Commercial real estate tremors, asset management dominance, Sudan's battles, El Nino, Somalia's flooding & Africa's cholera emergency
Great links, images and reading from Chartbook Newlsetter by Adam Tooze
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Njideka Akunyili Crosby, And We Begin to Let Go, 2013.
Njideka Akunyili Crosby (born 1983) is a Nigerian-born visual artist working in Los Angeles, California. Through her art, Akunyili Crosby "negotiates the cultural terrain between her adopted home in America and her native Nigeria, creating collage and photo transfer-based paintings that expose the challenges of occupying these two worlds."
Source: The Tate
Akunyili Crosby combines painted depictions of people, places, and subjects from her life with photographic transfers derived from her personal image archive as well as Nigerian magazines and other mass media sources. The resulting works are visual tapestries that vivify the personal and social dimensions of contemporary life while evocatively expressing the intricacies of African diasporic identity.
Source: David Zwirner
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How investors learned to stop worrying and to love the post-fascists
The performance of Italian government bonds over the last year has been nothing short of remarkable. Italy’s 10-year bond has come down from a high of 4.9% in 2023 to 3.8% today, while the BTP-Bund spread has contracted from 200 basis points to 155bp. Much of this rally was towards the end of 2023, when Italy crucially avoided a move into junk territory by Moody’s.
Among portfolio managers of Italian government debt, there is belief in the economic and fiscal strategy helmed by the establishment of Italian Prime Minister Giorgia Meloni. The Meloni government succeeded that of Mario Draghi in October 2022 following the collapse of a national unity government led by the former prime minister. The political crisis that ensued led to Moody’s downgrading Italy’s outlook to negative, leaving its Baa3 rating teetering on the edge of junk status.
However, Italy’s economic resilience in 2023 led Moody’s to restore its stable outlook and leave Italy in investment grade – allowing BTPs to breathe a sigh of relief. The decision was reflected by ‘a stabilisation of prospects for the country’s economic strength, the health of its banking sector and the government’s debt dynamics’, said Moody’s. It added economic prospects continue to be supported by the implementation of Italy’s National Recovery and Resilience Plan. Italy is presently rated ‘BBB’ with a stable outlook by both Fitch Ratings and S&P Global Ratings.
Source: OMFIF
Commercial real estate tremors
The US commercial real estate market has been in turmoil since the onset of the Covid-19 pandemic. But New York Community Bancorp and Japan’s Aozora Bank Ltd. delivered a reminder that some lenders are only just beginning to feel the pain.
New York Community Bancorp’s decisions to slash its dividend and stockpile reserves sent its stock down a record 38% on Wednesday, with the fallout dragging the shares to a 23-year low on Thursday. The selling bled overnight into Europe and Asia, where Tokyo-based Aozora plunged more than 20% after warning of US commercial-property losses and Frankfurt’s Deutsche Bank AG more than quadrupled its US real estate loss provisions.
The concern reflects the ongoing slide in commercial property values coupled with the difficulty predicting which loans might unravel. Setting that stage is a pandemic-induced shift to remote work and a rapid run-up in interest rates, which have made it more expensive for strained borrowers to refinance. Billionaire investor Barry Sternlicht warned this week that the office market is headed for more than $1 trillion in losses.
Source: Bloomberg
Three analyses of cholera today, with big news from Somalia and globally
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America’s capitalist dominance
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Njideka Akunyili Crosb, Nwantinti, 2012
State capitalism is back in Japan
In June 2023, an obscure semiconductor materials supplier announced that it was set to be taken over by an investment fund in a $6.4bn deal. Even many Japanese have not heard of JSR, a company that embodies one of the few areas of the semiconductor industry where Japan retains dominance. It is a leading provider of so-called photoresists — specialist chemicals used for printing circuit designs on chip wafers — to chipmakers such as Samsung Electronics, Taiwan Semiconductor Manufacturing Company and Intel. But it was the identity of the acquirer that really raised eyebrows.
Japan Investment Corporation is a government-backed fund whose investments are overseen by the Ministry of Economy, Trade and Industry (Meti) — the same interventionist branch of government that dictated and crafted Japan’s industrial policy during its stunning postwar economic recovery. Yasutoshi Nishimura, the head of the ministry at the time of the deal, championed it as “an extremely important effort . . . that will strengthen Japan’s global competitiveness in semiconductor materials pivotal to the production and development of cutting-edge chips”. The transaction and Nishimura’s comments rang alarm bells among JSR’s biggest customers and investors as they tried to gauge whether government intervention would now become the norm. They soon got an answer: in December, JIC led a consortium to buy out Fujitsu’s chip-packaging arm Shinko Electric Industries for around $4.7bn. JIC’s chief executive Keisuke Yokoo recently warned that Japan’s medium-sized companies would not be able to compete against bigger global rivals on technology alone. Former trade minister Yasutoshi Nishimura’s backing of the JSR-JIC deal raised questions over whether government intervention would become the norm “My thinking is that [JSR and Shinko Electric] cannot win the competition unless they continue investing in the digital era, so we want to support that effort,” he added.
Source: FT
Trump throws a wrench into steel deal
In a potential setback for Nippon Steel's plan to acquire U.S. Steel, former President Donald Trump said on Wednesday that he would "absolutely" block the deal if he is again elected to the White House. "I would block it instantaneously. Absolutely," Trump told reporters in Washington after a meeting with the International Brotherhood of Teamsters, one of America's biggest unions, describing it "a horrible thing" that U.S. Steel is being sold to a foreign entity. While criticizing President Joe Biden's economic policy and vowing to bring jobs back to the U.S., the leading Republican presidential candidate said, "We saved the steel industry, now U.S. Steel is being bought by Japan. It's so terrible."
Source: Nikkei
Is the tide turning in Sudan? The last sentence here is key
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American household types, measured
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How moths defend themselves
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Njideka Akunyili Crosb, Nwantinti, 2012