Turkish election promises fail to stir wary overseas investors
Air fares soar above inflation as carriers cash in on travel demand
Passengers’ willingness to pay high prices underlines strong rebound in flying over the past year
Air fares are rising at more than twice the rate of inflation, as carriers cash in on soaring demand for travel that has defied broader economic headwinds.
Average ticket prices on more than 600 of the world’s most popular routes rose at an annual rate of 27.4 per cent in February, the latest month for which data is available, marking the fifteenth consecutive month of double-digit growth, according to a Financial Times analysis of data from aviation company Cirium.
By contrast, US inflation, a proxy for global inflation in developed economies, has grown at less than half that over the same period.
The data analysed prices on popular routes flown across the world and used average one-way fares in economy, excluding taxes and fees.
It found significant price rises across many routes this year, compared to pre-pandemic levels.
The average one-way economy class transatlantic flight from London Heathrow to New York’s JFK was $343 in February this year, 23 per cent higher than in the same month in 2019.
Fares between New York and Singapore were 45 per cent higher at $887, while Dubai to Frankfurt tickets were 51 per cent up at $360.
Sixty routes with at least one leg in North America out of a total of more than 300 routes have set new highs in the past 12-months, including seven setting a new peak in February.
Fares between Miami and Bridgetown, Barbados grew 126 per cent in the year to February and ticket prices between Los Angeles to Mexico City International almost doubled — the highest year on year changes in air fares since at least 2014, the first year for which data is available.
Passengers’ willingness to pay high fares underlines the furious rebound in demand for flying over the past year, and how airlines are enjoying a sharp turnaround in fortunes following the pandemic.
“Airlines are running out of hyperbole to describe demand strength,” Bernstein analyst Alex Irving said.
American Airlines reported record first-quarter revenue in its most recent results, while Lufthansa said it expects adjusted earnings to surpass 2019 levels this spring. British Airways owner IAG and Air France both also predicted bumper summer seasons this week.
The high demand for travel comes at a time when airlines are passing on elevated costs to customers, including fuel, labour and the strong dollar for non-US carriers.
Prices have also risen because many carriers have been slow in rebuilding their pre-pandemic flight schedules, in part because of a global shortage of aircraft.
Analysts said the comparatively restricted supply of seats at a time of high demand has helped support prices, and stopped a glut of new capacity flooding the market and driving down fares.
Luis Gallego, chief executive of IAG, said “it is in our interest to offer competitive pricing”. But he added that airlines needed to pass on rising costs in the “high inflation” environment.
Airlines typically forecast demand with “incredible accuracy”, meaning they know a year in advance which flights will be full, and can charge high fares from when tickets are first put on sale in response, said Oliver Ranson, managing director of consultancy Airline Revenue Economics.
But he said the pandemic has complicated this model as demand patterns are still in flux, meaning airlines have often gone back to a cruder model of raising prices in line with sales, and raising prices for people booking at the last minute.
Airlines were one of the worst hit sectors during the pandemic and are rebuilding their finances after losing a combined nearly $200bn between 2020 and 2022, according to industry body Iata.
The high ticket prices come amid growing scrutiny of companies using high inflation as cover to raise prices opportunistically, a phenomenon dubbed “greedflation”.
Rory Bolland, travel editor of UK consumer rights group Which?, said passengers must not suffer from a rerun of the widespread travel disruption seen last year.
“Prices and profits at many airlines are soaring, so the least passengers should receive in return is a competent service,” he said.
However, Hugh Aitken, vice-president for strategic flights and industry partnerships at price comparison website Skyscanner, said there were still “deals” to be had, as fares are not rising uniformly.
“Even during busy travel periods like summer, prices are not rising on all routes, nor at the same rate,” he said.
Chatroom trade: inside the online marketplace for US secrets
Hackers and conspiracy theorists use platforms such as Telegram to exchange leaks for cash and bragging rights
On a Telegram channel with a handful of subscribers, a self-described hacker boasts that they have something they would like to show off.
Two messages later, they have posted what they claim to be a directory of thousands of FBI employees, from intelligence analysts to interns at the US law enforcement agency; classified manuals for US warplanes; and databases from police departments across the US.
What’s next, asks one awed subscriber. “The Feds,” jokes another, before posting a training manual for the Drug Enforcement Agency, saying: “Here’s something from the collection.”
This forum is just one venue in a raucous marketplace for America’s secrets, traded by low-level hackers and conspiracy theorists for cash and bragging rights, and accessible without passwords, special software or knowledge of the dark web.
Following leads from cyber security researchers who study hacker forums for a living, the Financial Times observed over two weeks several chat groups hosting tens of thousands of pages of documents, sometimes freshly harvested from recent security breaches, sometimes consisting of repackaged nuggets from previous hacks.
They ranged from the classified material US National Guardsman Jack Teixeira is alleged to have leaked to the recently extracted gigabytes of corporate secrets that unpaid ransomware groups unceremoniously dump when negotiations with their victims fail. There were also private communications between American law enforcement and tech companies.
Often on Telegram, but also on dark-web forums where hackers and ransomware criminals share tips and show off their exploits, the anonymous participants discuss world politics and give dating advice in addition to trading leaked data.
Recently, the greatest prestige has come from sharing as yet unreported details from the Teixeira leaks.
Within seconds of one subscriber on a Telegram channel asking for the documents, a link appeared to several dozen of the leaked slides, hosted on an open directory on Dropbox. When the FT saw them, several had been unreported by the world’s media — China building cyberweapons to take over western satellites and Russian mercenary group Wagner seeking weapons around the world.
The caches pale in comparison to what whistleblowers have described as the “avalanche” of data from Russian organisations exposed by pro-Ukrainian hackers.
But the variety of documents and the relative ease with which such forums can be accessed online make it seem “like you are [seeing] the tip of an iceberg”, according to one US diplomat. “Even old classified documents have operational value — they show how we approach problems, how we assess threats, how we train people.”
Hackers’ boasts, albeit uncorroborated, appear to confirm this. “This is not the best stuff,” said one member of a group observed by the FT, referring to documents on one Telegram channel. “You could spend years here [the dark web], and never get invited to the right room.”
In the right rooms, the “best stuff” is advertised as screenshots, and often traded for stolen US or European commercial data — credit card information, emails, social security numbers.
That so many of the briefing slides Teixeira is alleged to have leaked have become currency in pro-Russian online forums shows there is a lingering risk from the disclosure. Analysts said there remained a real possibility that some of the documents had yet to surface, or that new, doctored ones could appear in Russian disinformation campaigns.
“Once this kind of data finds itself on the highway of the internet, it doesn’t take long for a small group of people to stumble upon it — and once they do, it spreads on the internet like an epidemic,” said Osher Assor, head of the cyber security department at consultancy Auren Israel.
“Every day it becomes easier to get these classified files, and it puts the U.S government in very big trouble — on top of the originals, we see more fake or manipulated files being added to further confuse and divert,” Assor said.
As new documents become public, US officials have scrambled to assess the depth of the disclosures, with some releases catching them by surprise. Pentagon press secretary Brigadier General Pat Ryder said on Tuesday that the defence department was still assessing the scale and impact of the Teixeira leaks.
The FBI declined to comment on the scale and seriousness of the wider leaks. The Pentagon declined to comment.
The wide variety of US government-related material being shared underlines its value in the underground information economy in which hackers trade. Its relative scarcity compared with Russian data made fresh leaks exceptionally valuable, said two people involved in such online forums.
Of some comfort to US authorities is that few of these hackers breach the government’s most secure databases: the most damaging leaks have come from insiders — Chelsea Manning, convicted of leaking the Iraq war logs and state department cables; Joshua Schulte, convicted of leaking the technical details of how the CIA hacks high-value targets; and Edward Snowden, who leaked highly classified National Security Agency information.
“You get big ones, like [Schulte], once in five years — here, you move fast, collect everything, hide everything, sell quickly,” said one broker of these data sets. “But then you have little ones all the time — you find something here, something there, and then you have a file on a person that’s valuable to another person.”
He described selling to a French citizen the details of a US eavesdropping operation that he had learned about by hacking the emails of a European prosecutor who was being briefed on possible criminal activity. It was not possible for the FT to verify the broker’s claims, which included a screenshot of a $250,000 wire transfer to an Albanian bank account — allegedly the payment for the tipoff.
In many instances, the criminal groups have distant ties to the Russian state, providing opportunities to disseminate documents — doctored or original — that help with Russian propaganda.
One hacker showed off sample source code, settings and test data from an industrial process that was described as producing the alloy used to reinforce the armour on American-made infantry fighting vehicles. In another conversation observed by the FT, an unidentified buyer asked if anyone had for sale a more recent copy of the US no-fly list, which contains the names of people banned from travelling by aircraft into, out of or within the country. A 2019 copy of that list had already leaked on to the internet earlier this year.
“Check DM [direct messages],” replied one user in the Telegram group, promising that what he was sharing was the “most recent”.
Barrick Gold boss hunts for takeover targets
Serial dealmaker Bristow forecasts market rally in gold and copper that will lift mining stocks
Barrick Gold’s Mark Bristow is on the hunt for takeovers as rival Newmont tries to push through a mega-deal, forecasting a market rally in his company’s two key commodities.
The pugnacious chief executive of the world’s second-largest gold mining group expects gold and copper prices to rise, lifting mining stocks.
His comments mark a step up in the serial dealmaker’s M&A rhetoric after playing down the need to counter the world’s largest gold company Newmont’s $19.5bn all-share non-binding bid for Australia’s Newcrest.
He added that the group had the “luxury of picking and choosing M&A opportunities” after improving operations following its takeover of Randgold five years ago and a four-year effort to build a strong exploration team.
“Because of our broad footprint of exploration across all prospective tier-one gold and copper jurisdictions, we have our geologists on the front lines. We have a much better understanding of the M&A activity than most of our peers,” he said.
Newcrest granted Newmont, the industry leader, an exclusivity period to conduct due diligence that ends next Thursday.
Bristow brushed aside concerns about dealmaking at a time when the price of gold, which, at more than $2,000 per troy ounce, is approaching an all-time high.
Copper assets are fiercely desired by many mining companies because of the estimated demand growth due to the switch to electric cars, wind farms and for transmission cables, although prices have fallen since January on a disappointing rebound in China.
Bristow said “there’s significant upside risk for the gold price and the copper price” because of tightening supply for both and threats to US dollar strength as well as the shift by central banks to diversify their reserves by holding gold in place of the greenback for the precious metal.
Even so, Bristow has ruled out at this stage bidding for the base metals business of Canadian miner Teck Resources, which could be spun out. Teck Resources was the target of a hostile $23bn bid from London-listed Glencore.
In the markets, copper prices have fallen almost 10 per cent to about $8,500 per tonne since January after the fading of optimism over China’s easing of its zero-Covid policies.
However, mining executives and traders warn that historically low levels of inventory raise the risk of prices spiking later in the year.
In the case of gold, the sector is considered ripe for consolidation because it is relatively fragmented and companies have fallen out of favour in the past over investment decisions.
Barrick’s gold production dipped to 952,000 ounces in the first quarter, down from 990,000 a year ago, due to planned maintenance at its processing plant for its set of gold mines in Nevada and the start of plant commissioning at Pueblo Viejo in the Dominican Republic. That contributed to pushing adjusted net earnings down by almost half to $247mn.
Barrick is seeking to grow its copper business by developing Reko Diq in Pakistan’s Balochistan province, which borders Afghanistan, while focusing on exploration in the Americas, Saudi Arabia and Egypt.
It reached an agreement in late March to reopen the Porgera mine in Papua New Guinea, where production has been suspended since 2020 after a dispute with the government.
Deals between European private equity firms halve year-on-year as rising rates hit
Companies seeking to exit investments struggle to agree on prices in negotiations with rivals
Deals between private equity firms in Europe have plunged to their lowest levels since the Covid-19 pandemic as the buyout game of pass-the-parcel is hit by rising debt costs and investors’ concerns about the economic outlook.
In the first three months of this year the value of deals struck between rival private equity firms in Europe fell to its lowest point since the second quarter of 2020, according to data provider PitchBook, as buyout houses seeking to exit investments struggled to agree on prices.
Just €16.8bn worth of companies were traded between investment firms — less than half the value of deals struck over the same period last year. Initial public offerings had their second worst quarter over the same time period, PitchBook data shows.
“It’s a very tough time to exit anything and sponsor to sponsor deals are the most acutely impacted,” Hugh MacArthur, global chair of Bain & Co’s private equity team said. “You have the macro uncertainty and, by the way, debt costs a lot more, so unless you are willing to ignore that then it is very difficult to get these deals done.”
The practice of private equity firms selling assets to one another has boomed over the past decade as the era of low interest rates let firms raise record sums which they were under pressure to deploy.
The peak for intra-PE deals came in 2021 when, buoyed by the economic rebound of reopening after pandemic lockdowns, €173bn of companies were traded between buyout firms.
Some companies passed between PE hands four or five times at ever higher valuations. Vincent Mortier of asset manager Amundi likened the practice to a Ponzi scheme. Last June, Mortier warned that firms would face a reckoning in the coming years.
With PE firms now baulking at buying assets from each other, deals are at risk of falling apart as sellers are unwilling to compromise on price.
In recent weeks, two prominent auction processes for private equity-owned companies — veterinary clinic chain VetPartners and biometrics technology company IDEMIA — have attracted muted interest from rival firms, according to people familiar with the matter.
Both companies received fewer offers than expected as potential private equity buyers were put off by high pricing expectations and increased borrowing costs, the people said. Talks were ongoing with at least one prospective buyer of VetPartners, one of the people added. Both groups declined to comment.
Eurazeo’s sale of French insurance company Groupe Premium is facing similar difficulties, other people said. Eurazeo declined to comment. Groupe Premium did not reply to a request for comment.
The slowdown means buyout groups are struggling to cash in on their bets. As a consequence, firms seeking to raise new funds from their backers are having difficulty as investors typically like to have cash returned to them before backing managers again.
Investors in private equity funds have also been hit by the so-called denominator effect whereby publicly traded assets fall in value in real time but private assets are not marked down as much — so an increasing proportion of investors’ portfolios is held in private markets.
This phenomenon has amplified the need for investors to receive cash back from the firms they invest with, before they are able to make fresh commitments.
“There is no equilibrium on valuation,” said Simona Maellare, global co-head of the alternative capital group at UBS. “What limited partners are caring about is distributions and the easiest deals to do are deals to sell to another PE.”
“One of the biggest problems for sponsors now is the LBO math doesn’t work — valuations remain inflated and the cost of borrowing has gone up,” said Saba Nazar, co-head of global financial sponsors at Bank of America.
The need to return money to investors is forcing firms to get creative.
One tactic is so-called “continuation funds”. These enable firms to move assets from one fund they manage to another, without having to sell or list the asset.
Swedish firm EQT, for example, is building out an in-house team to help do these types of deals. This week European buyout firm Triton announced it had sold four portfolio companies it owned to a continuation fund in a €1.6 billion deal.
Private equity firms have also found some success in selling assets to corporate buyers or cash-rich sovereign wealth funds. Last month Bridgepoint sold its dialysis clinic chain Diaverum to a health venture backed by an Abu Dhabi sovereign wealth fund.
“A lot of sovereign wealth funds are awash with cash and they are keen to deploy it in the right businesses where they can make a clear return,” Nazar said.
Those without access to those pools of capital hope that the world’s leading central banks stop raising rates sooner rather than later, so that they can avoid crystallising losses by selling at lower valuations or losing out on deals completely.
“Everybody can survive a year without doing too much but [18 months] or two years is a long period of time,” MacArthur said.
Barron’s Weekend Summary:
Cover Story:
-Bud Light is the latest casualty in a battle over whether companies are embracing too many progressive goals on everything from gender identity to climate change. Companies from BlackRock to Walt Disney are under siege as political attacks on progressive corporate policies heat up ahead of the 2024 elections. Some companies are fighting back—notably Disney—and there is scant evidence of firms retreating from environmental, social, and governance, or ESG, initiatives. At the same time, conservative calls to boycott consumer brands and financial companies accused of corporate “wokeism” have gained momentum, and several Republican-led states have passed laws or rules penalizing companies they view as hostile to their economic or social interests.
Interview:
Matthew went to work for Marty Whitman, the legendary value investor who founded Third Avenue Management in 1986. He started “about one step above the mailroom” in 2000 and climbed the ladder to portfolio manager of the firm’s flagship $900M Third Avenue Value fund, which he has overseen since late 2017. Last year, the fund returned 17.5%, including reinvested dividends, while the S&P 500 returned a negative 18.1%. That performance placed Third Avenue Value in the first percentile of its category, according to Morningstar, meaning that it delivered better returns than 99% of its peers.
Tech Trader:
-On Thursday evening, Apple reported March-quarter results above expectations. Revenue fell by 3% year over year, but iPhone sales were actually up. Apple stock surged 5% on the earnings and revenue beats. Overall demand for computers and smartphones has been in free fall, following a large pull forward in spending during the pandemic. Last month, IDC said worldwide shipments of PCs fell 29% in the first quarter from a year earlier. Similarly, Intel—the largest supplier of PC processors—recently reported a 36% decline in revenue for the March quarter. The mobile phone market isn’t much better. Canalys, a research firm, said first-quarter worldwide shipments for mobile phones fell 13% year over year due to difficult economic conditions. On Wednesday, Qualcomm, the leading maker of mobile processors and 5G wireless chipsets, posted a 17% revenue decline in the March quarter, while giving a markedly worse-than-expected forecast, citing softening demand for smartphones.
The Trader:
-Haters of Starbucks stock were out in force Wednesday, despite an earnings report that showed everything going the company’s way. But, rather than sell, this is a chance to buy the stock on the dip. Starbucks’ earning report had much to like. Sales grew about 14% year over year to $8.72B, better than forecasts for $8.41B. The company gained millions of new Starbucks Rewards members, and both store traffic and total spend per store visit increased. Even the beginnings of the recovery in China, still not fully reopened, drove a moderate sales gain in the region. Profit margins beat estimates as increases in the cost of food and wages moderated. That drove earnings up 25% to 74 cents a share, better than the expected 59 cents. What seems to have raised analysts’ concerns is that management only reaffirmed its fiscal 2023 same-store-sales guidance for 8% growth, without raising its forecast.
-One would expect the Federal Reserve’s likely pause in raising interest rates to trigger a bullish response from the markets. That’s not what happened—and for good reason. The S&P 500 index had gained 7.7% this year, partially on hopes that the Fed will take a break. Economic growth has been slowing, dragging down inflation with it, providing Fed Chairman Jerome Powell with a reason to stop tightening monetary policy, if he so chooses. That’s a relief to the market, which struggled last year with some of the fastest rate hikes in history. Yet the stock market dropped when the Fed raised rates by a quarter-point but indicated that a pause is, indeed, on the way. The S&P 500 fell 0.8%, while the Dow Jones Industrial Average dropped 1.2%.
Features:
-It’s the Berkshire Hathaway annual meeting in Omaha, Nebraska. Some 30,000 Warren Buffett fans and Berkshire Hathaway shareholders have descended on Omaha for the annual ritual often called the “Woodstock for Capitalists.” The weekend kicked off with a Shareholder Shopping Day on Friday, with many of Berkshire’s dozens of subsidiaries showing off their wares in an enormous hall at the CHI Health Center. The main event on Saturday is the annual meeting itself and hours of questions for Buffett and his partner Charlie Munger, plus vice chairmen Greg Abel and Ajit Jain.
-CNH Industrial, a peer of Deere DE and Caterpillar CAT +2.24% , posted record first-quarter earnings and raised full-year financial guidance. The stock was down in early trading, until the jobs report bailed out the market. Friday morning, CHN, a maker of farm equipment and heavy machinery, reported earnings per share of 35 cents for the quarter on sales of $5.3 billion. Wall Street had expected earnings per share of 32 cents on sales of $5.1B. A year ago, the company earned 28 cents per share on sales of $4.6B. The company now expects 2023 sales to grow 8% to 11% from 2022, up from a previous range of 6% to 10%, and kept a free-cash-flow estimate range from $1.3B to $1.5B.
European Trader:
-European banks are looking better than their US counterparts. And investors are bullish on European bank stocks. The iShares MSCI Europe Financials exchange-traded fund has lost 10% over the past 10 years, while shares of US peers doubled. European banks trade at an average of 0.8 times tangible book value, says Elias Chrysostomou, an analyst covering the sector for T. Rowe Price. The U.S. ratio is 1.2. The tables may be turning. As the U.S. wraps up its third big bank rescue in seven weeks with JPMorgan Chase absorption of First Republic Bank, the European Union and the United Kingdom have remained relatively undisturbed. The continent’s one financial implosion, Swiss-based Credit Suisse, had been building for years and could safely be called idiosyncratic.
Emerging Markets:
No update this week for this column
Commodities:
-Shares of Enviva, a producer of industrial wood pellets, dropped after the company said it would eliminate its quarterly dividend and provided a weaker outlook for this year. Enviva’s press release on Wednesday it now expects a net loss ranging from $136M to $186M for 2023—compared with its previous outlook for a net loss of $18M to $48M. Enviva shares tanked 65% to $7.57 in Thursday trading, as both investors and Wall Street appeared concerned about the company’s update. Shares traded as low as $7.50, a new all-time intraday low, based on available data back to April 2015, according to Dow Jones Market Data.
Streetwise:
-This week, Jack Hough (there’s only the podcast version of the Streetwise column) discusses individual bonds versus funds? We revisit a listener question special from February, 2023, with questions on passive investing, robo advisers and bond funds.
Weekend Papers Summary
NEW YORK TIMES
-Coronation of King Charles III: A Celebration Decades in the Making. The world’s gaze will be on a royal family that has undergone an uneasy transition from imperial power to global celebrity.
-It’s a test of the new king’s ability to sustain the mystique of Queen Elizabeth II.
-Nearly all the king’s realms want to say goodbye to the British monarchy. Whether through a hard break or a soft fade in ties, nations that have kept the British monarch as their head of state are moving toward separation.
-Most fake Trump electors have taken Immunity Deals in Georgia Case. Prosecutors are nearing charging decisions after investigating whether former President Trump and his allies illegally meddled in Georgia’s 2020 election.
-Rioter gets 14 years for Jan. 6 attacks, in longest sentence so far prosecutors also recommended 25 years in prison for Stewart Rhodes, the leader of the Oath Keepers militia, who was convicted of seditious conspiracy.
-US defense experts worry about how AI could change war. US national security officials are warning about the potential for the new technology to upend war, cyber conflict and even the use of nuclear weapons.
-Tucker Carlson Wants to Return to TV Before 2025. Will Fox Let Him? In conversations with his associates, Mr. Carlson has expressed interest in getting back to work before his current contract expires.
-It may be in the interests of Fox and Mr. Carlson to resolve the situation. Leigh Vogel for The New York Times
-Demonstrators carrying flags, some of them similar to the American flag but in red, black and green, face the camera while marching across the Manhattan Bridge at night.
-Biden says he’s the most experienced 2024 candidate amid age concerns. President Biden also said that he was not yet prepared to lean on the 14th Amendment amid a showdown with House Republicans over the debt limit.
-DeSantis signs into law latest wrinkle in Disney feud. The bill would allow approved development agreements for Walt Disney World to be voided. The company has already sued Gov. Ron DeSantis over the issue.
-The Supreme Court stays execution of death row inmate Richard Glossip. The court acted after Oklahoma’s attorney general joined Mr. Glossip in urging it to halt the execution, which had been scheduled for May 18.
-Tightening Supreme Court ethics rules faces steep hurdles. Revelations about Justice Clarence Thomas’s failure to disclose largess from a Republican donor have highlighted a dilemma.
-A Police Funeral, 33 Years Waiting, for a Detective Shot in 1990. Detective Troy Patterson, mortally wounded during a robbery in Brooklyn, remained in a coma for more than three decades before dying last week.
-With a Ukrainian offensive looming, explosions in Crimea and inside Russia have rattled Moscow, sparking infighting among military commanders.
-Former President Trump did not disavow the “Access Hollywood” video when questioned by E. Jean Carroll’s lawyers, who rested their case Thursday.
-The Prince with no throne
If the Austro-Hungarian Empire still existed, 25-year-old Ferdinand Habsburg would eventually be its ruler. Instead he’s a racecar driver.
THE FINANCIAL TIMES
-US jobs growth was stronger than expected in April, showing the resilience of the economy even as the Federal Reserve signaled it was “getting close” to pausing its cycle of interest rate rises. The US added 253,000 non-farm jobs last month, according to a report from the Bureau of Labor Statistics on Friday, confounding expectations of a slowdown.
-Jack Dorsey spoke out publicly against Musk, saying he did not believe the Tesla chief “acted right” in his handling of Twitter. “It all went south,” wrote the 46-year-old, who rolled his stake over when Musk took Twitter private, making him one of its biggest shareholders. “But it happened and all we can do now is build something to avoid that ever happening again.”
-The US Securities and Exchange Commission has paid out its largest-ever award to a whistleblower, almost $279M, the regulator announced on Friday. The award is more than double the previous record amount of $114M, which was announced in October 2020.
-The European TTF benchmark hit a low of €35.20 a megawatt hour on Friday, a level last seen in July 2021 when Russia was first starting to squeeze Europe’s energy supplies ahead of its invasion of Ukraine. It later rose slightly to end the week at €35.95. The TTF benchmark peaked at more than €340/mwh hour last summer after Russian slashed gas exports to Europe, stoking inflation and sending energy bills soaring.
-The German economy ministry plans to subsidize 80% of the electricity cost for energy-intensive companies, in a proposal likely to fuel divisions inside the governing coalition and further alienate European nations who cannot afford such measures.
-The head of the Russian mercenary group Wagner has stepped up threats to withdraw his fighters from Bakhmut and blamed military leaders in Moscow for heavy losses in the city ahead of a Ukrainian counter-offensive.
-China’s foreign minister will meet officials from the Taliban at the weekend as Beijing explores boosting investment in Afghanistan, including bringing the crisis-hit country into its Belt and Road infrastructure project.
-Crowds were gathering on London’s Mall on Saturday morning ahead of the coronation of King Charles III, heralding a day of ancient ceremony and military spectacle that will draw on a millennium of British history.
-Geoffrey Hinton’s resignation follows a series of groundbreaking AI launches over the past six months, starting with Microsoft-backed OpenAI’s ChatGPT in November and Google’s own chatbot, Bard, in March. Hinton voiced concerns that the race between Microsoft and Google would push forward the development of AI without appropriate guardrails and regulations in place.
-The Covid-19 emergency is over after at least 20mn deaths, the World Health Organization said on Friday, ending a designation in place for more than three years since the novel coronavirus began sweeping across the world.
-Burkina Faso’s interim leader said Russia is a “strategic ally” but denied that the Kremlin-linked mercenary group Wagner were engaged in the west African nation’s fight against Islamist insurgents. President Ibrahim Traoré, who seized power in a military coup last September, told state broadcaster Radiodiffusion Télévision du Burkina (RTB) that Russia was a supplier of equipment for Ouagadougou’s military and that the countries enjoyed a “frank” relationship.
-As dark clouds hung overhead, hundreds of striking screenwriters picketed along Sunset Boulevard outside the company they blame for bringing the remorseless economics of Silicon Valley to Hollywood: Netflix.
-A new alliance of the oil and gas sector is being marshalled by the COP28 team behind the UN climate summit in the United Arab Emirates, but early outlines of its goals aimed at tackling global warming do not include the bulk of emissions that arise from the use of fossil fuels.
-A confrontation broke out in Los Angeles this week as 11,500 writers for film and television went on strike. Screenwriters know all about confrontations: they are the second acts of three-act dramas, when the main characters face a crisis that only gets resolved at the end.
NY POST
-The coronation of King Charles and Queen Camilla has finally arrived, following Queen Elizabeth II’s death in September. Their majesties will be formally crowned Saturday at London’s Westminster Abbey — the first coronation Britain.
-President Biden declared on Friday that his son Hunter Biden “has done nothing wrong” as federal prosecutors near a decision on whether to charge the first son with tax and gun crimes. Biden’s defense of Hunter came in a rare sit-down interview with MSNBC host Stephanie Ruhle that aired Friday night at 10 p.m. “My son has done nothing wrong. I trust him. I have faith in him and it impacts my presidency by making me feel proud of him,” Biden, 80, told Ruhle when asked about how the first son being charged would impact his presidency.
-Anheuser-Busch is telling US beer distributors it has fired the “third-party ad agency” behind Bud Light’s Dylan Mulvaney fiasco — but the beer giant is staying tight-lipped about the marketing firm’s identity, even launching a fresh ad campaign aimed at damage control, The Post has learned. The company’s global CEO Michel Doukeris this week came out swinging at the “misinformation” being spread about the extent of Bud Light’s relationship with the transgender influencer, who has more than 10 million followers on TikTok.
World’s Top AI Researchers Debate the Technology’s Next Steps
Conference in Africa focuses on AI’s promise and peril for poorer nations after ChatGPT sparked frenzy among big tech companies
KIGALI, Rwanda—Amid growing talk of the promise and peril of artificial intelligence, more than 2,000 researchers and engineers from around the world gathered in Rwanda this week to debate contrasting visions for the technology’s future.
One vision is to build ever-more-powerful systems such as ChatGPT that aim to exceed human intelligence to boost worker productivity and economic growth. The other is to create more-targeted, small-scale AI solutions to local and global challenges, including tackling climate change, improving healthcare and preserving biodiversity.
The competition of ideas was in part a design feature of this year’s convening of a major AI research conference in Africa for the first time. The organizers wanted researchers, predominantly from the U.S. and China and wealthy corporations, to reckon with the realities of societal problems present on the continent, while giving African researchers a voice in the discussion.
“It’s become obvious that in order to bring the potential benefits of AI to everyone, we need everyone to be part of it,” said Yoshua Bengio, nicknamed one of the godfathers of AI, who sits on the conference organizers’ board and was among those who pushed to locate it in Africa.
The arrival of ChatGPT months before the gathering has added urgency to discussions on the trajectory of AI and its near- and long-term impacts. Its release kicked off a global frenzy among the biggest tech companies from Google to Baidu to develop their own so-called generative AI technologies, software that produces text and images that is stirring worries about job replacement and the rapid proliferation of misinformation.
Largely absent in Kigali yet present on everyone’s lips was ChatGPT developer OpenAI, which has polarized the global AI community over whether to embrace or resist the company’s trajectory.
On Monday, Geoffrey Hinton, another “godfather of AI” who wasn’t in Rwanda, said he was leaving Google to speak more freely about the risks of AI development. Mr. Hinton has said in media interviews that he is concerned about the long-term existential threats of the technology to humanity.
At the conference, many researchers from Africa and other developing and minority populations said they were instead concerned about the immediate challenges that AI poses to their societies.
The current trend toward generative AI models threatens to exacerbate the dominance of the U.S. and China in AI development, leaving Africa behind or having to deal with the problems it creates, the researchers said. Such consequences include facing greater disinformation in African elections and the disappearance of their languages in digital technologies, they said.
Many researchers were also concerned about the lagging development of beneficial AI solutions that could help improve the basic quality of life for people around the world.
Girmaw Abebe Tadesse, an Ethiopian researcher in Microsoft’s Nairobi, Kenya, office, highlighted the critical data issues—such as error-filled medical forms—that hold back AI development for improving maternal care and eliminating child mortality in developing countries.
He also presented success stories including one that combined high-quality data with statistical analyses to discover that the southern region of Nigeria had a lower child mortality rate than the country’s average. It enabled researchers to engage in more-focused investigations as to why and devise solutions for elsewhere.
Others presented work on using satellite imagery to understand racial disparities in access to public parks and health facilities, using sensors and mathematical models to improve power-grid maintenance and using computer vision to detect agricultural diseases.
Mr. Bengio said he hoped this year’s conference setting would provoke researchers to move away from profit-driven AI advancements toward AI for social good applications.
“There have been a lot of discussions about the risks of AI, and I’ve been part of those discussions,” he said. “But there are not enough discussions about what we need to do to put AI to really good use.”
There were 261 attendees from Africa, up from only 16 in 2019, the last time the annual International Conference on Learning Representations, or ICLR (pronounced i-clear), was held in person before the pandemic, the organizers said.
Over the years, the largest and most prestigious annual AI research conferences have typically been held in the U.S. or Canada, close to Silicon Valley, which remains an outsize force in AI research.
African researchers were often unable to attend as they had trouble getting visas, drawing criticism over an absence of their perspectives in developing one of the most powerful and transformative technologies.
Prominent researchers, including AI ethicist Timnit Gebru, have pointed to the concentration of research into a few dominant players in Silicon Valley and the lack of inclusion of non-Western researchers or those from marginalized groups. In 2017, Ms. Gebru, who grew up in Ethiopia before arriving in the U.S. as a refugee, founded an affinity group called Black in AI to bring more diversity into the community.
Rwanda typically gives visas to researchers, regardless of company or country. The country, marred by brutal genocide in 1994, is now a budding hub of African AI research through new research centers and government programs aimed at attracting international talent.
The resulting mix was a study in contrasts: Huawei employees chatted with Google counterparts despite U.S.-China tech tensions, resource-strapped academics lamented to friends at wealthy companies and African researchers challenged Western peers to look beyond the perspectives of coastal elites in developed countries.
On Friday, Ms. Gebru hosted a panel on the limitations of large language models—the technology that underpins ChatGPT—in handling African languages, which have been increasingly excluded from the digital world because of a lack of data needed for current AI technologies. Ms. Gebru gained public prominence when she said she was fired by Google after she co-wrote a paper criticizing the exploding resource demands and environmental impacts of such models, which also underpin Google’s search engine. Internally, Google characterized her departure as a resignation.
During a separate panel, Vukosi Marivate, the data science chair at the University of Pretoria in South Africa and program chair of the conference, said African researchers were fighting the threat of losing their native languages.
“We’re racing against the clock” before English takes over and African languages cease to exist, he said after the event.
Despite being thousands of miles from Silicon Valley, there was no escaping the allure of large language models and generative AI such as ChatGPT. Researchers packed lecture halls for related sessions, sitting on the floor and leaning against the wall, with one perched on his suitcase after rushing straight from the airport.
Many researchers said they were amazed by OpenAI’s results, convincing them to aggressively scale their own models. Mickel Liu, a third-year Ph.D. student at Peking University in Beijing, said he plans to switch his focus over to generative AI to join the most exciting research direction.
“This will be the last conference not dominated by large language model research,” he said.
Warren Buffett’s Berkshire Hathaway dumps billions of dollars of US stocks
Cash pile rises by $2bn to $130.6bn as sprawling conglomerate finds little to spend on
Warren Buffett’s Berkshire Hathaway sold billions of dollars worth of stock and invested little money in the US equity market in the first three months of the year, as the famed investor saw little appeal in a volatile market.
Berkshire disclosed on Saturday that it had sold shares worth $13.3bn in the first quarter and bought stocks for a fraction of that figure. Instead, it put $4.4bn towards repurchasing its own stock, as well as $2.9bn on the shares of other publicly traded businesses.
The figures underscore the struggle Berkshire faces in putting its mountain of cash to work at a time when Buffett and his longtime right-hand man Charlie Munger regard valuations as unappetising. The company’s cash pile has risen by $2bn since the start of this year to $130.6bn, its highest level since the end of 2021.
Munger last month told the Financial Times that investors should reduce their expectations for stock market returns as the Federal Reserve raises interest rates and the economy slows.
Berkshire reported a profit of $35.5bn in the first quarter, or $24,377 per class A share, largely driven by a rally in stocks that lifted the value of its $328bn portfolio of shares. Profit was up from $5.6bn a year before.
Operating earnings — Buffett’s preferred performance measure for Berkshire’s diverse group of businesses — rose 12.6 per cent from the year before to $8.1bn. For the first time the figure includes the results of truck stop business Pilot Flying J, which Berkshire took majority control of in January.
The results are often scrutinised given the cross-section of the country Berkshire’s dozens of businesses touch, including in energy, logistics, housing and manufacturing.
One of Berkshire’s crown jewels, the Geico auto insurer, swung to an underwriting profit after six consecutive quarters of losses. The company said that scaling back advertising and raising policy rates had helped the unit generate a $703mn underwriting profit.
The impact of higher interest rates and slower economic growth was evident across the businesses, which span the Dairy Queen ice cream purveyor, aeroplane parts manufacturer Precision Castparts and the BNSF railroad.
Berkshire warned lower home sales continued to weigh on Clayton Homes, one of the largest makers of modular homes in the US, and that sales across its other housing businesses had fallen at the start of the year. Traffic on its BNSF railroad also fell at the start of the year, which the company blamed on lower imports from the west coast and the loss of a customer.
Higher interest rates, however, have also been a boon to Berkshire. The company invests the vast majority of its $130.6bn of cash in short-term Treasury bills and bank deposits.
Income on those short-term bills and cash-like deposits surged to $1.1bn, up from $164mn a year prior.
The figures were released just hours before Buffett and three other Berkshire executives take to the stage in downtown Omaha, where tens of thousands of shareholders have gathered for the company’s annual meeting.
Shareholders will hear the 92-year-old billionaire and his vice-chairs Munger, Gregory Abel and Ajit Jain discuss the economy, the Fed’s efforts to drive down inflation and Berkshire itself.
The four men will probably be pressed on why the sprawling conglomerate had not made a substantive investment in the US banking sector, as it did in the midst of the financial crisis.
At the time, Berkshire’s capital helped shore up both Goldman Sachs and Bank of America. The latter is now a core holding in the company’s stock portfolio.
Berkshire stock has risen by 4.9 per cent since the start of the year.