From US-China chip woes to a fresh volcano eruption in Italy – Here’s your October 11 news briefing
To start off, we’re looking into:
The US and China butt heads over tech
When it comes to global tech, the semiconductor supply chain is pretty exclusive. Lately, China has been investing a lot in domestic tech to get in on the industry. Right now, TSMC leads manufacturing for the most advanced semiconductors. And Netherlands-based ASML is the only company that makes the machines for creating the most advanced chips. Plus, US companies like Lam Research, KLA and Applied Materials make other tools needed for chip manufacturing.
On Friday, the Biden administration enacted new export controls cutting accessibility of certain semiconductors to China, including any made outside the US using American equipment. These restrictions are expected to slow down China’s chip industry and its efforts to develop advanced military weapons, artificial intelligence, data centers and other areas that rely on these chips. Now, we’re seeing European and Chinese semiconductor stocks take a tumble.
That Russian megayacht in Hong Kong, though …
Apart from placing sanctions on Russia for its continued invasion of Ukraine, the US has taken things a step forward by sanctioning individual people. These sanctions are placed on Russian government officials and elites close to President Putin, and they restrict luxury assets like yachts and planes. These assets have been seized as they enter different jurisdictions all over the world, so many Russians have sought out friendly places to park their stuff and avoid these measures.
One Russian oligarch, steel mogul Alexey Mordashov, is one of those sanctioned people with a megayacht. And that yacht – Nord – docked in Hong Kong last Wednesday. The US has concerns that Hong Kong could become a safe haven for people trying to avoid sanctions. Now, US officials have warned Hong Kong that it could lose its status as a global financial hub if it doesn’t follow international laws.
China doesn’t want Starlink
Elon Musk’s company Starlink puts satellites in orbit that can shoot down WiFi signals, and then you have receivers on the ground that can pick up the signal. This makes it great for emergency situations since all you need is power on the ground and those receivers, and you’re good. That’s why Starlink has rolled out operations in Ukraine and is working on getting to Iran (though that’s a little more complicated).
But it doesn’t sound like Starlink is headed to China anytime soon. In an interview with the Financial Times, Musk said that Chinese officials reached out to him directly to ask that Starlink not be rolled out there. Though Musk didn’t say whether or not he agreed, there aren’t any public plans to take Starlink to the region.
China regulates internet access, and something like Starlink would let people get around the country’s regulatory bodies. But Musk also talks a lot about free speech, and it’s looking like he will end up with Twitter to show for it.
To end, we’ll look into:
Airlines plan to go net zero by 2050
In 2015, when world leaders gathered in Paris to come up with a climate agreement, the accord they walked out with left out two big industries from their emissions goals – aviation and shipping. This is a problem since airlines produce at least 2.5% of global emissions, and experts say that the effects of airline emissions are even more harmful than just regular carbon emissions.
At a meeting in Montreal, though, the International Civil Aviation Organization (ICAO) passed a plan unanimously that will supposedly set airlines on track to reach net zero status by 2050. But there are mixed feelings about that.
See, the ICAO is going to use a scheme called CORSIA, which basically means that companies start paying for carbon offsets if carbon emissions go over a certain threshold. There was some haggling over where that threshold would be since they planned to use the 2020 numbers, except then came along this little viral pandemic, and that messed up the travel industry numbers. They ended up going with 85% of 2019 carbon emissions.
Officials in the US were happy about the deal, with the US Secretary of Transportation Pete Buttigieg calling the agreement “is an important step forward," and US Climate Envoy John Kerry saying he was “thrilled" to see the ICAO commit to “a sustainable future with a long term climate goal."
But climate activists say the deal isn’t enough. According to Jo Dardenne from Transport & Environment, a campaign group, “The only way we’re going to solve it is to stop burning kerosene. The way that you stop burning kerosene is by pricing kerosene more effectively and investing in alternative solutions."
See, the problem is that there are more pollutants planes spit out than CO2, so claiming to go carbon neutral doesn’t really solve those problems, even if it mitigates the CO2 part.
In other words, this deal is a step forward, but maybe only a small one.
In other news …
📉Stocks: MSCI’s global gauge of stocks dropped 0.91% to 2,395.61.
- S&P 500 is down 0.75% to 3,612.39.
- Nasdaq Composite is at a 52-week low of 10,542.10 after dropping 1.04%.
- Dow Jones slipped 0.32% to 29,202.88.
- Hang Seng Index tumbled 2.95%, hitting 17,216.66.
🧠Some quick factors to bear in mind:
- The US stock market is being weighed down by tech stocks, which the Fed’s high interest rates have hit the hardest. Tech shares are also reacting to new controls limiting US exports of advanced semiconductors and related manufacturing equipment to China.
- And JPMorgan CEO Jamie Dimon warned that the US will likely fall into a recession in 2023, and it may not be just a mild economic contraction like some economists expect.
- Now, investors are waiting on key earnings and inflation reports released later this week.
- In the East, Chinese and Hong Kong tech stocks have tumbled with the US tech export restrictions announcements.
- Later this week, China will announce its GDP estimate for the third quarter and release inflation data.
- Russian missile attacks on Ukraine are also weighing heavily on investors’ minds, especially as Russia threatens to conduct more strikes.
👄Some comments and chatter:
- “These are very, very serious things which I think are likely to push the US and the world – I mean, Europe is already in recession – and they’re likely to put the US in some kind of recession six to nine months from now,” JPMorgan CEO Jamie Dimon said.
- Foreign Ministry Spokesperson Mao Ning said on Saturday that the US has been “abusing export control measures to wantonly block and hobble Chinese enterprises. Such practice runs counter to the principle of fair competition and international trade rules.”
🛢Oil: Oil prices sank by almost 2%, as investors anticipate a possible global recession, lowering fuel demand. US crude fell to US$91.13 per barrel, while Brent settled at US$96.19.
👛Bitcoin: Bitcoin dropped 1.47% to US$19,157.10 at the time of writing.
🤝Belarus joins Russia: Belarus leader Lukashenko said he ordered troops to deploy with Russia near its border with Ukraine. The European Commission has threatened sanctions against Belarus for grouping itself with Russia and spreading false information.
🌏Haitian officials want an international force to help: The government of Haiti supports Prime Minister Ariel Henry in asking for an international “specialized armed force” to aid in its fuel crisis. A group of gangs is blockading Haiti’s main fuel port, leading to massive shortages.
😷Shanghai lockdown before Party congress: As China’s CCP congress approaches this coming weekend, COVID cases are rising in Shanghai. The government is enacting new lockdowns in different neighborhoods to contain any outbreaks.
🚂US Rail Union rejects labor deal: A majority of almost 12,000 unionized railroad workers voted to reject the labor agreement created last month – the first by one of the dozen groups that must accept the deal or risk a strike. The Brotherhood of Maintenance of Way Employees had more than 6,600 members vote against it. Now, we can expect more bargaining during a “status quo” period before any strike happens.
🕊Taiwan doesn’t want war: Yesterday, Taiwan President Tsai Ing-wen said that war between Taiwan and China is “absolutely not an option.” She expressed a desire to open talks with China while still boosting Taiwan’s defenses. China has rejected the offer, saying the mainland and the island are inseparable.
😯Kanye, please no: Kanye West is making headlines for problematic behavior once again. After only just getting his Twitter account back on Saturday, West’s account was locked due to antisemitic remarks. He said he was going “going death con 3 On JEWISH PEOPLE.”
🏆Nobel Prize in Economics awarded: This year, the Nobel Prize for Economics was shared by three people: Ben S. Bernanke – the former Fed chair – and economists Douglas W. Diamond and Philip H. Dybvig. They conducted research on banks and financial crises.
♥Thailand toddler survives massacre: Last week’s massacre in Thailand ended with many children being killed. But one toddler experienced what her parents are calling a “miracle.” She remained asleep and covered by a blanket during the attack, surviving without injury.
🌋Volcano erupts in Italy: A volcano erupted on the Italian island of Stromboli (yes, you read that correctly), located near Sicily. There haven’t been any injuries or deaths reported. The Stromboli Volcano is one of the most active on Earth.
Written and put together by Jake Shropshire, Vanessa Wolosz, Christine Dulion and Krystal Lai