From US-Russia nuclear talks to a toad you probably shouldn't lick – Here's your November 10 news briefing
To start off, we're looking into: The US and Russia nuclear treaty talks – In 2010, the US and Russia signed an agreement called The New START treaty, which was extended to last through 2026.
To start off, we're looking into:
The US and Russia nuclear treaty talks
In 2010, the US and Russia signed an agreement called The New START treaty, which was extended to last through 2026. It allows Russia and the US to inspect each other’s nuclear weapons facilities on-site, but these were suspended in 2020 because of COVID. And ever since Russian President Vladimir Putin invaded Ukraine, foreign relations between the two countries have been tense. Earlier this year, the US tried to resume inspections, but Russia wasn’t on board.
On Tuesday, US State Department spokesperson Ned Price said the countries have agreed to resume the treaty talks soon. These would be the first New START talks since Russia invaded Ukraine. It’s looking pretty positive that Moscow has shown interest in resuming the talks, but it would only happen after inspections are back on.
China’s banks are in hot water
China's property market has been dealing with a bit of a crisis. The government has been trying to ease the liquidity troubles of developers, especially since the property sector makes up about 28% of China's GDP. China asked banks to raise their net financing to help the property sector weather the storm. But now, these banks are facing growing risks since officials vowed to "unswervingly" stick with the zero-COVID approach, and the housing slump isn't showing signs of easing.
Big Chinese banks aggressively expanded their credit lines to the property and infrastructure sectors this year. But now, these banks' valuations are at a record-low level of about 0.4 of their Hong Kong book value. To put this in perspective – this is about where investors priced big US banks, including JPMorgan and Bank of America, during the 2008 market crash.
Tooting instead of tweeting
Elon Musk’s Twitter is pretty much a disaster so far, and his takeover could potentially spell the end of the platform. With Musk’s decisions to fire executives, change the verification system and overhaul the content moderation approach, many users are tired of him. But what can even replace Twitter?
That’s where Mastodon comes in. A Germany-based social network, Mastodon is where Twitter quitters are headed. It’s a decentralized, open-source platform that looks a lot like Twitter (with hashtags and all). But, it’s more focused on giving users more control over the content they see and interact with.
There are some differences – handles are more like emails, “toots” are longer than tweets and it may be harder to find people you know. At least, for now.
To end, we'll look into:
COP27 and corporate greenwashing
Another environmental story from us! We know we've been talking about climate topics quite a lot lately, but with COP27 going on, there are so many interesting developments that we want to share.
One of the most important issues being addressed by the UN at COP27 is corporate and governmental greenwashing. "Greenwashing" is usually a term used when talking about a product or service that's publicized as being more environmentally friendly than it really is – for the sake of profit. Corporate and governmental greenwashing is a little bit different.
Basically, what's happening is that many companies and governments claim that they're working toward net zero greenhouse gas emissions by a certain year – usually 2050. And while making these claims, they still invest in and back new coal, oil and gas developments. To make up for supporting these projects, organizations rely on carbon offsets. An offset is a way to compensate for emissions you cause by funding an unrelated environmental project, like planting trees.
The issue is that offsets just don't really work. As Barbara Haya, the director of the Berkeley Carbon Trading Project at the University of California, Berkeley, explained: "The most basic problem with carbon offsets is that you're trading a known amount of emissions with an uncertain amount of emissions reductions. But there's also the whole trading approach of companies being able to buy their way out of their responsibility to reduce their own emissions."
At COP27, there is an entire panel dedicated to addressing this trend. On Tuesday morning, UN Secretary-General António Guterres delivered a report with recommendations and guidelines for net zero targets from companies and non-state organizations. He said: "The problem is that the criteria and benchmarks for these net zero commitments have varying levels of rigor and loopholes wide enough to drive a diesel truck through. We must have zero tolerance for net zero greenwashing."
Among the guidelines are redlines for greenwashing. For example, companies can't claim to be going net zero while continuing to support new fossil fuel infrastructure, deforestation or other environmentally-damaging activities. They also can't just buy emissions credits instead of cutting their own emissions. Plus, they can't oppose government climate policies on their own or through trade associations.
In other news ...
📉Stocks: MSCI’s global gauge of stocks is down 1.77% to 2509.77 at the time of writing.
- Dow Jones is down 1.95% to 32,513.94.
- Nasdaq Composite is down 2.48% to 10,353.18.
- S&P 500 is down 2.08% to 3,748.57.
- Hang Seng Index is down 1.20% to 16.358,52.
🧠Some quick factors to bear in mind:
- In the US, stocks tumbled, retreating from a three-day rally. Unclear midterm election results, a crypto selloff and risk sentiment ahead ofconsumer inflation data on Thursday weighed on investors. Thursday’s CPI report will offer clues on the Fed’s tightening of monetary policy. Analysts predict a slight rise, meaning more rate hikes would still be on the table for the Fed.
- Bitcoin sank over 15% and reached a two-year low below US$16,000 as big crypto exchange Binance dropped out of the FTX takeover deal. FTX’s token collapsed more than 40%, following yesterday’s tumble of more than 70%. Yikes.
- Disney tumbled a little more than 13% after yesterday’s earnings reported losses, while Meta surged 5.18% as investors cheered news of its over 11,000 job cuts to reduce spending.
- APAC stocks were mixed as China’s producer price index fell 1.3% and investors speculate on US election results. China’s consumer price index climbed 2.1%, retreating from a 29-month high in September, signaling price pressures remained modest, with core inflation rising 0.6% in October – not much change month-to-month.
👄Some comments and chatter:
- "I take Chairman Powell at his word. He's been telling markets all along that he needs to raise rates, which suggests to me that there are a number of rate hikes still in the works from the Fed," said Michael Arone, chief investment strategist at State Street Global Advisors in Boston.
- "Elections matter, but other factors matter more for markets and the economy. The path of inflation, interest rates, monetary policy, the economy, and earnings will continue to exert the greatest influence on markets over the next year," said Keith Lerner, co-chief investment officer at Truist Wealth.
- "Inflation is enemy number one for the Fed, and if you see the core CPI print creep up, I believe that the market would have a negative reaction to that," said Johan Grahn at Allianz Investment Management.
🛢Oil: Oil prices slipped on Wednesday after data showed US crude stockpiles rose more than expected and over concerns about China’s rising COVID cases, which may sink demand. US crude fell 3.5% to US$85.83, and Brent dropped 2.8% to US$92.65 per barrel.
👛Bitcoin: Bitcoin was down 14.17% to US$15,920.00 at the time of writing.
😢Earthquake in Nepal: An earthquake hit western Nepal early Wednesday, killing at least six villagers, four of them children. It destroyed houses in remote communities in the foothills of the Himalayas.
🩺Australian medical records leak: A hacker leaked almost 10 million Australians’ medical histories online after private health insurer Medibank wouldn’t pay a ransom. The extortionist posted personal information on the dark web, including names, addresses and details of medical procedures. Medibank expects them to release more information.
✈China’s historic airshow: China launched a historic debut of its C919 civil jet at a major air show on Tuesday. The airshow was scaled down as COVID cases continue to rise across the country. Since the debut, orders for the jet have been flying in.
😷Guangzhou locked down: China’s southern city of Guangzhou has locked down its third district as a COVID outbreak spreads. Guangzhou, which has about 19 million residents, reported 2,637 infections on Tuesday – making up nearly one-third of China’s new cases.
🚤Migrant ship heads to France: A migrant rescue ship with more than 200 people on board left for France on Tuesday after Italy didn’t let it dock. Italy’s new right-wing PM Giorgia Meloni is trying to limit migration across the Mediterranean. Her government told migrant vessels to take the refugees to other countries but did allow two of four boats to dock. France hasn’t responded yet, but the ship is expected to arrive Thursday.
💻Meta layoffs: Meta is laying off more than 11,000 employees, which accounts for 13% of the company’s workforce. Meta hasn’t been doing super-well lately, with rising costs and expenses and a drop in sales as Zuck pursues the metaverse.
🏎Selling Tesla stock: Elon Musk has sold US$3.95 billion worth of Tesla stock since buying Twitter a couple of weeks ago. That’s 19.5 million shares. Musk also sold Tesla shares worth a total of US$15.4 billion earlier this year. Not a good look.
⚡Water-for-energy deal: Israel and Jordan are moving ahead with a water-for-energy deal since deciding it’s feasible. The idea was first announced a year ago and involves Jordan building out solar power capacity to export to Israel. In return, Israel will provide water-starved Jordan with desalinated water.
🏳Russian Kherson retreat: Russian Defense Minister Sergei Shoigu ordered his troops to leave the occupied Ukrainian city of Kherson and go to the opposite side of the River Dnipro. This major retreat could even be a turning point in the war. Shoigu says it wasn’t possible anymore to keep troops in the city supplied.
🚬Hong Kong’s no-smoking gen: Hong Kong has announced that it’s considering a lifetime ban on buying cigarettes for people born in 2009 or later. Right now, those people are 13 and under, but this would mean no new young smokers from 2027.
💰Binance backs out: Remember how yesterday Binance offered to bail out rival FTX, which is facing some liquidity trouble? Well, CEO Zhao has pulled the deal, saying Binance can't help. Bitcoin plunged below US$16,000 after the flip-flop.
👨🎨That beats a paper crane: American artist Felix Semper is going viral again for his mad origami skills. Using thousands of layers of glued paper, he creates amazing sculptures that are so lifelike, you'd never think it was paper.
🦛Baby hippo!: The Dallas Zoo in Texas just announced the birth of a healthy baby hippo. The baby is bonding with its mother right now, and zookeepers will name it after getting an idea of the hippo’s personality.
🐸Please stop licking this toad: The National Park Service in the US has added tongue contact with the Sonoran desert toad to its list of warnings for park visitors. The toad, also known as the Colorado river toad, secretes toxins that can make people sick. But, some people have discovered that these secretions also contain a hallucinogen known as 5-MeO-DMT, which is why visitors have been licking the toad. Don’t do this.
Written and put together by Joey Fung, Vanessa Wolosz, and Christine Dulion