TheChek News Flow

Debt spreads for the top-tated emerging markets have fallen

Investors have pushed borrowing costs for highly rated emerging market governments and companies relative to developed markets to near their lowest levels since the global financial crisis, as traditional havens such as US Treasuries lose their lustre, write Joseph Cotterill and Alan Livsey.

The premium that investors demand to own investment-grade country and company debt over Treasuries has dropped to 1.04 and 1.1 percentage points, respectively. That marks the tightest level for sovereign spreads since 2007, while corporate spreads were also briefly lower than now before Donald Trump’s election as US president last year.

The move highlights how investors have become less worried about the potential fallout for emerging markets from Trump’s erratic trade war, and are instead focusing on some of these countries’ improving economic health. It also reflects wariness among some investors over US government bonds following the president’s repeated attacks on Federal Reserve chair Jay Powell and worries about government debt levels.

“The safe assets aren’t as safe as they used to be, and that is one factor pushing people into credit markets”, including emerging markets, said David Hauner, head of global emerging markets fixed-income strategy at Bank of America, who also pointed to “superstrong” global equity markets and a boost from a weaker dollar.

Emerging market “spreads to US Treasuries or German Bunds are tight, but the overall level of yield is attractive when you are seeing people lose faith in the traditional safe assets”, he said.

Overall spreads on the JPMorgan Emerging Market Bond index of sovereign borrowers — comprising investment grade and high yield — have fallen from 3.9 percentage points in April to just over 3 percentage points, the lowest level since early 2020. A corporate equivalent is down from 2.8 percentage points to 2.05 percentage points, not far off 2018 levels.

Pimco warns of US market revolt

Pimco’s chief investment officer has warned that any attempt to limit the US Federal Reserve’s independence would be “very bad for markets”.

“Markets value central bank independence, at least around the setting of policy rates,” said Dan Ivascyn, chief investment officer of the $2.1tn bond-focused fund manager Pimco.

“Although there’s always tension between policymakers, any attempt to reduce independence would be very bad for markets.”

Concerns have been swirling over the Fed’s independence even though the Supreme Court has signalled that the White House cannot fire Fed chair Jay Powell or any of the bank’s other six governors due to disputes over monetary policy, write Harriet Clarfelt, Claire Jones and Lauren Fedor.

Trump has lashed out repeatedly at the Fed and Powell, whom he has called a “numbskull” for declining to reduce rates this year.

Ivascyn’s comments came just hours before Trump sparred with Powell over the costs of the renovation of the Fed’s headquarters in Washington when the president visited the construction site on Thursday.

Still, some of Trump’s actions of late have been lauded. Blackstone’s president Jonathan Gray reckons recent trade deals and tax cuts have restored confidence in US financial assets, writes Antoine Gara.

Deals with Britain, Japan and Indonesia, as well as tax changes favourable to corporations and wealthy individuals, had removed investor uncertainty and fuelled rising excitement about opportunities to invest in artificial intelligence and digital infrastructure spending, Gray said in an interview with the Financial Times.

“There has been a restoration of confidence in terms of US assets and just the continued growth in earnings of US companies,” he added.

Gray expected the renewed enthusiasm for US assets would fuel a broad capital markets recovery later this year, with initial public offerings and corporate takeover activity accelerating significantly through the autumn.  

GIC urges caution over private credit

One of the world’s largest sovereign wealth funds has sounded the alarm over the rapidly expanding realm of private credit, write Arjun Neil Alim, Haohsiang Ko and Will Schmitt.

Singapore’s GIC sovereign wealth fund has raised concerns around non-bank lending due to shrinking returns and the market’s lack of experience of a sustained downturn.

GIC, which oversees about $800bn of assets for the city state, has long been a big player in global private equity and real estate.

“We are now at a part of the cycle where we feel that spreads are a lot tighter [and] valuations are also higher,” said Bryan Yeo, GIC’s chief investment officer. “Hence, we are raising the bar in terms of further deployment into the private credit space.”

Yeo highlighted the market’s lack of experience of a major downturn as a source of potential concern. “In hindsight, we haven’t really seen a major credit default cycle [in private credit],” added Yeo — excepting what he called a “shortlived spike” during the Covid-19 pandemic.

His comments are the latest in a series of warnings about the risk of investors rushing into the rapidly growing private credit sector in search of higher yields, amid a cooling of the private equity market and increased equity volatility.

Private credit has boomed in the past decade as tighter regulations since the 2008 financial crisis have increasingly stopped traditional banks from lending to riskier companies. This has created an opportunity for “alternative” players, including groups such as Blackstone and Apollo Global Management.

GIC is not alone. Jamie Dimon, head of JPMorgan Chase, has repeatedly warned about the risks in private credit, cautioning that the asset class could become a “recipe for a financial crisis” if mismanaged.

But as Gillian Tett notes, JPMorgan has also raised its allocation to private credit this year from $10bn to $50bn. Its rivals are rushing into this space, just as US President Donald Trump seeks to open the asset class to pension funds and retail investors.

Stretched valuations and a surge in speculative trades are raising red flags, even as growth persists

Speculative stocks like Opendoor and Kohl’s are surging, reminiscent of 2021’s meme stock frenzy.

Crypto prices are rising, fueled by Trump administration policies and companies adding bitcoin to their balance sheets.

Market breadth is improving and the economy remains strong, but stock valuations are stretched and the job market shows signs of weakening.

Stocks are doing crazy things again.

The share price of online house flipper Opendoor Technologies has catapulted some 377% in the past month, despite a stagnant U.S. housing market. One of the biggest stock gainers Tuesday was Kohl’s, a department store that has been losing ground to competitors for some time and has replaced its chief executive more than once in recent years.

On Wednesday, the crowd favorites were unusual names such as GoPro and Krispy Kreme, with both the camera company and doughnut maker notching eye-popping gains over the week.

Some investors say the action is the latest phase in what has turned into a near-euphoric rebound from April’s tariff turmoil. Since the market tumbled and then turned higher, there has been a stampede into risky assets such as meme stocks, cryptocurrencies and shares of smaller companies that have yet to turn a profit.

To some, this resembles a bubble—a period of frenzied market activity and speculation that artificially inflates asset values, driving prices to an eventual breaking point.

“A lot of us thought that the [spring] correction had to do with the fact that valuations were rather stretched back in January and February, yet here we are,” said Ed Yardeni, president of Yardeni Research. “It’s almost like a slow-motion melt-up.”

Here’s what investors are tracking for signs of froth:

The return of YOLO bets recalls the heady days of 2021, when online traders briefly drove the fading mall retailer GameStop to a $24 billion valuation, before rising interest rates brought the bull market to an end.

The housing market is stalled, and Opendoor shares traded under $1 earlier this month. They closed Friday at $2.54. The bets on Kohl’s center on the potential sale of the company’s real-estate holdings, which Wall Street has eyed for years. The stock has still slid more than 70% since the start of 2022.

Unprofitability isn’t much of an obstacle. Avis and Aeva Technologies, both of which reported net losses in the first quarter, are flying high. Of the 33 stocks in the Russell 3000 that have tripled in price since the market bottom in April, only six have generated profits over the past year, according to a Bespoke Investment Group analysis.

hares of the ARK Innovation ETF, a fund that includes a number of speculative companies operating at a net loss, have climbed more than 36% year to date.

“That in itself is not unhealthy,” Callie Cox, chief market strategist at Ritholtz Wealth Management, said of the rise in speculative trades. “When you get worried is when cracks start forming in the economy, yet you still have a huge appetite for speculation.”

Prices of Ethereum and bitcoin have soared in recent weeks, lifted by the Trump administration’s pro-cryptocurrency policies and growing acceptance by mainstream financial institutions.

But a new group of buyers has also pushed up prices: publicly traded companies that stockpile bitcoin, effectively transforming their own shares into a leveraged bet on the cryptocurrency.

Those include Trump Media & Technology Group, which announced on Monday it had accumulated about $2 billion in bitcoin and bitcoin-related securities as part of a previously announced “bitcoin treasury strategy.”

Critics caution that practice could amplify risks in the crypto market, deepening selloffs. Those warnings haven’t deterred an estimated five dozen companies from pursuing similar strategies.

Since stocks returned to their pre-April levels, the daily moves have been small. And the rally has expanded beyond the Magnificent Seven and other tech giants to include financial companies, industrial firms and communication services. The KBW Nasdaq Bank Index has climbed more than 7% over the past month, while shares of GE energy spinoff GE Vernova and advertising tech firm Trade Desk rose more than 20% in the same period.

The number of stocks in the benchmark S&P 500 closing above their 50-day moving average is hovering at levels last seen in the fall, before the postelection “Trump bump” in share prices. Analysts typically consider that kind of improving breadth a sign of a sustainable bull market.

Yet stock valuations are stretched. The equity risk premium, defined as the gap between the S&P 500’s projected earnings yield and the yield on 10-year Treasurys, is close to zero. That means that the extra return for owning stocks over lower-risk bonds has nearly vanished, which investors consider an unhealthy sign.

Despite initial concerns that tariffs could kick-start inflation and drag on growth, the U.S. economy has kept chugging along.

There are some signs of weakness: The annual inflation rate ticked up in June, as tariffs started to affect consumer prices. One basket of leading economic indicators recently pointed to slower growth in the second half of the year.

But the increase in consumer prices has so far been modest, and economists’ biggest worry—a sharp slowdown in the labor market—has yet to materialize. Such a shift could turn off the tap on U.S. consumer spending, effectively halting economic growth.

Private-sector job growth has fallen to the lowest level in eight months. Hiring has slowed to a trickle, and college graduates are struggling to land roles.

“At a point where the job market is clearly weakening, it’s interesting that we’re seeing such optimism in markets,” Cox said. “When the job market starts slowing, it doesn’t turn around easily.”

Locals and tourists line up for a dip in the Seine after a centurylong ban; beware the ‘natural hazards’

PARIS—The promise of a swim in a cleaned-up Seine was an enticing bribe for Parisians forced to put up with the throngs of tourists who descended on their city for last year’s Olympics.

But floating next to Notre Dame or the Eiffel Tower is less magical when it rains. It’s not even possible.

The day after the river opened to public swimming for the first time since 1923, officials hoisted a red flag and promptly closed it again. Water-quality tests showed rainfall upstream had led to a high concentration of bacteria.

Swimming resumed a few days later when the weather cleared, but then the city had to evacuate the swimming site near the Eiffel Tower. A lifeguard had fished out what was later identified by police as an animal lung of an as yet unspecified species.

In all, the three Seine swimming spots have been closed roughly half the time since the river was reopened July 5, leading at times to long lines when they are open, and some doubts as to whether doing the breaststroke in the Seine is a particularly good idea in the first place.

“It is a little tempting, but I’m scared of getting eczema,” said Pauline Mussat.

The 32-year-old dentist had joined the crowds watching bathers take a dip near the picturesque Île Saint-Louis. “I think I’ll send Laurent first,” she said with a smile, nodding toward the young man sitting next to her.

Local authorities invested more than $1 billion to clean up the river for the 2024 Olympics, when the Seine hosted several events. It wasn’t easy; swimming in the river had been banned for over a century because of growing traffic and worsening pollution.

In Paris, rainwater flows into the sewage system. During heavy cloudbursts, the system used to often reach capacity and overflow into the Seine, officials say.

To limit sewage pollution, authorities built a massive underground storage tank in the heart of the city to store water during storms. It is designed to hold as much as 13.2 million gallons, about 20 Olympic pools’ worth. Local government workers have also gone door-to-door to persuade thousands of homeowners to connect their wastewater pipes to the sewer system instead of flushing directly into the Seine or one of its tributaries, the Marne, as is sometimes still the case. About half of the plumbing issues have been fixed.

The upshot of cleanup efforts, which ramped up in recent years after decades of work, is that there has been a 10-fold increase in the numbers of fish species in the Seine, including a six-foot-long catfish. In January, researchers even found three rare species of freshwater mussels that are extremely sensitive to pollution.

Plenty of Parisians and tourists have decided the water is good enough for them, too.

“I have zero worries,” Kathleen Lang, a 51-year-old Australian nurse on vacation in France, said on a recent Friday.

Lang waited patiently outside the swimming area near the Eiffel Tower. The site had opened late that day because of what officials tactfully called a “pollution cloud,” moving through the river from cities upstream.

Eventually, Lang slipped into waters teeming with anchovy-sized fish, along with around 200 people.

The three free sites, open until Aug. 31 as part of the annual Paris Plages, have space for nearly 1,000 people. Weather and pollution permitting, they are open most of the day—except for the one near Île Saint-Louis, which is closed weekday afternoons for tourist boats. Showers and lockers are provided.

Swimmers float leisurely, chat in groups as they tread water—and a few even attempt laps. The only river traffic here is other people and the mandatory yellow floating devices. Lifeguards stand on newly built wooden docks, where some swimmers sunbathe. From time to time, lifeguards ask them to either go back in the water or leave to make room for those waiting outside in line.

Megyn Price, a 54-year-old American actress, had to reassure her daughter back home about any potential health risk before getting in the water. But she had no regrets.

“It’s just so beautiful to see the city from that angle, I thought I might cry,” Price said after her swim.

Parisian Caroline Gastaud-Nucera had been dreaming of swimming in the Seine since she was a child, listening to her grandparents tell stories about bathing in the river.

“The water is astonishingly clear, I can see my feet,” the 54-year-old lawyer said, looking down at her red-painted toe nails as the slow-moving Seine slipped by.

Water quality can vary significantly depending on the weather.

After heavy rainfall, sensors installed to test water quality in real time showed a high concentration of E. coli. Most strains of the bacteria are harmless, but a high concentration indicates possible fecal contamination, which makes a welcome home for norovirus and other illness-inducing viruses.

“It will never be like a municipal swimming pool,” said Paris deputy mayor for sports Pierre Rabadan. “There are natural hazards that we’ll never be able to control.”

While the new tank is working well, the main problem is cities upstream. Without their own tanks, some continue to discharge wastewater after rainfall, officials said, and it can take hours to pass through the capital.

“There will always be days when it rains and we can’t go swimming,” said Marc Guillaume, the prefect of the Paris region. The city plans to allow river swimming every year, though the locations may change.

Some Parisians suspect they’ll never take the plunge.

“It’s already much cleaner, that’s for sure. But go swimming in it? No way,” said Sylvie Boucher, a Paris-based engineer, as she watched people entering the water.

“I admire them, they’re very brave,” she said, before adding she would recommend a heavy dose of antibiotics to anyone taking a dip.

Western brands suffer downturn, while gold jewelry brand Laopu’s stock price surges

Well-off Chinese used to chase Western luxury bags and jewelry as symbols of status. Now, in a challenge to the likes of Cartier and Yves Saint Laurent, they are turning to homegrown brands.

Little-known in the West, names such as Laopu, Mao Geping and Songmont are winning over Chinese customers with a pitch that combines locally inspired designs and cultural pride.

Beijing auditor Zhou Linanfang, 35, noticed long lines outside a store selling Laopu gold jewelry from her hospital room last year when she was about to give birth. Her social-media feeds added to the buzz around the brand.

Zhou, like many in her generation, considered gold jewelry unfashionable but changed her mind after seeing the filigree flower rings, gourd-shaped pendants and phoenix hairpieces in Laopu designs. Soon after the arrival of her baby boy, her husband lined up at a Laopu store in Beijing for an hour to buy her a butterfly-shaped pendant for $1,600.

“It’s just stylish,” Zhou said. “Now that we have luxury gold pieces, as someone who loves fashion, how could I not get one?”

Also taking notice are Western luxury-brand CEOs such as Johann Rupert, chairman of Cartier parent Richemont. He was asked in May whether Laopu was a threat.

The brand is “tied to nationalism and tied to patriotism, and they have a lot of wins in their favor,” Rupert said. However, he added, “Cartier is universal.”

Sales of luxury products in mainland China, mostly Western brands, fell around 20% last year to less than $50 billion, according to consultants at Bain. They said China accounted for about one in eight dollars spent on luxury globally. For the year ended March 2025, Richemont’s sales in China fell 23%.

Laopu listed its shares in Hong Kong last year and its stock surged, giving the company a market capitalization of more than $15 billion. By contrast, shares of Gucci owner Kering have declined more than 20% compared with a year earlier as the China growth hopes that formerly drove luxury shares have faded.

In June, NBA player Victor Wembanyama was seen wearing Laopu’s signature gourd-shaped pendant at a sports-card show in New York after visiting China.

Uncertain economy

Zhou said she liked the idea of buying gold jewelry because it might retain its value better in an era of growing economic uncertainty. She said she no longer bought a luxury handbag or jewelry every six months like she used to. “I might lose my job tomorrow, so I definitely need to cut back,” she said.

Laopu’s chairman, Xu Gaoming, told shareholders in April that the company has carved out a niche with little direct competition. Chinese gold jewelry makers aim for the mass market, while European fine jewelers don’t specialize in gold.

Laopu’s black-and-white stores offer a minimalist ambience, while pampering customers as they wait with Evian water and Godiva chocolate.

As those perks suggest, European brands still have a cachet that is hard to match. People in the luxury business said the Chinese brands might even serve as a feeder to get younger consumers interested in luxury.

Vanessa Piao, a luxury-bag reseller in China, said more buyers are treating their purchases as an investment, and they often prefer prestigious names such as Hermès, Chanel and Louis Vuitton.

“They are happy to pay $20,000 for a Birkin 25 because they can resell it in a few years without losing much,” Piao said, referring to the Hermès bag. “They won’t pay that money for a luxury bag or any fashion item from a domestic brand, no matter how exquisite and rare it is, because that, to some, is the equivalent of throwing $20,000 down the drain.”

Big names, big prices

Sophia Zhang, 32, was a loyal customer of Lancôme and Estée Lauder until she became a fan of Mao Geping, the namesake brand of a Chinese makeup artist. Its cream and foundation typically cost half or less the price of the international brands. A 100-gram jar of its signature moisturizer costs $139, compared with $280 for a smaller jar of a top-of-the-line Lancôme moisturizer.

“In the past I figured I’d splurge on skin care, believing those big names were the best, and I’d dismiss local products just because they were cheaper,” said Zhang, who, like Zhou, said she still buys some European brands. Now that she has found a less-expensive alternative that suits her, she said, “it’ll be tough to go back.”

China is also developing some accessible luxury brands priced comparably to Coach and Michael Kors. One is Songmont, known for its simple and modern designs in products such as a $529 shoulder bag.

Twelve-year-old Songmont was co-founded by Fu Song and Wang Jie, designers who graduated from China’s top art schools. Some of their first products, with Chinese brocade linings depicting auspicious Chinese motifs like dragons, phoenixes and butterflies, were fashioned by Fu’s grandmother and other craftspeople in western Shanxi province.

Like many other niche brands around the world, Songmont emphasizes sustainability and its sourcing of threads and oils for its leather bags from Germany and Italy. Its stores incorporate pine trees and rocks, and it brought on tennis star Li Na to promote the brand to channel a bold vibe.

The next question is whether the Chinese brands can go global. Shein and Temu have succeeded in e-commerce with rock-bottom prices on mostly Chinese-made goods, and some Americans have taken to Labubu, the viral troll-like toy from China’s Pop Mart.

Laopu, the jewelry retailer, opened its first overseas store in Singapore in June and will venture to Japan next, but a person close to the company questioned whether Western consumers were ready to embrace marketing based on traditional Chinese culture and aesthetics.

Bain consultant Claudia D’Arpizio said Labubu’s success suggested Gen-Z consumers were open to buying Chinese. However, she said, “for more of the core high-end luxury customers in the U.S. and in Europe, made-in-Europe is still very important.”

The contract win comes as Samsung is struggling to catch up with TSMC in the global foundry business

Samsung 005930 5.61%increase; green up pointing triangle Electronics will manufacture semiconductors for Tesla TSLA 3.52%increase; green up pointing triangle in a $16.54 billion multiyear deal, marking a major win for its sluggish foundry business.

The South Korean technology giant said in a regulatory filing Monday that the contract, equivalent to 7.6% of its 2024 revenue, will run until the end of 2033. It didn’t identify the client, citing a confidentiality agreement that also kept other terms undisclosed.

Tesla Chief Executive Elon Musk confirmed the deal with Samsung in a post on X, saying that Samsung’s new Texas fabrication facilities will be dedicated to making the U.S. EV maker’s next-generation AI6 chip. “The strategic importance of this is hard to overstate,” he wrote in the post.

Samsung’s shares rose as much as 3.5% on Monday, outperforming the benchmark Kospi’s slight decline. The stock was recently 3.2% higher, on course for its biggest one-day gain in a month.

The contract win comes as Samsung, the world’s largest memory-chip maker, is struggling to catch up with Taiwan Semiconductor Manufacturing Co. in the global foundry business despite years of investment. The foundry business involves making chips on a contract basis for customers such as Nvidia, Qualcomm and Apple, which design chips but don’t have their own factories to produce them.

TrendForce, a research firm tracking the semiconductor industry, reported last month that it estimates TSMC’s share of global foundry revenue increased to 67.6% in the first quarter from 67.1% in the previous quarter. Samsung’s share fell to 7.7% from 8.1% over the same period.

Some analysts say Samsung’s foundry business, relative to TSMC, is suffering from lower yields, which refer to the number of chips that can be harvested from a wafer. Samsung is also seen as struggling with slower-than-expected progress with its advanced manufacturing processes and insufficient demand from major customers.

The coming crypto crisis

Bipartisan backing of stablecoins will hurt America’s economy and its politics

My heart sank last week when I read that JPMorgan Chase was looking into lending against clients’ cryptocurrency holdings, even though we all knew the day was coming when crypto would make its way into the real economy.

Bitcoin, one of the digital assets banks may lend against, has been nearly four times as volatile as major indices since 2020. It has also had ties to terror funding, and I have yet to read anything that made me think it is more than a tool for speculators and criminals. But that hardly matters when the largest political donors are behind it.

Crypto political action committees have, over the last several years, spent tens of millions of dollars donating to not only Republican politicians but many Democrats too. This effort culminated a couple of weeks ago in the passage of the Genius Act. Legislation covering other crypto assets is expected later this year. I predict all this will not only cause the next financial crisis, but fuel even more political populism and unrest in the US.

It’s all too reminiscent of 2000, when advocates for over-the-counter derivatives descended on Washington begging to be properly “regulated” so that they could gift the world with financial “innovation.” What we got instead was a seven-fold increase in poorly regulated credit default swaps that culminated in the great financial crisis of 2008.

Now consider that US Treasury secretary Scott Bessent expects the stablecoin market to grow tenfold over the next few years, from a near-$200bn to a $2tn industry, one that will be embedded in everything from loan underwriting to Treasury markets.

As Democrat Elizabeth Warren, the ranking member of the Senate banking commission, told me last week: “We’ve seen this movie before,” with lobbyists “saying, ‘Please regulate us’ because they want the gold sticker of government confirmation that they are a ‘safe’ investment,” and politicians offering up bipartisan support for deregulation.

Indeed, you can draw a clear line from derivatives deregulation in 2000, and the broader Clinton era deregulation that eroded the barriers between trading and lending, to the weakening of Dodd Frank regulation for regional banks in 2018 (which contributed to the banking crisis of 2023), and now, the Genius Act. All of it was bipartisan.

Warren, who was brought to power by voters who felt betrayed by mainstream politicians of both stripes, waged an unsuccessful campaign to convince Democrats not to go along with Republican support for the Genius Act.

But money talks, and the crypto lobby has already shown tremendous power by spending $40mn to defeat critics like Sherrod Brown of Ohio, the former Senate Banking chair. While almost two-thirds of Senate Democrats voted against the Genius Act, the proponents — including influential Democratic senators like Virginia’s Mark Warner and New York’s Kirsten Gillibrand — were enough for the legislation to pass.

This worries me for four reasons.

First, the Genius Act (like the Commodity Futures Modernization Act of 2000) is being marketed as a way to make crypto safer, with stablecoins backed one to one by US dollars.

But that doesn’t make what is, more broadly, a volatile asset class any less volatile. Indeed, it may only make the overall market more so. Advocates talk about cryptocurrencies such as bitcoin as a hedge against traditional markets, but in fact, bitcoin is a “high beta” investment, meaning that it is highly correlated to the stock market. That means that both gains and losses relative to the S&P are amplified. Anything over a beta of one indicates a higher volatility than the market. A recent Fidelity report found bitcoin’s rolling 3-year beta to the S&P was 2.6.

Second, I can’t imagine a worse moment to encourage financial “innovation” than when markets, economics and monetary policy are so uncertain.

Consider what could happen if, over the coming months or years, the Fed must raise interest rates more sharply due to inflation. Markets would tank, as they always do when rates go up. Crypto would fall further and faster. Financial institutions (including any number of shadow banks) holding crypto on their balance sheets could then run into trouble, causing credit markets to freeze.

Suddenly, we’re facing echoes of 2008. Enter my third worry. Genius Act proponents say it will support the dollar and the Treasury market. But one could easily imagine a flight to safety into which crypto companies like, say, Tether (which has more US Treasury holdings than Germany) must sell T-bills into a down market to cover redemptions. Then you’ve got a fire sale, higher borrowing costs, and yet another disastrous situation in which Main Street is under pressure to bail out speculators.

But this time, it comes after more than two decades of growing cynicism with politics. This gets me to my final worry. Financial deregulation from the late 1990s under the Clinton administration set the stage for both 2008 and a loss of working people’s support for Democrats. That in turn set the stage for Trump’s rise.

Trump has now set the stage for our next financial crisis by backing (and of course, trading) crypto. What happens when we get financial chaos and more voter cynicism about mainstream politics at a time when there is less interest or ability for the government to buffer a downturn? No coin, and nothing stable.

CK Hutchison to invite ‘major’ Chinese investor for $23bn Panama ports deal

China’s state-owned shipping conglomerate Cosco in talks to join consortium

Hong Kong-based conglomerate CK Hutchison has said it plans to bring on a “major” Chinese investor for a consortium backed by US asset manager BlackRock as the company seeks Beijing’s approval for a $23bn ports sale that includes key assets in the Panama Canal.

While CK Hutchison did not name the investor, four people close to the discussions said China’s state-owned shipping conglomerate Cosco was in talks to join the group that includes Swiss-Italian shipping company MSC.

Under one of the options being discussed, Cosco would receive a stake in 41 global ports but not the two Panama Canal ports that US President Donald Trump has alleged of Chinese influence, said three of the people.

CK Hutchison shares rose 1 per cent on Monday following the announcement, while Cosco shares fell 2.5 per cent. CK shares have climbed 9 per cent in the past week on hopes for the deal. The companies did not immediately respond to requests for comment.

The Hong Kong conglomerate controlled by billionaire Li Ka-shing in March announced plans to sell its portfolio of 43 non-Chinese ports, including two in the Panama Canal, to a consortium led by Terminal Investment Limited, majority owned by MSC, and BlackRock’s unit Global Infrastructure Partners.

“The group remains in discussions with members of the consortium with a view to inviting major strategic investor from the PRC to join as a significant member of the consortium,” CK Hutchison said in a filing to Hong Kong’s stock exchange on Monday, cautioning “there can be no certainty that the discussions for the New Arrangements will reach a successful conclusion”.

An exclusive negotiation window between CK Hutchison and the consortium expired on Sunday after Beijing expressed frustration over the deal, arguing it would hand controlling power of strategic global ports to western investors.

Under initial deal arrangements, BlackRock would take a controlling stake in the two Panama ports, and Aponte family-controlled MSC would hold majority ownership of the rest of CK Hutchison’s 41 global ports including those in Europe, south-east Asia and the Middle East.

Adjustments to the “membership of the consortium and the structure of the transaction will be needed for the transaction to be capable of being approved by all relevant authorities”, the company said, adding it “intends to allow such time as is required for such discussions to achieve the new arrangements”.

China has been pushing for Cosco to be involved in the deal and the consortium is likely to accept, according to a person close to the deal, as it could help with getting it past the country’s antitrust regulator.

Beijing has hit out at the deal since its announcement in March, saying it could hurt its “national interests” by allowing the US to curb China’s trade and shipping.

Representatives of MSC and BlackRock held talks with China’s antitrust regulator, the Financial Times reported in June, as the companies looked at ways to secure a nod from Beijing on the transaction.

The sale of CK Hutchison’s two Panama ports at either end of the canal has proved controversial after Trump threatened in his inaugural speech in January to “take back” the canal and accused China of “operating the Panama Canal”.