TheChek News Flow

Weekend Papers Summary

NEW YORK TIMES

-US shoots down high-altitude object over Alaska. The incident comes less than a week after a US fighter jet brought down a Chinese spy balloon over the Atlantic during a diplomatic crisis.

-China, still trying to play down balloon, finds it’s getting harder to do. Beijing has accused the United States of waging “information and public opinion warfare.” But analysts say a lack of credible messaging from China is not helping.

-US blacklists 6 Chinese entities involved in spy balloon programs. The action to cut off five Chinese companies and a research institute from American parts and technologies is part of the Biden administration’s response to the balloon it shot down last week.

-Russia fires major missile barrage at Ukraine as combat intensifies. The first major aerial bombardment in weeks targeted cities across Ukraine, as President Volodymyr Zelensky returned home from a trip across Europe to press for more arms.

-Both Ukraine and Russia are preparing to attack after months of static fighting, with Russia moving first. Here’s what each side wants to achieve.

-Gov. DeSantis declares victory as Disney is stripped of some 56-year-old perks. Florida passed a bill, supported by Gov. Ron DeSantis, that restricts Disney’s autonomy over a fight involving the teaching of gender.

-In place of damaged or destroyed hospitals, a series of field clinics have sprung up in Turkey, with doctors and nurses from around the world.

-As the death toll rises in the one of the deadliest quakes in decades, a global humanitarian aid effort faces deep challenges.

-The 7.8-magnitude earthquake that struck southern Turkey and northern Syria in early February killed tens of thousands of people, flattened city blocks and sent the region, already grappling with a refugee crisis and over a decade of war, into a monumental recovery effort.

As of Feb. 10, the death toll in Syria and Turkey combined had surpassed 22,000. In Turkey, President Recep Tayyip Erdogan said that over 19,000 people had died in his country; in Syria, the death toll neared 3,400, according to Syria’s Health Ministry.

-FBI found one classified document after searching Pence’s home. Aides to former Vice President Mike Pence agreed to the search after discussions with the Justice Department.

-Electric vehicles could match gasoline cars on price this year. Competition, government incentives and falling raw material prices are making battery-powered cars more affordable sooner than expected.

-Toronto mayor resigns after admitting to relationship with employee. The mayor, John Tory, who had led the city since 2014, apologized for what he called a serious error in judgment.

-Trump is willing to provide DNA in case filed by writer, his lawyer says.

Lawyers for E. Jean Carroll, who accuses the former president of raping her at a department store decades ago, say they have genetic evidence connected to the episode.

THE FINANCIAL TIMES

-Ukraine has pleaded with its allies for ammunition and artillery “immediately”, warning it is running short of stocks to defend against a new Russian offensive that Kyiv fears is imminent. The demand, by Deputy Prime Minister Olha Stefanishyna, came on a day when Moscow launched ballistic missiles against Ukraine’s infrastructure. It also followed a tour of western capitals by President Volodymyr Zelenskyy that emphasized longer-term supplies of fighter jets and heavy weaponry.

-In 2022, the six largest western oil companies made more money than in any year in the history of the industry: over $200B, largely from pumping and selling the fossil fuels the world must replace to avert the climate crisis.

The windfalls that BP, Chevron, Equinor, ExxonMobil, Shell and Total revealed in their end-of-year results have sparked outrage and accusations of war profiteering. It has also cast doubt over the commitment of executives, politicians and investors to the Paris climate agreement to slow global warming by bringing down emissions.

-The US military shot down a “high-altitude object” off the coast of Alaska on Friday, White House spokesman John Kirby said, a week after it downed a Chinese spy balloon that was floating in American airspace.

The object, which Kirby said was the “roughly the size of a small car”, passed over land in Alaska before being shot down by a fighter jet on Friday morning local time, falling into frozen waters near the north-east border with Canada. “The object was flying at an altitude of 40,000 feet and posed a reasonable threat to the safety of civilian flight,” Kirby said. “Out of an abundance of caution and at the recommendation of the Pentagon, President Joe Biden ordered the military to down the object, and they did.”

-Moldova’s Prime Minister Natalia Gavrilita has resigned citing a lack of support for her government as it struggles with the fallout from Russia’s war against neighboring Ukraine, and efforts by Moscow to destabilize the country. President Maia Sandu announced later on Friday that her security adviser Dorin Recean would take over as prime minister.

-Activist investor ValueAct has purchased a stake in Spotify, with the head of the fund arguing that costs at the streaming music service had “exploded” as it built out its podcast business. Mason Morfit, head of the San Francisco-based investment firm, disclosed the position at a conference hosted by Columbia University on Friday. Morfit did not reveal the size of the stake but said it was ValueAct’s newest position.

-Last year, as Turkey marked the anniversary of an earthquake that ravaged parts of the country in 1999, Recep Tayyip Erdogan hailed government “urban transformation projects” that would shield people from future catastrophes. “As humans, it is not in our hands to prevent disasters; yet, it is in our hands to take measures against their destructive impacts,” he said. Now, the Turkish president stands accused of failing to do just that — and faces the enormous challenge of a vast humanitarian crisis. The country’s worst natural disaster in almost a century has already claimed more than 19,000 lives on their side of the border with Syria.

-China has cut its participation in an internet cable project to link Asia with Europe, as tensions grow between Washington and Beijing over control of the physical infrastructure that transmits the world’s online traffic.

Two of China’s biggest telecoms groups, China Telecom and China Mobile, withdrew their combined investment of roughly 20 per cent from the subsea cable project last year after a US company was selected to build the line over Hengtong Marine, the country’s biggest provider in the sector, according to three people briefed on the decision.

-German house prices suffered their biggest six-month fall in more than 20 years in the second half of 2022, underlining how an unprecedented rise in interest rates has brought an abrupt end to the decade-long boom in Europe’s largest property market.

-Gautam Adani has hired one of Wall Street’s fiercest activism defense law firms to fight back against claims made by short seller Hindenburg Research, as the Indian billionaire battles to reassure investors about the financial health of his business empire. In recent days, the Adani Group has tapped senior lawyers at New York’s Wachtell, Lipton, Rosen & Katz to advise it on how to stem the crisis facing the Indian conglomerate since Hindenburg accused it of accounting fraud and stock market manipulation in late January, four people with direct knowledge of the matter said.

NY POST

-Emails released Friday by the National Archives reveal references to President Biden’s lawyers handing over boxes of documents in Boston — confirming a little-known detail in the chronology of Biden’s classified documents scandal. “Please ensure that the boxes in your office in Boston remain secure in a locked space and are not accessed by anyone,” National Archives official Gary Stern wrote on Nov. 7 to Biden attorneys Patrick Moore and Bob Bauer.

-Former President Donald Trump’s legal team has given federal prosecutors more documents with classified markings and an aide’s laptop in recent months, according to a report. The handovers happened in December of last year and in January, according to CNN. Also turned over to investigators was an empty folder marked “Classified Evening Briefing,” the news outlet reported.

-Angry Google employees ridiculed CEO Sundar Pichai on internal message boards over the tech giant’s botched handling of a crucial rollout for its “Bard” AI chatbot this week. The much-hyped rival to the the popular Microsoft-backed ChatGPT chatbot, which is seen as a potential threat to Google’s search engine dominance, flubbed an answer during Monday’s presentation. In posts on Google’s internal forum “Memegen,” workers described the troubled launch as “rushed,” “botched” and “un-Googley,” according to CNBC.

Barron’s Weekend Summary: Over the past two months, Wall Street has become preoccupied with ChatGPT

Cover Story:

-Over the past two months, Wall Street has become preoccupied with ChatGPT, the now very popular chatbot from start-up OpenAI. ChatGPT launched on Nov. 30 as a free service, and the world has been dazzled by its ability to answer questions and create original materials, generating everything from letters and resumes to computer code and Shakespearean-style sonnets. ChatGPT reached more than 100 million users in January, hitting that milestone even faster than TikTok.

Interview:

-This week Barron’s talks to Burton G. Malkiel, who is fond of saying that, as a boy growing up in Boston, he knew the price of General Motors’ stock as well as he knew Ted Williams’ batting average. The Princeton University economist was just 10 when he started thumbing through the newspaper to reach the stock tables. “I was fascinated with the numbers that appeared on the stock pages from day to day,” says Malkiel, now 90. “I was curious about how the share prices had changed, why they had changed, and whether there were any interesting patterns in the numbers.”

Tech Trader:

-In a recent presentation, SoftBank Group noted that sales of AI-related chips are projected to grow at an annual rate of 35% through 2030. That’s no idle observation: It’s directly tied to the outlook for SoftBank’s most important holding, UK-based chip-design firm Arm Holdings. SoftBank bought Arm for $32B in 2016. In 2020, it agreed to sell the company to Nvidia for $40B in cash and stock, but the transaction was eventually scuttled in the face of fierce opposition from regulators and global chip makers, who are Arm’s customers.

The Trader:

-Even the most optimistic investors will admit that January’s blistering pace—which lingered into the first trading days of February—couldn’t continue indefinitely, not after the NASDAQ Composite in 2001. In that sense, the fact that the Dow Jones Industrial Average dipped 0.2%, the S&P 500 index fell 1.1%, and the NASDAQ dropped 2.4% this past week isn’t too troubling. Yet bullish investors should feel uneasy. Markets seem convinced that the US will pull off a soft landing, and the early economic data, which featured a slowing inflation rate and a still-strong job market, only seemed to support the case. The past week, however, lacked any meaningful data, and no news, in this case, was bad news.

-A quick look at Pepsi’s recent fourth-quarter numbers shows there was a lot to like. Organic growth—a particularly important metric for consumer-goods companies because it reflects internal improvements—jumped nearly 15% from the year-ago period, easily surpassing analyst estimates. Pepsi’s better-than-expected results reflected strong global demand and robust revenue that showed only minimal pullback from consumers in the face of higher pricing. Like many companies, Pepsi and its staples peers have been raising prices in recent quarters to offset the impact of inflation, but the beverage and snack industries in particular have largely seen consumers accept these increases.

Features:

-A sale of Meta stock by a Meta executive may have bullish implications. Chief Business Officer Marne Levine sold $4.45M worth of Meta shares Tuesday, according to a Thursday afternoon filing with the Securities and Exchange Commission. It was the first substantial sale by a Meta executive this year. The sale was related to a Rule 10b5-1 trading plan, which triggers sales at a certain price or time depending on the conditions. Sales enacted through these plans can still be “very meaningful” data points, according to Max Magee, a senior analyst at VerityData, which tracks buyback patterns and insider activity.

While it’s not clear from the SEC filing why the sale went off Feb. 7, Magee sees reason to believe it could be due to price. “This may suggest that we have reached a threshold where Meta shares have come back to a price at which their executives are more broadly willing to sell,” Magee told MarketWatch.

- ChatGPT can write poetry, stories, and song lyrics. Eager experimenters have asked the chatbot to pass professional exams and create market-beating stock funds. But in each case, the details tell an equally important story: Artificial intelligence still can’t match human intelligence in terms of accuracy, creativity, or originality. Even OpenAI CEO Sam Altman has tried to tamp down some of the enthusiasm. Technologies like ChatGPT are “impressive but not robust,” he said at a StrictlyVC event last month. At first when you use them, they seem “incredible,” he says, but after you “use them 100 times, you see the weaknesses.”

European Trader:

-Spain’s Repsol looks well placed to benefit from the tailwinds caused by Russia’s invasion of Ukraine and its knock-on effect for fuel imports. Repsol is the product of the privatization of the former Spanish state assets in the energy sector, giving it a dominant position in the country’s refining industry. It is Repsol’s refining operations that could see it outperform energy peers this year. The European Union’s ban on Russian fuel imports from Feb. 5 is expected to support high refining margins, even as oil-and-gas prices normalize. Repsol makes around 30% of its profit from refining, according to Bank of America, one of the highest levels of all European energy companies.

Emerging Markets:

-The Adani Group, which has seven listed companies including flagship Adani Enterprises, is beginning to recoup some of the $100B-plus loss in market value it suffered after US-based short selling firm Hindenburg Research in late January made allegations of widespread fraud. The Adani Group responded with its own 413-page rebuttal calling the charges baseless, and described the allegations as a “calculated attack” on India’s growth story and ambition. The energy and infrastructure conglomerate’s story has been intertwined with India’s growth, and the close relationship its chairman built with Prime Minister Narendra Modi over decades has added an extra element to the turmoil, which has shaved about 4% off the MSCI India index since late January. But money managers don’t see the crisis derailing the longer term prospects for India, the world’s fifth largest economy, and one which appeals to many market strategists and geopolitical analysts. The long-term economic promise of India, with its young population, and efforts by Modi to upgrade infrastructure and woo manufacturers to remake India as an alternative for those looking to diversify away from China, still holds.

Commodities:

-The West slapped new sanctions on Russian oil products this past Sunday that many thought would spike diesel prices. On Monday, fuel prices barely budged. “I think right now the market is kind of in show-me mode,” says RBC Capital Markets analyst Helima Croft. Similar predictions were made in December before Russian crude was sanctioned, and prices didn’t move much then, either. In fact, Russia exported more oil than it did before sanctions were imposed; S&P Global says Russian seaborne crude hit a six-month high in the first half of January.

Streetwise:

-This week Jack Hough wonders what you would do If you had to choose between, say, apple pie and being splashed head-to-toe by a roadside slush puddle. Are you the kind of person who’d take the pie? If you answered no to any of these questions, the standard bank sweep might be a good fit. It recently paid 0.48%. Others should probably consider what Charles Schwab calls “purchased money funds.” An ordinary one of those recently paid 4.47%. On a $50,000 balance, that’s an extra $2,000 a year. A Schwab rep says its sweep accounts aren’t intended for investment cash, and that its rates are “up to 45 times higher” than what some banks pay on checking accounts. Indeed, JPMorgan Chase and Bank of America still offer accounts that pay 0.01%. If anything, the rep understated the case. Schwab offers a debit card with unlimited rebates of ATM fees and no foreign transaction fees—a solid value for traveling cash-flashers.jpm