to make a final investment decision this year.

The government is currently auctioning a new round of contracts for offshore wind projects, but Nipper said the maximum price set was too low and he “would be surprised” if it secured the full capacity on offer.

“It is inconceivable that others are not having a difficult time,” Nipper warned.

He added that costs were becoming easier to pass on elsewhere, however, noting that the prices business customers are locking in have jumped and that the Irish government recently awarded contracts to offshore wind developers at €86 per megawatt hour.

UK energy minister Graham Stuart told the wind conference that Britain had the right support in place to maintain the “attractiveness of investing” in offshore wind.

“I’m confident that we will continue to be not only a European, but a global leader,” he said.

FT : UK clean power targets are unfeasible, experts warn

UK clean power targets are unfeasible, experts warn
Senior industry figures cast doubt on ambitious Labour and Tory plans to decarbonise the grid

Energy experts have warned that Labour would struggle to hit its target to decarbonise the electricity system by 2030 given the scale of the challenge ahead, with the Conservative party’s 2035 target also in doubt.

Labour’s ambition is a key part of its wider plan to invest tens of billions of pounds on the shift to net zero through a debt-fuelled “green prosperity plan”, which will be set out in a speech by shadow climate secretary Ed Miliband on Monday.

Sir Dieter Helm, professor of economic policy at the University of Oxford, who has advised the government on energy policy over many years, said neither parties’ goals were likely to succeed on the current trajectory.

“It is reasonable to assume on the current path that the 2035 target will not be met and the 2030 target is simply implausible,” he warned in an article published on his website last week.

Helm said: “It could be [met], but not on the current path and not without quite a lot of consumer and taxpayer pain. It will take much more intervention by government to turn this around.”

Both political parties want to rapidly strip emissions out of the electricity system as part of the push towards net zero carbon emissions across the economy by 2050.

Labour aims to decarbonise the sector by 2030 if it wins the next general election, while the government wants to do so by 2035, with 95 per cent of this achieved by 2030.

But experts fear the required rapid development of new wind farms, nuclear plants and large-scale batteries will be held back by slow grid connections, planning permits, skills shortages, supply chains and other factors.

Senior industry figures cast doubt on the feasibility of the targets for cleaner electricity, warning there needs to be a major policy overhaul if they are to be achieved.

Tom Glover, UK country chair for RWE, the UK’s largest power producer, said the targets “are ambitious and will be a challenge to achieve” and the government needed to take urgent steps to support developers if it were “to have any chance of delivering this”.

Chris O’Shea, chief executive of Centrica, the owner of British Gas, also applauded the ambition in Labour’s targets, but added: “You’re always trying to get the balance right between having a very stretching target and having an impossible target. 

“How would I feel if I was a new government at the start of 2025 and I had to deliver that in five years? I’d feel energised, motivated, slightly stressed.”

About 56 per cent of the UK’s electricity came from low carbon sources last year.
The rest came mostly from gas-fired power stations, which will need to be replaced or switched to run on hydrogen or combined with technology to strip out their carbon emissions.

Adding to the challenge, electricity demand is set to soar, potentially 50 per cent by 2035, as households and businesses are encouraged to swap gas-fired boilers and petrol cars for electric equivalents.

Generation capacity will need to more than double by 2035 under current targets, according to projections from the Climate Change Committee, which advises the government.

Both the National Audit Office and the parliamentary business, energy and industrial strategy select committee have recently warned over the feasibility of the targets.

Labour’s Miliband told the Financial Times that the target was “deliberately stretching” but said it was achievable, according to independent analysis. 

The party aims to reform the planning system and regulation, as well as create a publicly owned clean energy company, GB Energy, among measures to help hit the target.

“This is the essential plan that Britain needs . . . but we won’t achieve it on the basis of the dither, delay and foot dragging of this Conservative government,” he said. 

The government said: “Our commitment to decarbonise the UK’s electricity system by 2035 remains resolute and on track.
We are decarbonising faster than any other G7 country whilst keeping the economy growing.”
Since 2010, the UK has increased the amount of renewable energy capacity connected to the grid by 500 per cent, the second highest amount connected in Europe, the government added.

FT : Fidelity pushes into European corporate lending as banks retreat

Fidelity pushes into European corporate lending as banks retreat
Asset manager to launch fund that will make secured loans to midsized European businesses

Fidelity International is expanding into European business lending as asset managers seek to exploit gaps in the market after the financial crisis and recent banking turmoil.

Fidelity, which oversees more than $700bn, is launching a fund that will make secured loans to midsized European corporates with annual earnings of around €5mn to €30mn.

The private credit team will run the Luxembourg-domiciled, closed-end fund with a focus on senior debt. It aims to make its first investment in the coming weeks.

The launch comes just after BlackRock, the world’s biggest asset manager with more than $9tn in assets, bought private debt business Kreos Capital, which provides loans to start-ups and technology companies.

The moves by two of the world’s most prominent fund groups underscore the shift towards private credit, which has grown into a $1.4tn sector. US-based asset managers Nuveen and PGIM have also made private credit acquisitions in the past few months.

Banks pulled back from providing certain types of financing after the financial crisis in 2008 because of worries about more risky lending and tougher capital requirements.

Bank lending has also been hit by the collapse of Silicon Valley Bank in the US and the takeover of Credit Suisse by rival UBS in Europe earlier this year.

“What we’ve seen with Credit Suisse and SVB is that the banks don’t have it any easier, it’s more difficult, so we see this as an opportunity,” said Nick Haaijman, global head of private asset solutions at Fidelity International.

“This is a growing market . . . Investors recognise it’s an asset class in Europe where you can see a steady income stream.” He added that the new fund will be its first in the European direct lending sector.

Michael Curtis, who will co-manage the fund, said: “Returns are looking more attractive in this market than they have done in the past few years. It’s a floating rate asset class, driven by base rate plus a margin.” The fund will also benefit from transaction fees on the underlying deals, he added.

Even though the direct lending sector has grown over the past decade, Curtis said there are “far fewer participants . . . looking at mid-market corporates”.

Fidelity said despite the growing number of funds in the direct lending market, there was a gap in the midsized corporate sector.

According to data provider Prequin, about $125.9bn was raised by direct lending funds in 2021, and $75.9bn in the first three quarters of 2022. In Europe, $45bn was raised in 2021 and $25.7bn in the first three quarters of 2022.

FT : Airlines consolidate and relaunch to reshape Latin America’s skies

Airlines consolidate and relaunch to reshape Latin America’s skies
Spirit of enterprise helps to lift carriers out of the Covid clouds and seek growth again

Latin American aviation is charting a course back to health despite receiving no direct government help in the Covid-19 crisis, with a battle for the skies heating up through mergers and expansion plans. 

On the brink of collapse when flights were grounded during the pandemic, three of the region’s largest airlines — Chile’s Latam, Avianca of Colombia and Aeroméxico — all exited US bankruptcy protection over the past 18 months.

Others such as Brazilian carriers Gol and Azul have struck deals with creditors to reduce debts and financial obligations to more manageable levels. 

As passenger numbers bounce back, growth is once again in focus. The sector’s dominant players have embarked on corporate combinations and launched new routes, with investors pumping in billions of dollars to aid the recovery.

This spirit is embodied by the newly created Abra Group, a pan-Latin holding company bringing together Avianca and Gol under common ownership. It will challenge Latam, the regional market leader by fleet size and itself the result of a merger over a decade ago.


While the two brands are to remain independent with separate managements, Abra says it will lead to cost savings and greater economies of scale, at the same time increasing revenues and investments.

“You’ve seen consolidation in the US and Europe. Players like Lufthansa and Air France-KLM really now dominate the region, with low-cost rivals keeping them honest,” said Adrian Neuhauser, Avianca’s chief executive. “You’ve got very little of the old, one-market airline. And we think the same is starting to happen in Latin America.” 

Abra’s ambitions suffered a setback last month, however, when Avianca abandoned an acquisition of stricken fellow Colombian carrier Viva Air. It blamed conditions imposed by regulators as unworkable. 

Even so, analysts say there is logic to such business tie-ups, given the scope for greater bargaining power on fuel and aircraft purchases. 

Industry boosters also point to the potential to widen air travel in a region with 660mn inhabitants but a relatively low number of flights per capita. Poor road and rail infrastructure make planes vital for transport between many territories.

“There is a land grab — or air grab, if you prefer — in Latin America generally now between the various carriers,” said Mike Arnot, an analyst at Cirium. “Every player sees opportunities to add capacity.”

Throughout 2022, the region ranked first worldwide for passenger recovery and it is now virtually back to pre-pandemic rates, according to the Latin American and Caribbean Air Transport Association.

Its head José Ricardo Botelho said a factor was “revenge tourism” — holidaymakers seeking escape following the confinement of social distancing. European groups Air France-KLM and Lufthansa recently reported strong performances for South America.


However across the region the picture is mixed, according to data from the industry body. Mexico has now overtaken Brazil as the largest market, with passenger numbers in the first quarter up 17 per cent on the same period in 2019. Colombia was also higher, but Brazil, Argentina, Chile and Peru were all below the level of four years ago.

For bigger Latin American carriers this is feeding through into improved financial results, with revenues and earnings on the rise — even if many share prices are yet to rebound from steep falls. 

Despite narrowing losses, the industry as a whole in Latin America will remain in the red in 2023, according to the International Air Transport Association, although it said some airlines will post “solid profits”.

Unlike in Europe and North America, what stands out is the absence of targeted state financial assistance in the depths of Covid-19. (An exception was Aerolíneas Argentinas, although it was already state-owned.) 

“Airlines in Latin America had to be warriors to survive,” said Botelho. “They had to reinvent themselves to become even more efficient.”

In a sign of confidence, Aeroméxico has spoken of returning to public markets. Abra has said it plans an initial public offering and Latam suggested it will seek to relist its American depositary receipts on the New York Stock Exchange, after they were suspended during its bankruptcy process. 

The convalescence is not across the board though. At least 10 Latin lines — mostly budget brands — have ceased operations since 2020, including four this year. 

Some have struggled against traditional competitors that adopted a ‘hybrid model’ of cheap tickets and charging for extras such as baggage and airport check-in. 

Yet low-cost providers are also among those that have fared the best in Latin America since Covid-19 began. The category increased its share of industry capacity — as measured by available seat miles — from around 30 to 42 per cent, according to data from Cirium.

One company sitting out the consolidation is Azul, which made an unsuccessful bid to take over bigger rival Latam in 2021. 

Chief executive John Rodgerson said it now had no M&A plans and was instead focused on adding new locations to its network, which will expand from 119 cities in 2019 to 170 by the end of the year. Its routes include Fort Lauderdale and the Amazonian jungle capital of Manaus. 

“It’s exciting — there’s demand for all these remote cities in Brazil,” he added. “The biggest opportunity is to continue to grow the domestic market.”

Another option short of mergers being pursued is commercial partnerships with US peers, with a view to boost flying across the continents.

American Airlines last year invested $200mn for a 5 per cent stake in Gol, with the pair to deepen a code-share agreement (under which companies sell seats on each other’s flights). 

Delta has a joint venture with Latam and was among shareholders that provided funds towards a $5.4bn cash injection as part of a restructuring last year. The Chilean company said it was “strengthened and more competitive” than before Covid.

Yet despite industry enthusiasm, weakened currencies in several Latin countries have made the rising cost of fuel — priced in dollars — even dearer in local terms, forcing up ticket prices. 

With an economic slowdown forecast in 2023, air travel may remain an unaffordable luxury for the millions pushed out of the region’s middle class as a result of the pandemic.

FT : The unexplained rise of cancer among millennials

The unexplained rise of cancer among millennials
Increasing numbers of younger people in the developed world are being diagnosed with the disease. Scientists are not sure why

When Paddy Scott developed agonising stomach pains in 2017, the possibility of cancer never entered his head. The British expedition photographer and film-maker, whose work often took him into rugged or dangerous terrain, was just 34 years old and prided himself on his physical fitness. 

After his GP referred Scott to hospital for a colonoscopy, the clinician who administered it asked if he would take part in a trial of a new blood test designed to detect tumours. The invitation struck him as strange. “I remember thinking, yes but I’ll be the kind of ‘control’ that doesn’t have it,” Scott says.
Later he received the devastating news that he had advanced bowel cancer which had spread to his liver.
Scott’s experience is not the anomaly it once was. The past 30 years have seen an upsurge in cases of so-called “early onset” cancer in the under-50s. So marked is the increase, leading epidemiologists have suggested it should be called an epidemic.

Financial Times analysis of data from the Institute for Health Metrics and Evaluation at the University of Washington School of Medicine shows that over the past three decades cancer rates in the G20 group of industrialised nations have increased faster for 25- to 29-year-olds than any other age group — by 22 per cent between 1990 and 2019. Rates for 20- to 34-year-olds in these countries are now at their highest level in 30 years.

In contrast, cases in older age groups — those over 75 — have declined from their peak around the year 2005.

During more than six years of gruelling treatment courtesy of the UK’s taxpayer-funded NHS, Scott has observed this shift. “I always used to be known around the ward because I was the youngest there. But the other day I was sitting in chemo with a guy who must have been late 20s. It does seem like it’s increasing quite dramatically [in younger people],” he says.


Researchers have no definitive explanation for why people in the prime of life seem to be markedly more vulnerable to the disease than their counterparts in earlier generations.

There may be clues in the types of cancer afflicting the young, researchers believe.
Among 15- to 39-year-olds, cases of colorectal cancer increased 70 per cent in G20 nations between 1990 and 2019, compared to a 24 per cent increase in all cancers, the FT’s research found.
Analysis produced by the American Cancer Society based on national data on cancer incidence and mortality suggests that this year 13 per cent of colorectal cancer cases and 7 per cent of deaths will be in people under 50. 

Michelle Mitchell, chief executive of Cancer Research UK, or CRUK, cautions that age remains the biggest predictor of cancer risk, with around 90 per cent of all cancers affecting over-50s and half afflicting those over 75.

But the increase in younger age groups is nevertheless “an important change. We need to understand that change,” she says. CRUK has launched a joint research initiative with the US National Cancer Institute to learn more about the causes of early onset cancer.


The trend has economic, clinical and social implications. For cancer doctors on the frontline, the rise in such cases is becoming an inescapable and worrying aspect of their practice. Shahnawaz Rasheed, the surgeon in charge of Scott’s treatment at the Royal Marsden, a renowned London cancer hospital recalls a two-week period a couple of years ago when he operated on four women under 40. Another recent patient was a super-fit, international sportswoman in her 30s.

Diagnoses in young adults hit clinicians like Rasheed hard, deepening his resolve to find answers. “These are people who should just be getting on with their lives . . . building careers, bringing up children,” he says. “It breaks my heart.”

The microbiome’s role
Scientists searching for insights are increasingly convinced that changes to nutrition and ways of living that began in the middle of the last century hold at least part of the key to the puzzle.

Dr Frank Sinicrope, an oncologist and gastroenterologist at the Mayo Clinic in the US with a particular interest in early onset colorectal cancer, says incidence of the disease has been markedly increasing among people born in, or after, the 1960s. The increase in younger people coming to him for treatment in recent years has been “quite alarming” he says.

The diet and lifestyle to which children are exposed in early life is likely to be a factor in the rise, he says, pointing to childhood obesity which has “become more prevalent and more problematic over the past 30 years”. However, no single factor can explain it, Sinicrope adds. 

As they explore a connection with diet, researchers are homing in on the possibility that changes to the microbiome — the roughly 100tn microbes that live inside us, mostly in the gut — are increasing susceptibility to cancer.
The microbiome is thought to play a key role in overall health, including digestion and regulation of the immune system, as well as protecting against disease-causing bacteria and aiding the production of vital vitamins.

The consumption of food high in saturated fat and sugar is believed to alter the composition of the microbiome in ways that can harm an individual’s health. While these changes affect people of all ages, researchers believe it is highly significant that cases of early onset cancer started to rise from around 1990. People born in the 1960s belonged to the first generation exposed from infancy to modernised diets, and lifestyle and environmental changes, that started to become the rich-world norm in the 1950s. 


Cancer often develops over decades — people can harbour slow-growing tumours for years — so for those diagnosed in their twenties, thirties and forties “some of the risk factor exposures may have happened when they were a baby or even in utero”, says Prof Shuji Ogino, an epidemiologist at the Harvard TH Chan School of Public Health who is part of the CRUK/NCI research initiative.

The fact that the biggest increases in cancer in the young have been in gastrointestinal varieties — colorectal as well as in the oesophagus, stomach, pancreas, bile duct, liver and gallbladder — bolsters the case for a link with diet.

Some other cancer types increasingly seen in younger people, such as breast, kidney and endometrial cancers, plus the blood cancer myeloma, may be affected both by obesity and the condition of the microbiome even though they lack an obvious link to the digestive system, Ogino says.

Additionally, antibiotic use and medications more generally can affect an individual’s microbiome, sometimes referred to as their “bacterial fingerprint”.
Ogino points out that during the second half of the 20th century the range of medicines available to treat multiple conditions substantially increased.
New anti-obesity medicines are a recent example.
“The effect really remains unknown what they all do in the long term,” Ogino says.

The link to the microbiome is still circumstantial, he emphasises. He points to other changes that occurred from the 1950s onwards: more sedentary lifestyles, changes to sleep patterns and repeated exposure to bright light at night that can affect circadian rhythms and metabolism. “All these changes are happening in a really parallel way so it’s hard to tease out the culprit. There are likely multiple culprits which work together,” he says. 

The rise in cases in wealthy western countries now looks set to find a belated, but resounding, echo in poorer countries where these societal changes happened decades later than in the US or the UK. The FT’s research shows that between 1990 and 2019, cancer rates for 15- to 39-year-olds increased significantly faster in upper-middle income countries, such as Brazil, Russia, China and South Africa, compared to high-income countries: by 53 per cent compared to 19 per cent. 


Valerie McCormack, an epidemiologist who has studied disease patterns in cancer in low and middle income countries, where infectious diseases have long posed the biggest health burden, suggests a number of factors could be increasing rates of non-communicable diseases, including cancer, in the Brics and other developing nations.

Women in these countries are having fewer children overall, and at later ages, meaning they spend a shorter period of their lives breastfeeding compared with previous generations.
Having a larger family — typically leading to an extended period of breastfeeding — and giving birth for the first time at a young age are factors known to confer protection against breast cancer.

“These changes do have many benefits for women, but they do place them at greater risk of breast cancer,” says McCormack, who is deputy branch head for environment and lifestyle epidemiology at the International Agency for Research on Cancer, part of the World Health Organization.

Similarly, an increase in smoking and alcohol use evident in some developing countries, mostly in men, is “narrowing the gap in cancer risk” between rich and poorer nations, while the adoption of a more westernised diet, obesity and lower physical activity were implicated in the growth of colorectal cancer cases, McCormack adds.

But she cautions: “These are epidemiological and lifestyle transitions which will be contributing to increasing rates of specific cancers” — but they are unlikely to tell the full story. “Some of the rises are so very recent that the research hasn’t been done to exactly pinpoint all of the driving factors,” she says.

Spotting ‘red flags’
The rise in early onset cancer is not simply a concern for health systems. It is a problem for economies too. Those who survive the disease are at greater risk of long-term conditions such as infertility, cardiovascular disease and secondary cancers, researchers say, threatening more costly healthcare burdens in future.

Simiao Chen, head of the research unit for population health and economics at the Heidelberg Institute of Global Health and an adjunct professor at Peking Union Medical College, led a team which earlier this year calculated that the estimated global cost of cancer from 2020 to 2050 would be $25.2tn at constant 2017 prices.
This, the researchers concluded, was “equivalent to an annual tax of 0.55 per cent on global gross domestic product”.

“If the trend is getting younger then the economic burden will be much heavier because we are losing people in the working age population who can contribute to economic growth,” Chen says. Cancer survivors might not be able to recapture their previous productivity levels, she suggests. “So it will reduce the quantity and the quality of labour”, she adds.

Recognising that early onset cancers are becoming more common, some clinicians would like to see a reduction in the age of eligibility for screening programmes, most of which take effect only in later middle age. 

In England, for example, home bowel cancer testing kits are sent out when patients reach 60.
Last month, the US Preventive Services Task Force, an independent body made up of national experts, suggested that the age for breast screening should be lowered to 40. In 2021, the same group argued that colorectal screening should begin at 45.

As health systems around the world struggle with a mismatch between demand and resources made worse by the pandemic, mounting a compelling case for the necessary expenditure may prove harder. A “national dialogue” about priorities may be needed given the rising proportions of under-50s developing cancer, Rasheed, the Royal Marsden surgeon, says.

Some scientists say they have identified differences in the molecular structure of cancers in younger people, pointing to the potential need for specific treatments aimed at this group.

Tomotaka Ugai, a research fellow in epidemiology at Harvard’s Chan School who led a study into rising rates of early onset cancer which drew international attention to the trend in 2021, says that for many cancer types such as breast, colorectal, endometrial, multiple myeloma, pancreatic and prostate, “early onset cancers have more aggressive clinical features”.

A related question is whether the causes of early onset cases are different to those diagnosed at older ages. Ugai says: “We assume that many risk factors overlap between early onset and later onset, but we don’t know if risk factors completely overlap . . . so we need to conduct more research.” 

Some clinicians believe that equally important is the fact that cancers have often reached a more advanced stage in a younger person before they are diagnosed. They believe doctors need to be on the alert for cancer in a 20- or 30-something, recognising this can no longer be considered an outlandish prospect. 

Rasheed, who regularly lectures to GPs about the importance of spotting cancer “red-flag” signs early, says studies have shown that younger people “may have been seen by five or six clinicians, before being referred for specialist investigations, diagnosis and treatment”. The same symptoms in someone 30 years older would have probably rung immediate alarm bells. The delayed diagnoses may also reflect a lack of awareness among younger people of the symptoms they should look out for, he suggests.

“I’ve heard and seen a lot of horror stories about younger people who, by the time they come in [to hospital] have got quite locally advanced or metastatic disease. And there may have been a window [to find and treat the cancer] earlier,” he says.

Scott recalls that, after his GP referred him to a central London hospital for tests, “apparently they said to her, ‘This isn’t urgent, he’s 34, he’s clearly in very good health’. She pushed and pushed and eventually managed to get me in.”

The question preoccupying researchers and clinicians is whether the rise in cases over the past few decades represents the tip of a much larger epidemiological iceberg.

In their research paper, Ugai and his fellow researchers warned of the possibility that those who are currently children, adolescents and young adults might have higher risks of cancer throughout their lives compared to older generations. 

And it may not stop at cancer. The same risk factors may predispose them to conditions such as diabetes and inflammatory bowel disease, the scientists said, suggesting a permanently higher chronic disease burden in the future unless action is taken to spur healthier ways of living and eating, and to reform the way that food is produced and distributed.

While the prevalence of smoking, a key cause of cancer, has decreased in many parts of the world over the past few decades, obesity, physical inactivity and other risk factors have increased, Ugai notes.
“So there is a trade off but we can speculate that [early onset cancer] cases will continue to grow for the foreseeable future,” he says.

For younger people like Scott who were previously healthy and fit, cancer can seem like the ultimate misfortune, the shortest of straws. As he copes with his diagnosis, Scott resists asking “why me?” He has started a masters degree in environmental politics and policy and became a father 11 months ago when his partner, Hen, gave birth to their son, Osprey.

But he inevitably reflects on what might have been. “I’d spent 10 years trying to break into wildlife film-making. And then just as I started [cancer] treatment, I started getting job offers and had to turn them down.

“I can’t help but think, ‘What would my life be like if I didn’t have to be going through all this?’”

>>> Barron’s Weekend Summary

Barron’s Weekend Summary: Americans online shopping habits should have most retailers worried.

Cover Story:
-Americans online shopping habits should have most retailers worried. Shein, for example, may be the most ambitious company you’ve never heard of. Shein, which was founded in China and later moved its headquarters to Singapore, was the most downloaded shopping app in the world last year (it was No. 2 in the U.S. after Amazon.com app, according to Apptopia). The retailer took off during the pandemic-era e-commerce boom, rising to global prominence on the back of Gen Z’s taste for the $4 shirts and $6 dresses, which it’s able to churn out with its norm-breaking supply-chain model. Along the way, it picked up backing from some of the biggest names in venture capital, including Tiger Global and Sequoia Capital China, and a valuation of roughly $66 billion, dwarfing fast-fashion and affordable-apparel companies such as H&M and Gap.

Interview:
-On June 6, Barron’s interviewed Joyce Chang, chair of global research for J.P. Morgan, is known for her deep, detailed dives into big-picture topics, from sovereign debt burdens to demographic trends to US-China relations. She teases out of her research the economic and investment implications for clients. Chang spent the earliest part of her career in public policy, working at the US Agency for International Development in the Philippines and India before becoming a Wall Street strategist specializing in emerging markets. As investors grapple with paradigm shifts related to interest-rate policy and geopolitics, Chang’s early experience is helping her get a handle on what could be ahead for the US. Chang spoke with Barron’s on June 6 about looming economic problems, the parallels between developed and emerging markets, and why the aging of the baby boomers demands a rethink of interest-rate assumptions.

Tech Trader:
-Oracle’s emergence as a serious player in cloud computing should not surprise Barron’s readers. In early 2021, Barron’s published a cover story headlined “Oracle Is Turning Into a Cloud Giant.” At the time, Oracle was pushing cloud-based versions of its database software and its portfolio of enterprise applications. Oracle was also aggressively building a cloud-computing business to take on the three cloud giants— Amazon, Microsoft, and Alphabet. There was considerable doubt from investors about Oracle’s chances of success. But the company sure believed. And now it turns out that Oracle shares are up about 110% since the last Barron’s story about the company. Last fall, when the stock had dropped to about $60 from a peak near $100, we wrote that the market had a second chance to buy the evolving cloud play on the cheap. The stock on Thursday closed at $126.55. Sure enough, the Oracle story is now all about the cloud.

The Trader:
-Why all the buying on Wall Street? The Fed is still close to the end of its rate hikes, which would allow economic growth and corporate profits to stabilize, and even rise for many sectors. Meanwhile, rates in the bond market could dip. “The smoke hasn’t cleared, yet the momentum market remains,” writes Evercore ISI strategist Julian Emanuel. That was enough for the S&P 500 to move from 4200 (reached some weeks ago), it’s now well above 4300, where it peaked in August after Fed Chairman Jerome Powell interrupted a summer rally by reminding markets that rate hikes weren’t nearly finished. It ended Friday a hair under Thursday’s close of 4425, its highest level since April 2022, a sign that market participants are confident enough in the outlook to keep buying stocks.
-With summer, which officially starts next week, come summer blackouts. That’s good news for generator stocks. Generac Holdings has had a tough time of it recently. But, with summer here, though, demand is due to pick up. The stock, a Barron’s pick last September, has dropped 76% since its late 2021 record high, amid concerns about high inventory levels and the possibility that electric vehicles and solar battery packs could ultimately replace the need for stand-alone generators. Sales have declined 31% over the several quarters since last June, while earnings have declined 79%.

Features:
-The rise of Artificial Intelligence has the music industry on edge, and has contributed to a drop in the stocks of some key companies. Universal Music Group, which represents Drake and The Weeknd, is down 10% this year despite statistics showing that people are streaming much more music this year than last. Rival Warner Music Group has fallen more than twice as much. AI is dangerous to existing industry players, and appears to be weighing on their stocks, because it can divert money away from musicians and music labels and toward people using technology to mimic them. Its emergence comes at a tough time for some of the industry’s big players. A decline in advertising rates and concerns about a slowdown in the growth rate of streaming-music subscriptions have already been weighing on the shares of music labels.

European Trader:
-Intel said it plans to invest up to $4.6B billion to build a semiconductor assembly and test facility in Poland, with the plant helping “meet demand for assembly and test capacity anticipated in coming years.” The plant in Poland “will help create a first-of-its-kind end-to-end leading-edge semiconductor manufacturing value chain in Europe,” Intel said.
Intel said the plant would create about 2,000 Intel jobs. The plant is expected to be operational by 2027. Intel stock has gained more than 15% this week and was on pace for its best week since July 2009, according to Dow Jones Market Data. The company operates a wafer fabrication plant in Ireland, and announced plans last year for another in Germany.

Emerging Markets:
Could a trade deal with Europe save Brazil’s Amazon Rainforest? Brazilian President Luiz Inácio Lula da Silva (lula for short) cut Amazon deforestation by 80% during previous terms, 2004-12. Jair Bolsonaro reversed this progress with a vengeance from 2018-22. Four-fifths of the (mostly illegally) cleared land is used for cattle ranching, says Erika Berenguer, a Brazilian researcher at Oxford’s Ecosystems Lab. Lula has recently unveiled a new plan for stopping Amazon deforestation by 2030. That could pay off by unsticking a stalled trade agreement between the European Union and Mercosur, a five-nation South American bloc dominated by Brazil.

Commodities:
-Copper prices appear ready for a rally and Freeport-McMoRan stock is the way to play it. Copper got off to a slow start in 2023, and so did Freeport. With the possibility of a US recession dominating the conversation in the US and China’s reopening running out of steam, copper prices fell 4% through the first five months of the year. That weighed on Freeport, which gets three-quarters of its sales from copper, dragging shares down 9.6% over the same period. But things are starting to look up for Freeport. The Phoenix-based company already has the strongest balance sheet of any copper miner, a strong management team, and the ability to return capital to shareholders. And it will benefit from the long-term adoption of electric vehicles and other forms of alternative energy. Now, copper prices are starting to tick higher amid signs of economic resilience, and if they continue to, so will Freeport stock.

Streetwise:
-Summer is about to begin, and Jack Hough has cold beer in mind. He says that America’s new favorite beer is Mexican, and it isn’t Corona—although that one is thriving, too. The beer is Modelo Especial, and the company is Constellation Brands. Mexico is said to have developed a taste for European-style lager after Vienna-born Maximilian I was declared its emperor in 1864. He lasted three years and died by firing squad; local brewing fared better. A 1920s start-up called Cervecería Modelo did so well with its namesake lager that it added a lighter one called Corona. Today, Grupo Modelo controls more than half of Mexico’s beer market.