UK
Wage surge raises prospect of further interest rate hike


Dearbail Jordan - Business reporter, BBC News
Tue, August 15, 2023

Office workers

Wages grew at a record annual pace in the April to June period, according to new official figures.

Regular pay rose by 7.8%, the highest annual growth rate since comparable records began in 2001.

The stronger-than-expected increase has fuelled forecasts the Bank of England will be forced to raise interest rates again to calm inflation.

Inflation - which measures the rate at which prices rise - has eased but remains high at 7.9%.

Darren Morgan, director of economic statistics at the Office for National Statistics, which released the wage and employment data, said the latest figures suggested real pay growth, which takes into account the rate of inflation, is "recovering".

Prime Minister Rishi Sunak said there was "light at the end of the tunnel" for the millions struggling with the cost of living.

However, wage growth is not quite outstripping the pace of price rises. Mr Morgan told the BBC's Today programme that real pay growth was "still falling a little", dropping by 0.6%.

Labour's shadow work and pensions secretary Jonathan Ashworth said: "These figures confirm once again that the Tories are failing working people and businesses across Britain."

New inflation figures are due out on Wednesday and analysts expect them to show price growth slowed again during July to between 6.7% and 7%.

However, that remains far higher than the Bank of England's target to keep inflation at 2%. Stronger wages will stoke concerns that price rises will take longer to ease.

Sushil Wadhwani, a former member of the Bank's rate-setting Monetary Policy Committee, said financial markets were projecting that an interest rate rise at the next meeting in September was a "virtual certainty".

Markets are also forecasting that interest rates could now peak at 6% from 5.25% currently. Just a few days ago, rates were expected to peak at around 5.75%.

Mr Wadhwani, who serves on the chancellor's Economic Advisory Council, said: "The key thing is how much does the Bank need to encourage the process by raising interest rates further and I would argue that today's news is disappointing in the sense that it implies that the Bank has more work to do."

There are signs in the ONS's data that the UK jobs market is weakening. The unemployment rate rose from 4% to 4.2%, while the number of people in jobs ticked lower.

"The fall in employment in the three months to June and further rise in the unemployment rate will be welcomed by the Bank of England as a sign labour market conditions are cooling," said Ruth Gregory, deputy chief UK economist at Capital Economics.

However, she added, given that wage growth is still accelerating, she expects the Bank of England to increase its key interest rate again to 5.5%.

Commenting on another potential rise in interest rates, Mr Sunak said it was a matter for the Bank. But he added: "The best way to be able to bring interest rates down and stop them going up is to bring inflation down."

Chart showing wage growth and prices growth

Annual average pay growth in the private sector continued to outpace the public sector at 8.2%. Wages in the public sector grew at an annual pace of 6.2% between April and June.

The number of vacancies in the UK jobs market fell again, down 66,000 between May and July. However, there are still more than one million vacancies.

Finding enough people to fill vacancies is one of the biggest business barriers facing Candice Mason, the owner of Masons Minibus & Coach Hire in Hertfordshire.

"It is just dire," she told the Today programme. "It is not just me, it is every operator that I speak to, we just cannot recruit and staff our companies properly."

Ms Mason said the company had increased its wages to fill shifts left by employees who, following Covid lockdowns, decided they wanted a better work-life balance and therefore are working fewer days.

"But, of course, that created a bigger gap of needing to recruit anyway," she said. "It honestly has just been relentless since we came out of lockdown. It is the most difficult part of the business at the moment."
Triple lock

The wage figures are likely to intensify political debate over next year's rise in the state pension, which is governed by the so-called triple lock.

Government policy means the state pension rises the following April in line with either average wage growth, the inflation rate or 2.5% - whichever is higher.

It is based on wage growth between May and July, which the ONS will release next month. The inflation figure for August is also used to decide pension payments. This is released in September.

The latest set of figures signal that wage growth remains relatively high and rising. That is likely to prompt discussion over the potential increase in the state pension, and the allocation of government spending.

Pensioner groups say the state pension remains relatively low compared with some other countries.

The employment data also showed that the rate of those considered economically inactive edged lower to 20.9% between April and July.

Economically inactive people are those aged between 16 and 64 who are not looking for work.

Numbers swelled during the Covid pandemic. The ONS said on Tuesday that the number of people who were inactive because of long-term sickness had increased to a record high of 464,225.

But the overall rate dipped because more people shifted out of being economically inactive and into unemployment.

These are people who have been searching for work over the past four weeks or are available to start a job within the next fortnight.

An abandoned desert village an hour from Dubai offers a glimpse at the UAE's hardscrabble past

The Canadian Press
Tue, August 15, 2023 at 10:25 p.m. MDT·4 min rea


AL-MADAM, United Arab Emirates (AP) — Nestled in sand dunes an hour’s drive from the skyscrapers of Dubai, a desert village abandoned in the 1990s stands as an eerie relic of the rapid urbanization of the United Arab Emirates.

Built in the 1970s to house semi-nomadic Bedouin, the village of al-Ghuraifa was abandoned two decades later as oil wealth transformed the country into a global hub of commerce and tourism, home to the futuristic cities of Dubai and Abu Dhabi.

In recent years, the ghost village near the town of al-Madam in the Sharjah emirate has become something of a tourist attraction, offering an escape from the concrete jungles of the coastal cities and a glimpse at the Emirates’ hardscrabble past.

The village, which comprises two rows of homes and a mosque, “can teach us a lot of the modern history of the UAE,” said Ahmad Sukkar, an assistant professor at the University of Sharjah who is part of a team researching the site.

It was built as part of a public housing project after the 1971 formation of the United Arab Emirates, a federation of seven sheikhdoms. The discovery of oil 13 years earlier was just starting to reshape the country.

The village housed around 100 members of the al-Ketbi tribe, Sukkar said. They were one of several Bedouin tribes that until then had led a semi-nomadic existence, raising animals, traveling among the desert oases and visiting Dubai and Abu Dhabi when they were small port towns reliant on fishing and pearl diving.

The modern cement houses, built to ease the transition to settled life, featured local flourishes. The interior walls were brightly colored, and some were adorned with mosaics. The homes also featured spaces where village elders could host local councils, known as “majalis” in Arabic. One house had wallpaper depicting a lush green landscape, a stark contrast to the monotonous sandscape outside.

It's unclear what exactly sparked the exodus just two decades after the homes were built.

In local lore, the residents were driven away by evil spirits, but Sukkar says it's more likely that they left to seek a better life in the UAE's fast-growing cities. The village had limited access to electricity and water, and was buffeted by sandstorms. Families would have also had to contend with a long commute across the desert to reach government jobs and schools in Dubai.

Nowadays the desert is slowly reclaiming the village. Drifts of sand have blown into the homes, and in some rooms, they obscure walls and nearly reach the ceiling. Only the mosque remains as it was, thanks to regular sweeping by maintenance workers from nearby Al-Madam.

Some descendants of the camel-mounted Bedouin who once plied the desert sands still reside in the Emirates' rural stretches, though many now live in cities with glimmering skyscrapers, cavernous, air-conditioned malls and a sprawling network of modern highways. Expatriates from all corners of the earth make up the vast majority of the UAE’s population, and some have taken an interest in its humbler past.

On a recent day, tour guides could be seen leading groups of visitors through the abandoned village. It’s also been the setting for music videos and social media posts featuring the foreign models, fancy cars and displays of opulence for which Dubai is now best known.

“I wonder why they left,” said Nitin Panchal, an Indian expatriate visiting the site. “Could it be a genie, could be black magic? We’ll never know.”

The municipality recently installed fencing around the perimeter, along with a security gate, garbage bins and a parking lot. Past visitors had left graffiti, scraped décor from the walls and climbed atop fragile roofs for photos.

The new measures have drained some of the mystery from the site and raised the prospect of it becoming yet another tourist attraction in a country filled with them.

Danny Booth, an expatriate from the Isle of Man, a British Crown Dependency in the Irish Sea, said he had decided to “come and have a look before things start to change here.”

“Sometimes these places are better left undisturbed, as they lose their charm when they become crowded,” he said.

Nick El Hajj, The Associated Press

Sand is piled in a house at the Bedouin village of al-Ghuraifabout 100 km, 62 miles, southeast of Sharjah, United Arab Emirates, Sunday, July 9, 2023. Built-in the 1970s, the village was abandoned two decades later as oil wealth transformed the country into a global hub of commerce and tourism, home to the futuristic cities of Dubai and Abu Dhabi. 

(AP Photo/Kamran Jebreili)

OUTSOURCING

Tech company behind Kentucky school bus problems had similar issues in Ohio last year

The Canadian Press
Tue, August 15, 2023 



LOUISVILLE, Ky. (AP) — The company behind a disastrous change to a Kentucky city's school bus routes that resulted in more than a week of canceled classes had similar problems in two cities in neighboring Ohio last year.

Touting its connections to the Massachusetts Institute of Technology, bus-routing vendor AlphaRoute pitched its mathematical models and machine-learning technology as a way of saving money and smoothing out complex bus routes in Louisville, Kentucky, and school districts across the U.S.

But real-world problems often got in the way.

Columbus began running new routes planned by AlphaRoute in fall 2022 after entering into a three-year, $1.6 million contract. But there were problems from the beginning. Most importantly, the district was not able to make adjustments quickly with the company’s software. It decided to pivot mid-year to the software it was previously using from another company, Versatrans, said district spokesperson Jacqueline Bryant.

Cincinnati Public Schools told The Associated Press in an email that it was under contract with AlphaRoute for less than one year, beginning in April 2022 at a cost of $150,000.

"AlphaRoute provided route analysis and made efficiency recommendations. CPS was not satisfied with the results and had to reroute and physically evaluate each stop,” according to the statement.

Several other districts listed as partners on the company’s website said they either no longer worked with AlphaRoute or never were its customers. The school district in Providence, Rhode Island, a listed partner, said it considered the company's proposal in 2021 but “went in another direction.”

AlphaRoute said in a Tuesday night written statement that it recognized the Kentucky school cancellations have been “terribly disruptive” and that it has had a team in Louisville helping to address them since Saturday.

“We at AlphaRoute have been working alongside the district to fix as many issues as possible as fast as possible, so that service is greatly improved when schools reopen on Friday,” it said.

In Louisville, the transportation changes recommended by AlphaRoute for Jefferson County Public Schools proved disastrous on the first day of school. Some students were not picked up in the morning while others did not arrive home until nearly 10 p.m.

The fiasco resulted in hungry and tired children, angry parents and exasperated politicians. Schools had to be closed to reevaluate the transportation plan, and students will have missed more than a week of school when they begin returning on Friday as part of a staggered reopening. The fallout has included a call from some state lawmakers to explore splitting up the state’s largest school district.

Like other districts, Jefferson County turned to AlphaRoute for ways to increase efficiency and cut the number of bus routes after a nationwide driver shortage left them scrambling for solutions to transport students. The company, based in Waltham, Massachusetts, uses computer algorithms to map out bus routes and stops.

In a March 2021 letter to Jefferson County seeking to justify its use as a single contractor, company co-founder and CEO John Hanlon outlined how his firm could solve some of the “daunting challenges” of a busing system he described as inefficient and one of the most complex in the country, with 65,000 daily bus riders.

Hanlon touted AlphaRoute as the only company capable of both rerouting buses and planning staggered school start times. Superintendent Marty Pollio championed the idea, saying the combination would allow for more efficient use of buses and let teenagers sleep longer so they could be more alert in school.

A researcher who studies automation bias — in which people are prone to overly trusting the abilities of automated systems, from factory robots to ChatGPT — said what happened in Louisville fits into a broader problem with the use of artificial intelligence technology.

Students having to walk long distances to bus stops early in the morning might have been “algorithmically correct” because it satisfied the objectives and constraints of the algorithm under Kentucky law, “but in reality parents would not want their kids walking that far at 6 a.m.,” said Aaron Schecter, a professor of information management systems at the University of Georgia.

Similarly, an algorithm might satisfy its goal of minimizing total routes, to lessen the number of drivers, at the expense of another criterion such as the time it takes to transport students. Schecter said machine-learning algorithms such as AlphaRoute’s are typically trying to optimize an objective and can overlook “worst case” harms even if the average result is satisfactory.

“The underlying principle here is that people were wooed by something that seemed sophisticated, and they trusted that AI would be a magic fix,” said Schecter, who hadn't evaluated the specific technology used.

AlphaRoute's Hanlon is the former chief operating officer of Boston Public Schools and has emphasized the company's origins as a partnership between MIT researchers and the school district.

In a 2019 scientific paper, a team lead by Dimitris Bertsimas, an MIT professor who is also a co-founder of AlphaRoute and its parent company, Dynamic Ideas LLC, said that using an algorithm for selecting the best school start times would empower Boston leaders “to make decisions based not on the political whims of special interest groups but on an objective standard agreed on by the community.”

News articles at the time said the researchers helped Boston cut 50 buses for a savings of $5 million, although transportation officials did have to vet and tweak the routes before they were used.

However, Boston only ever used routing software in a limited capacity and has no relationship with AlphaRoute today, district spokesperson Max Baker said.

In a follow-up paper in 2020, Bertsimas and his team acknowledged that Boston didn’t follow its recommendations for changed bell times and elaborated on a number of routing challenges, from the city’s meandering topography to the equity-minded policies tracing back to racial desegregation efforts of the 1970s. But it said the experiment led it to develop a new software system that it was showing to nearly 30 school districts across 17 states.

Nearly 500,000 school buses nationwide transport 25 million students, said Molly McGee-Hewitt, executive director with the National Association for Pupil Transportation. The driver shortage is a real problem, she said, but one that can be solved by offering competitive pay and benefits and reducing bureaucratic barriers to entry.

“You can’t have world-class schools without world-class infrastructure, and that includes transportation," she said.

Routing can be complicated, especially in districts that are transporting children across town to magnet schools, charter schools, special needs schools and even private schools, McGee-Hewitt said. Various software vendors have been successfully helping schools manage that challenge for years.

In a news conference Monday, Jefferson County Public School Superintendent Pollio said one significant deficiency was that the recommended routes weren’t accounting for the latest information. He said AlphaRoute gave the district the new routes earlier in the summer, but since then thousands of stops had been added as new students enrolled ahead of opening day or parents requested a different bus stop.

“When stops are added to routes, we did not properly add the time that was needed for a bus driver to complete that,” he said, explaining that those extra minutes were adding up.

“We had some room for error in our former schedule. We do not have room for error now,” he said.

In assessing fault for the opening day fiasco, Pollio has said he’s “not going to put it on the company. ... I said it from the very beginning, I take responsibility for it myself."

_____

Loller reported from Nashville, Tenn. AP Technology Writer O'Brien reported from Providence, Rhode Island.

Travis Loller, Matt O'brien And Bruce Schreiner, The Associated Press

Crashing markets thinned the ranks of America's millionaires last year as global wealth shrank for the first time since 2008


Phil Rosen
Tue, August 15, 2023

Private yachts docked in front of a yacht club.Marielle Descalsota/Insider

Global wealth declined in 2022 for the first time since 2008, UBS and Credit Suisse economists said Tuesday.


Americans were hit hardest as stocks and bonds tumbled throughout the year, the banks said.


Roughly 1.7 million US adults lost their status as millionaires.

Global wealth declined last year for the first time since 2008, and Americans in particular took the biggest hit as stocks and bonds sold off and currencies fluctuated, according to a wealth report from UBS and Credit Suisse economists.

Notably, about 1.7 million US adults lost their status as millionaires in 2022. Plus, 17,260 fell out of the ultra-high net worth bracket of those worth $100 million or more.

The S&P 500 crashed by 19% in 2022, and it was one of the 10 worst years for the stock market in nine decades. The losses erased most of the meteoric gains seen in 2021, when the market grew by more than 26% and wealth surged.

"[F]inancial assets contributed most to wealth declines in 2022 while non-financial assets (mostly real estate) stayed resilient, despite rapidly rising interest rates," the economists wrote. "But the relative contributions of financial and non-financial assets may reverse in 2023 if house prices decline in response to higher interest rates."

According to the report, in total dollar terms, global wealth slipped 2.4% to about $454.4 trillion, and much of that was due to shifting currency values. Europeans felt the bite from weaker currencies, while Russia and Latin America benefitted from the shifts. Russia, amid its war in Ukraine, added 56,000 millionaire amid a strengthening of the ruble.

Meanwhile, Switzerland and Hong Kong boasted the highest level of wealth per adult.

On a country by country basis, the US saw the biggest losses in 2022, as the country shed $5.9 trillion, compared to its $19.5 trillion rise the prior year. Japan, China, Canada, and Australia also saw losses exceeding $1 trillion.

The banks project that global wealth will rise by 38% over the next five years to hit $629 trillion by 2027.

"Growth by middle-income countries will be the primary driver of global trends," the economists maintained. "We estimate wealth per adult to reach USD 110,270 in 2027 and the number of millionaires to reach 86 million while the number of ultra-high-net-worth individuals (UHNWIs) is likely to rise to 372,000 individuals.

Many offices buildings are going to be 'obsolete' and losses are headed for banks and investors holding real estate debt, property exec says

Jennifer Sor
Tue, August 15, 2023 

Robert Libetti/ Business Insider

The highest tier of office buildings will continue to do well, property exec Scott Rechler said.

"And then there's Class B office or lower-grade Class A that effectively is going to become competitively obsolete."

That could lead to losses at the bank level and investor level, he warned.

A huge chunk of office buildings are going to be "obsolete," leaving real estate investors and banks left to weather the losses, according to Scott Rechler, the CEO of RXR Realty.

In an interview with CNBC on Tuesday, he pointed out that not all offices are the same, saying that the highest tier of buildings, known as Class A, will continue to do well as more people return to in-person work.

"And then there's Class B office or lower-grade Class A that effectively is going to become competitively obsolete," Rechler added.

The US office vacancy rate just rose to an all-time-high of 13.1% at the end of the last quarter, according to National Association of Realtors data.

Lower-tier buildings could be repriced and turned into other forms of commercial real estate, such as such as apartment buildings, but Rechler noted that such conversions aren't easy and that only so many offices can be converted.

"If you really think about it, if you're trying to attract your workforce back to the office and you want to collaborate, you want to be in places that have energy, that have amenities, places where people can gather together … Class B, dark buildings, bad infrastructure, bad light, bad air, people don't want to be in those buildings," he told CNBC.

Banks are already scooping up distressed office space and other commercial real estate, with Goldman Sachs among the list of lenders who are raising billions to buy up properties, the Wall Street Journal reported.

Over time, more distressed inventory will hit the market, Rechler predicted, which could lead prices to drop.

"I think there are going to be losses at the bank level, there are going to be losses at the investor level," he warned.

But for regional banks, multifamily properties are actually a bigger commercial real estate risk than office buildings, because rents have been relatively flat recently while interest rates have spiked, Rechler said.

Experts have warned of a catastrophe coming for commercial real estate for months, as there's around $1.5 trillion worth of debt in the sector that will soon hit maturity. That could spell trouble for property owners who will need to refinance their loans, though banks are pulling back on lending and are unlikely to issue debt at low rates.

Those headwinds could culminate in a major commercial real estate crash, which could involve office prices plunging 35% over the next few decades, one research firm warned.

Myanmar Eyes Surge In Rice Exports After India Curbs Supply

Khine Lin Kyaw
Tue, August 15, 2023 



(Bloomberg) -- Myanmar expects rice exports to surge in coming months as curbs on Indian sales and a spike in Thai and Vietnamese prices force buyers to hunt for other origins.

The tightening in global supply should help revive the Southeast Asian nation’s rice shipments, which slumped 56% in the first four months of the fiscal year, and bring it closer to its annual goal of earning $1 billion from exports of the grain, Ye Min Aung, president of the Myanmar Rice Federation, said in an interview last week.

Myanmar exported about 320,000 tons from April to July, earning just $138 million, according to data from the federation, after the government decided to prioritize selling higher-grade rice. But prospects improved last month when India, the world’s top exporter, banned a substantial portion of its overseas sales to keep a lid on domestic prices ahead of a general election due early next year. That’s pushed up prices in some of Myanmar’s regional competitors.

“We hope to take advantage, even though we’ll maintain our focus on exporting only higher-quality varieties,” Ye Min Aung said.

Myanmar is another nation troubled by food insecurity, a situation worsened by political instability since a military coup in 2021, and its export policy is designed to conserve domestic supplies. While sales of better-quality grain can reap as much as $700 a ton compared to $300 or $400 a ton for lower grades, according to Ye Min Aung, it also limits customers to relatively wealthy countries.

Myanmar earned over $800 million from rice sales in each of the two previous fiscal years, according to the federation, and its biggest buyers include China, the Philippines and Belgium. The US Department of Agriculture ranked it as the world’s sixth-biggest exporter last year.

China Is Hiding More and More Data From the Rest of the World

MORE IMPORTANTLY FROM THEIR OWN PEOPLE

Bloomberg News
Tue, August 15, 2023 


(Bloomberg) -- China’s abrupt decision to pause releasing data on its soaring youth jobless rate this week was the latest sign the Asian giant is increasingly restricting sensitive information — especially when it’s unflattering to the nation’s faltering economy.

The unemployment rate of people aged 16-24 fell into that prickly category, after hitting a record of 21.3% in June. One fifth of young people being out of work is a troubling statistic for a ruling Communist Party obsessed with maintaining social stability.

As China’s economy battles a slew of threats to its economic expansion target for 2023, a wider range of data is being deemed unsuitable for public consumption. President Xi Jinping’s ideological battle with the US has also motivated Beijing to ringfence data it believes could advantage the Biden administration.

While much of China’s vanishing data disappears quietly, the decision to hold back the jobless rate was announced at a press briefing. The National Bureau of Statistics has a history of halting releases that are uncomplimentary for the economy, but they don’t usually make the decision public.

Here’s a look at some of the datasets that have been restricted recently:

Youth Unemployment

The government last month indicated that July’s figure would probably increase, setting another record. Then suddenly on Tuesday, officials said they would pause publishing the data, citing the need to iron out the method for how it is assessed.

Calculating the actual employment rate is complex and it’s plausible the government decided the changing nature of the economy and labor patterns means their current model isn’t accurately reflecting reality. However, the timing of the move raises questions, given how the number was set to hit another record. The authorities indicated they may resume publishing the data in the coming months.

Land Sales

Numbers showing the amount of land developers bought and the price they paid have been missing from the monthly release. The data series goes back to 1998. The move came as the amount of land sold for development slumped more than 50% last year.

That decline indicated the housing crisis was worse than the government has said. Local government revenue from land sales last year only fell 23%, according to official figures.

Currency Reserves

Another curious data point is the amount of money the government holds in official foreign exchange assets, which has held remarkably steady since 2017. That’s despite China running an increasingly large trade surplus over that period, which should have led to an increase in reserves.

Brad Setser, the former US trade and Treasury official, suggests that half of the actual reserves are “hidden.” Many of the nation’s reserves don’t show up in the official books of the People’s Bank of China because they’re stashed in “shadow reserves,” appearing among the assets of entities such as state commercial lenders and policy banks, he said.

Despite the growing trade and current account surplus, the currency has also been stable, indicating that some of that money is likely being used to intervene in currency markets.

Bond Transactions

Even some data from the private sector has become unavailable. In March, the bond market was plunged into chaos after fixed-income brokers stopped supplying aggregated bond quotes to data vendors long relied on by traders. Transactions plunged by 30% to 60% from one day to the next after the two-day halt, which some media said was due to regulators trying to address data security concerns.

In May 2022, the main bond trading platform for foreign investors quietly stopped providing data on their transactions after record outflows in the nation’s $20 trillion debt market.

Some corporate registration data are also no longer available to overseas clients. Meanwhile, Beijing has been investigating consultants and researchers who help global investors understand China.

Covid Deaths

Cremations in one of China’s most-populous provinces surged by 72.7% year-on-year in the first quarter, Chinese financial media outlet Caixin reported in July, citing official data released by Zhejiang province.

That gave a rare insight into the scale of mortality after the government’s sudden relaxation of coronavirus restrictions in December. And then the data vanished. The official statement was later removed from the internet, and Caixin deleted its report on that release.

It is unknown how many people actually died from Covid during the exit wave that began late last year as the country abandoned its attempt at stopping all infection. The government reported that there were nearly 60,000 Covid-related deaths in the first five weeks of that outbreak.

Academic Information

Since April 1, overseas access to parts of the popular academic database China National Knowledge Infrastructure has halted. That means foreign academics can no longer access Chinese dissertations, patents, statistics and conference proceedings, the University of California, Berkeley said in an online notice.

Others reported that access to statistical yearbooks and Chinese census data would also be affected. The change in access was to comply with a 2022 law on cross-border data transfer, according to a statement from the Chinese data provider.

Politicians’ Biographies

It isn’t just economic data that’s harder to come by. Official biographies of senior politicians and officials have shrunk, with the new format only giving basic personal information in a few sentences instead of the detailed resumes that were common before.

There’s also been at least three months when the Communist Party didn’t publish a readout from its top decision-making body since Xi took a third term last October. The Politburo normally meets every month and releases a statement with some details of what was discussed. That didn’t happen last November, January or May.

China’s foreign minister was also abruptly removed from his role without explanation in July, after disappearing from public view for a month, adding to the information vacuum in elite Chinese politics.

Social media users were cynical about the government’s latest swipe at information freedom on Tuesday. One popular post suggested the authorities had simply run out of options.

“You thought you couldn’t get anything out of the toolbox except the megaphone,” the post read. “Then after some digging, you found a blindfold.”

Bloomberg Businessweek

China Markets Approach Grim Milestones as Selloff Spirals

Bloomberg News
Tue, August 15, 2023 


(Bloomberg) -- A selloff in Chinese assets deepened on Wednesday, with key equity gauges on track to erasing gains seen since last month’s Politburo meeting and the yuan hovering near a 16-year low.

The MSCI China Index dropped as much as 1.3% amid mounting concerns over economic growth. The Hang Seng China Enterprises Index also fell, set to close below where it was before policy vows at the July political gathering triggered a rally. The Hang Seng Index slid more than 1%, inching closer to a technical bear market.

Pressure is building across China’s financial markets given a slew of disappointing economic data, renewed concerns about the property sector and an unfolding crisis in the nation’s shadow banking system. All of this is creating deflationary pressure that threatens to undermine corporate profit. Investors are calling for more aggressive easing by Beijing as the incremental policies have so far failed to revive confidence.

“China’s current recession-like conditions, characterized by deflationary pressures, have significant implications for both its domestic economy and its global interaction,” said Manish Bhargava, a fund manager at Straits Investment Holdings in Singapore. “Investors might become wary of allocating funds to China due to concerns about the economic downturn and reduced potential returns.”

Market reaction to a spate of stimulus steps has been muted, underscoring the extent of investor pessimism. The weakness in the nation’s assets persisted even as the People’s Bank of China cut a benchmark interest rate on Tuesday in a surprise move to shore up sentiment. A report that policymakers are considering cutting the stamp duty on stock trades also failed to move the needle.

The price actions today were “another classic day” for China stocks despite the supportive measures, said Willer Chen, senior analyst at Forsyth Barr Asia Ltd. “People are losing patience. With just piecemeal policies, they are getting more and more concerned about the economy.”

The PBOC on Wednesday moved again to boost fragile sentiment with a stronger-than-expected reference rate for the yuan and the largest injection of short-term cash to the financial system since February. The measures came as the onshore unit fell toward its weakest in 16 years against the dollar.

The central bank is tasked with keeping the currency stable while aiming to boost the economy — two ambitions that can often be in conflict. A weak yuan may dampen the appeal of China assets to overseas investors, while local firms may be reluctant to convert foreign currencies into yuan given the wide yield differential with markets like the US.

Dimming Outlook

The outlook for China’s economic growth is dimming, with investment banks around the world cutting their 2023 forecasts. JPMorgan Chase & Co.’s team lowered its full-year projection to 4.8%. As recently as early May, the bank had been predicting a 6.4% expansion, among the highest calls.

Sentiment was hit further on Wednesday as the latest data showed home prices falling again in July. The property sector’s turmoil has been at the center of China’s economic troubles given its importance to growth and implications across household wealth and the financial system.

“Negative China sentiment has been reverberating through markets and PBOC’s rate cut has again suggested that calls for a massive stimulus may be misplaced,” said Charu Chanana, market strategist at Saxo Capital Markets.

--With assistance from Abhishek Vishnoi.

Hackers could now steal passwords over Zoom by listening to keystrokes using AI — and they'll be right 93% of the time, study says


Kai Xiang Teo
Tue, August 15, 2023 

Hackers could now steal passwords over Zoom by listening to keystrokes using AI — and they'll be right 93% of the time, study says.Getty Images

AI can steal passwords from keystroke sounds recorded over Zoom with up to 93% accuracy, per a new study.


The accuracy rate ratcheted up to 95% when keystrokes were recorded using an iPhone 13 mini.


"Passwords containing full words may be at greater risk of attack," per the study.

An AI tool could decipher text — including passwords — from keystroke sounds recorded over Zoom and be right over nine times out of ten, a group of researchers said in a paper published on August 3.

An AI model developed by the researchers showed a 93% accuracy rate in deciphering keystrokes from a recording of a Macbook's keystrokes made over video conferencing software Zoom, according to a group of researchers affiliated with Durham University, the University of Surrey, and the Royal Holloway University of London.

Moreover, the accuracy rate rose to 95% when keystrokes were recorded using an iPhone 13 mini.

"Acoustic side-channel attacks" are a growing threat to keyboards, the researchers said. Side-channel attacks are used by hackers to exploit information — like how much power your computer is using or the keystroke sounds it makes — rather than directly attacking the system's code.

For their experiment, the team used a 2021 16-inch MacBook Pro, highlighting its consistent keyboard design with other recent MacBook models.

Their AI tool was based on "deep learning" — a subset of machine learning that trains computers to analyze data similarly to how the human brain functions.

The study also highlighted potential countermeasures. "Passwords containing full words may be at greater risk of attack," per the study's authors. Touch typing and adding background noise also seemed to lower the accuracy rate of the AI tool.

The authors said that while these types of attacks are under-studied, they have a long history. "Acoustic emanations" were even mentioned as a vulnerability in a 1982 partially declassified NSA document, the authors wrote.

The study adds to recent concerns over how AI tools could be used to compromise security and privacy.

AI tools can make online scams harder to detect because AI makes it easier to personalize scams for each target, Insider reported last Tuesday.

Two specialists raised the alarm in 2019 over how the advancement of AI and 5G technology would heighten vulnerabilities in internet-connected devices, amplifying cybersecurity threats.

The study's authors did not immediately respond to a request for comment from Insider, sent outside regular business hours.

Woodside, unions remain at odds over wages at Australia's largest LNG facility

Reuters
Tue, August 15, 2023 

Australia's Woodside Energy Group's exhibition booth is seen at the World Gas Conference 2022 in Daegu, South Korea

SYDNEY (Reuters) -Woodside Energy said "positive progress" was being made on wage disputes at Australia's largest liquefied natural gas (LNG) facility even as a union alliance said key differences remained ahead of further talks next Wednesday.

Woodside's North West Shelf, along with Chevron's Australian LNG operations of Gorgon and Wheatstone, supply about 10% of the global LNG market.

About 99% of workers at offshore platforms that supply gas to the Woodside facility have voted to authorise the union to take industrial action, with any strike potentially disrupting shipments and sending prices for the super-chilled fuel higher.

After the vote, the union can decide whether to go ahead with any action, which must take place within 30 days.

"Positive progress is being made and the parties have reached an in-principle agreement on a number of issues that are key to the workforce," a Woodside spokesperson said in an emailed statement, following a round of negotiations on Tuesday.

"We continue to engage actively and constructively in the bargaining process."

The Offshore Alliance, which combines the Maritime Union of Australia and Australian Workers' Union, however, said differences on key issues remained.

"Woodside are well off the pace on key bargaining issues including job security and remuneration," the union said in a message posted on Facebook on Wednesday.

Further talks between the unions and Woodside are scheduled for next Wednesday, according to a person with knowledge of the matter. They declined to be named as they were not authorised to speak to the media.

China and Japan are the top two buyers of Australian LNG, followed by South Korea and Taiwan.

Last week, Australia's labour regulator cleared the way for possible action by Chevron workers if they vote in favour of it. The Offshore Alliance said in a social media post on Tuesday that members at the Chevron sites would begin voting "over the next week".

Chevron did not immediately respond to a Reuters request for comment.

Possible industrial action could range from stopping work for 30 minutes to an all-out strike, and the unions have the final say on whether to carry out any action, even if members vote in favour of it, according to the regulator.

Employers must also be given seven days' notice ahead of any industrial action.

(Reporting by Renju Jose and Lewis Jackson in Sydney, and Florence Tan in Singapore; Editing by Jacqueline Wong and Miral Fahmy)

FORDISM (2.0) IS GLOBALIZATION

VinFast: Vietnam EV maker valued at more than Ford or GM


Mariko Oi - Business reporter
Tue, August 15, 2023 

The Vinfast VF6 all-electric vehicle is on display at the 2022 Los Angeles Auto Show.

Vietnamese electric vehicle (EV) maker VinFast's stock market valuation has soared above Ford and General Motors (GM) on its first day of trading.

Shares in the firm, which has yet to make a profit, closed above $37 (£29) each in their New York's debut.

That gave VinFast a stock market valuation of $85bn, much higher than Ford's $48bn and GM's $46bn.

It comes as motor industry giants and newer manufacturers fight for a slice of the booming EV market.

The listing added around $39bn to the wealth of VinFast's chairman and founder Pham Nhat Vuong, who was already Vietnam's richest man.

Regulatory filings show he controls 99% of the firm's outstanding shares, mostly through Vietnam's largest conglomerate, Vingroup JSC.

That limits the number of shares available for other investors to trade, which can lead to large price swings.

Trading in VinFast was relatively thin on Tuesday, with around $185m worth of its shares changing hands.

"Investors are continuing to believe that the future is in electric and that a low-cost East Asian country will emerge as a competitor in the US," said Bill Russo, Founder and CEO of Shanghai-based Automobility.

"The markets believe that given geopolitics that Vietnam, not China, will be that country."

Instead of a conventional share sale, VinFast went public using a shell company, or special purpose acquisition company (Spac).

Spacs are often used by start-ups to speed up the often slow and expensive process of taking a private company public. In simple terms, it means merging a company that is not on a stock exchange with one that is.

Several EV makers - including Lordstown Motors and Faraday Future - have gone public using Spacs in the last three years.

However, both firms have lost more than 90% of their stock market value since their mergers.

Mr Russo said VinFast could be different because "they are primarily backed by Vingroup, which gives them access to funding from a business that has a proven track record of growth".

"Most EV start-ups fail because they do not have profitable core and external funding eventually runs out as they burn capital far faster than they generate cash," he said.

But VinFast also faces tough competition as major players fight for market domination.

Market leaders - including Elon Musk's Tesla and BYD, which is backed by veteran investor Warren Buffett - have been cutting prices to boost sales.

In the first half of the year VinFast delivered 11,300 EVs, according to a company presentation. By comparison, Tesla delivered more than 889,000 vehicles in the same period.

"Tesla will continue to be the clear leader in EVs but there will be many winners," said Dan Ives of Wedbush Securities.

"VinFast has built a strong foundation for EV success."

Tycoon’s Fortune Soars $39 Billion on Eyebrow-Raising SPAC

Anders Melin
Tue, August 15, 2023 


(Bloomberg) -- Its electric cars have been dogged by poor reviews and it’s on pace to make fewer sales this year than General Motors Co. does in a week.

Yet that hasn’t stopped VinFast Auto Ltd. from becoming the latest beneficiary of speculative fervor around newly minted SPAC deals — many of which end up tumbling over the long-term.

The Vietnamese automaker’s shares surged 255% Tuesday when it debuted on the Nasdaq Global Select Market, pushing the company’s market capitalization above that of industry giants GM and Mercedes-Benz Group AG. It added $39 billion to the net worth of chairman Pham Nhat Vuong, whose fortune now stands at $44.3 billion, according to the Bloomberg Billionaires Index.

At the current market capitalization, VinFast is about six times bigger than Chinese EV maker XPeng Inc., which went public in the US in 2020.

VinFast is the latest example of a thinly traded company soaring on its debut after completing a merger with a special-purpose acquisition company. Many have experienced eye-popping rallies that ended a few trading sessions after the merger closed, as traders look to make a quick profit on companies with limited shares — meaning the jump in Vuong’s wealth may be short-lived.

De-SPACs — the term for firms that go public via a SPAC merger — that have made their debut this year have seen a median slump of about 45%, with 18 of them wiping out more than 70% of their value, according to data compiled by Bloomberg.

Regulatory filings show Vuong, Vietnam’s richest man, directly and indirectly controls 99% of the company’s outstanding shares, mostly through his conglomerate, Vingroup JSC. That large stake limits the shares available for other investors to trade, meaning the stock is prone to large swings. The Bloomberg Billionaires Index hasn’t previously counted Vuong’s stake in the carmaker, which he founded in 2017.

“The stock will be very volatile until more shares are available for trading,” said Jay Ritter, a finance professor at University of Florida.

If VinFast can hold onto its gains, it will be in a somewhat unique position given the dismal performance of other electric automakers taken public via SPACs, including Lordstown Motors Corp., Nikola Corp. and Faraday Future Intelligent Electric Inc., all of which lost more than 90% of their market value since their mergers.

VinFast, though, has been weighed down by operational problems. In May, it recalled all the electric sport utility vehicles shipped to the US over a software malfunction and there have been some negative reviews. The company also cut some of its US workforce, sales have been modest and its net losses are widening.

“There have been some negative reviews,” VinFast Chief Executive Officer Le Thi Thu Thuy told Bloomberg Television Tuesday. “We take them very close to our heart, we reflect on the feedback from those reviews and we make our vehicles better.”

In the six years it has been operating, VinFast has taken in $9.3 billion of financing to cover its operating and capital expenditures, much of it coming from Vuong’s other businesses.

Still, the company, which began building a factory in North Carolina last month, forecasts sales will reach 45,000 to 50,000 this year and Vuong predicts it will break even by the end of 2024.

VinFast had been planning a normal initial public offering, but scrapped that and opted for a SPAC listing after investor appetite for money-losing startups waned over the past year. Instead, it agreed to merge with blank-check company Black Spade Acquisition Co., founded by casino mogul Lawrence Ho.

Vuong, who studied geo-economic engineering in Russia, made his fortune in the 1990s in Ukraine with a business making instant noodles. The Hanoi-born businessman sold it to Nestle SA in 2010, nine years after he had returned to Vietnam.

By that time, he’d already established publicly-traded Vingroup JSC, focused on real estate, resorts, schools, shopping malls and more. The firm booked revenue of $4.4 billion last year, and remains a major shareholder in VinFast.

--With assistance from Bailey Lipschultz, Filipe Pacheco and Nguyen Kieu Giang.

(Updates with stock comparison in paragraph four and comment in paragraph eight.)

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