From China’s bursting housing bubble to Prince Charles’ “Dear, oh dear" – Here’s your October 14 news briefing
To start off, we’re looking into:
China’s housing bubble, explained
In China, residential housing makes up about a quarter of domestic output. And this market is crashing. For years, preselling housing real estate made it easy for developers to snag loans; they could buy more land and keep building. Two years ago, though, President Xi cracked down on these lending practices, halting funding for developers. But, they couldn’t finish the homes they borrowed money for because they’d already spent it on their next projects. And, those unfinished homes had already been presold.
This summer, hundreds of thousands of Chinese homeowners got together, refusing to repay loans they’d taken out on unfinished properties. Now, the Chinese government is pushing stimulus into the real estate market; billions have gone into bank loans, interest rate cuts and support for developers. Plus, the government wants to restructure weaker developers.
How tech is dealing with US chip export curbs
Last week, the US announced some hard and fast restrictions on tech exports to China. It limited exports of some types of advanced computing chips and also made it more difficult to sell semiconductor equipment to any Chinese company. The US is trying to stop China from developing tech that it sees as a threat. But, with the semiconductor industry being so specialized, this move could risk interrupting the entire supply chain.
Because of these new restrictions, TSMC just cut its spending target for this year by about 10%. But, the company is trying to calm down worries about the effect the chip export curbs may have. On Thursday, Nikkei Asia reported that TSMC got a one-year extension to order American chipmaking equipment for its Chinese expansion, and it can still ship equipment to a manufacturer in Nanjing, China, according to people familiar with the matter.
Russia and NATO’s nuclear exercises
Since the start of Russia’s war in Ukraine, much of the West, and especially NATO, has done its best to stay out of actual combat, partly because NATO getting involved directly could trigger a nuclear response from Russia. And, Putin gave a speech last month that essentially said Russia wasn’t afraid to use nuclear weapons if provoked.
Now, despite rising tensions, Russia and NATO countries are running nuclear exercises. Starting Monday, 14 NATO members will participate in “Steadfast Noon,” which runs for two weeks. The Russian defense ministry confirmed Thursday it had conducted exercises involving ground-based missile systems.
Western leaders have stressed that the exercises are routine, and they are monitoring Russia’s movements “as we always do.” But, the West has made it clear that even a small-scale nuclear attack by Russia would lead to a large-scale reaction by NATO.
To end, we’ll look into:
Are dream jobs worth it?
There are pretty much two extremes for the advice people give on choosing a job. On one end is the hustle-culture version, which says you should get a degree in a high-paying field and then get the highest-paying job you can find. On the other end is the ‘follow your dreams’ type, which says to do what you love and everything will fall into place.
Well, for some people, doing what they love doesn’t work out, partly because the protections in place to make sure people get paid for doing what they love are inadequate.
Take Andrew, a pastry chef who spent six years working his way through the kitchen ranks until he got his dream job as a confectioner in a Michelin-starred restaurant in Scotland. He said that, for a 65-hour or more work week, he would get paid around US$22,300 a year. “For that little money, you just think, what am I doing with my life? Like, am I crazy?”
So, he left his job to get a degree in software development. This isn’t an unheard-of story, though. Plenty of dream jobs, particularly in fields like culinary or musical arts, are notorious for paying poorly – even for people who have spent thousands of hours mastering a skill. And some of those people get to that point and realize it just isn’t worth it.
Does that mean following your dreams is a dead idea? Not at all. But some say it’s worth considering how you want your life to look rather than focusing only on the job you want.
“Most college students will be able to tell you what their dream job is, but I’m willing to bet they also have a dream idea or even just a dream,” said Rushabh Shah, an opinion columnist at The Michigan Daily. “Let’s inspire students to dream of a life that they want to live, not just a company that they can work for.”
In other news …
📈Stocks: MSCI’s global gauge of stocks jumped 1.86% to 2,411.69.
- S&P 500 went up 2.60% to 3,669.91.
- Nasdaq Composite raised by 2.23% to 10,649.15.
- Dow Jones is up 2.83%, reaching 30,038.72.
- Hang Seng Index is down 1.87% to 16,389.11.
🧠Some quick factors to bear in mind:
- In the US, traders are digesting the September CPI report released yesterday. With it stronger-than-expected (it showed the price index gaining 8.2% annually), investors are crossing their fingers that price increases (and rate hikes) will peak soon. Stocks fell initially, then rebounded in a major reversal.
- But, core US inflation jumped to a 40-year high of 6.6% in September. Traders believe the Fed will hike interest rates in three weeks, headed towards rates of 4.75%-5% by early 2023.
- On a global scale, markets are still volatile with the concern that major economies are headed into recession before inflation eases.
- And now, Chinese markets are looking forward to tomorrow’s CCP congress, which could narrow down who’s in line as the next premier, the country’s top economic official. Hong Kong dealmakers are expecting a shift of focus toward business and economic issues.
- Lawyers and analysts are saying that any signs toward opening China’s borders and stimulating demand would boost public confidence and business transactions both in the mainland and in Hong Kong.
👄Some comments and chatter:
- “Maybe we get this last gasp higher in inflation and from here we start to decelerate,” said Liz Ann Sonders, chief investment strategist at Charles Schwab. She added, “I think there’s still plenty of things that could drive volatility and intraday swings are just the nature of the beast right now.”
- “Hopefully, the global economic situation will improve next year, and I expect to see a greater focus on business and economic issues in China after the 20th Party congress," said Richard Wang, Freshfields partner in Hong Kong.
🛢Oil: Oil lifted higher due to low supply in the coming winter, helping investors overlook higher stocks of crude and gasoline. US crude went up 2.1% to US$89.11, and Brent settled at US$94.57, up 2.3%.
👛Bitcoin: Bitcoin raised 1.53% to US$19,444.50 at the time of writing.
🗺UN condemns Russia annexation: On Wednesday, the UN General Assembly voted overwhelmingly to condemn Russia’s attempted annexation of four regions in Ukraine. In total, 143 countries voted in favor of the resolution, while 35 (including China and India) abstained. Only five countries voted against it: North Korea, Syria, Nicaragua, Belarus and (obviously) Russia.
💣North Korea tensions: North Korea confirmed that it test-fired two long-range strategic cruise missiles on Wednesday. According to state media, this test was used to evaluate the “combat efficiency and might" of the missiles for tactical nukes. Then, on Friday, it fired another missile and flew warplanes near the South Korean border. South Korea confirmed that it dispatched its F-35 fighter jets in response.
💥Kyiv area hit by kamikaze drones: Russian forces used Iranian kamikaze drones to attack the Kyiv and Odessa regions and hit other areas with missiles. Ukrainian officials said 13 people were killed and 37 were wounded in these attacks. Russia is lashing out after the truck bomb attack on a bridge to Crimea.
💸Saudi Arabia calls oil cut an economic measure: Saudi Arabia rejected criticisms of the OPEC+ decision last week to cut oil production despite US objections. It claims that Washington’s request to delay the cut would’ve been a bad economic move. Saudi Arabia said that the decision was aimed at curbing market volatility.
🚗Volkswagon in China: Volkswagen plans to invest €2.4 billion euros (US$2.3 billion) in an autonomous driving joint venture with China’s Horizon Robotics. The new unit will be working on automated and assisted driving systems in the country and aiming to integrate functions onto one chip to save money and energy.
💻China chip troubles: Major chip equipment suppliers are suspending sales and services to semiconductor manufacturers in China. Companies that deal with semiconductor manufacturing are quickly trying to comply with new US export restrictions. ASML, a Netherlands-based creator of chipmaking equipment, has told its American employees to stop serving Chinese customers as the company figures out these regulations.
💼Taiwan reopens tourism: After two and a half years of COVID-related border restrictions, Taiwan is opening to tourists again. The island officially lifted mandatory quarantine periods for foreign arrivals, welcoming travelers on Thursday.
💉Possible cancer vaccine?: Merck, a pharmaceutical company, has plans to jointly develop and possibly begin selling a personalized mRNA vaccine with Moderna. Moderna’s vaccine is based on the specific mutational signature of a tumor. It generates T-cells, a cornerstone of the body’s immune response, and would be used in combination with Merck’s cancer immunotherapy.
📷Wildlife Photographer of the Year crowned: The UK’s Natural History Museum closed its Wildlife Photographer of the Year competition, awarding the title to American photographer Karine Aigner. Her winning photo is called “The Big Buzz," showing a ball of mating male cactus bees surrounding a single female bee.
🎬Netflix is going ad-supported: Netflix will launch a new US$7/per month ad-supported plan starting November 3 to help jumpstart growth. It’s being rolled out first in the US and 11 other countries, including Japan, France and Brazil.
👑King Charles “Dear oh dear": Prime Minister Liz Truss had her first weekly audience with King Charles. He greeted her by saying, “So you’ve come back again?" and then, “Dear, oh dear. Anyway…" Um… awkward.
Written and put together by Jake Shropshire, Vanessa Wolosz, Christine Dulion and Krystal Lai