Monthly Archives: May 2021

Bloomberg

(Bloomberg) -- Chinese debt is back in favor with overseas investors.After the nations government bonds suffered their first outflow in two years in March, foreigners added 52 billion yuan ($8.1 billion) to their holdings in April, bringing the total to a record 2.1 trillion yuan, data compiled by ChinaBond show.In a game-changing shift -- compared by some to the birth of the euro -- yuan-denominated debt has emerged as a refuge during this years global bond rout. Investors looking for diversification have piled in, seeking its relatively high yields and low correlation to other markets. While that partially reversed in March, as rising U.S. yields dimmed Chinese bonds appeal, the quick turnaround has underscored the resilience of demand and Chinas growing clout since opening its fixed-income market.The underlying case for Chinese bonds is still very, very strong, said Pramol Dhawan, head of emerging markets portfolio management at Pacific Investment Management Company LLC. Because of its low correlation to global rates, its high nominal yields and high real yields form a very important part of portfolio construction.Foreign investment in Chinas interbank fixed-income market, as compiled by ChinaBond, rose 65 billion yuan in April to an all-time high of 3.2 trillion yuan, the data showed. Those holdings more than doubled over the past two years as Chinese bonds were included in global benchmarks compiled by Bloomberg Barclays and JPMorgan Chase & Co. Still, foreign investors only account for 4.3% of the total debt in Chinas interbank market.We are increasing our exposure to the Chinese bonds, said Kheng Siang Ng, Asia Pacific head of fixed income at State Street Global Advisors. Its hard for the markets to ignore.Read More: Chinas Bonds Only One to Gain Among Biggest Markets in RoutEven as foreign investors returned, the April numbers suggest the momentum of inflows has slowed from the breathtaking pace earlier this year. Last months inflow was less than half the amount seen in January.The yield premium of Chinas benchmark 10-year bond over Treasuries narrowed by around 1 percentage point to about 154 basis points from a record in November. On top of that, FTSE Russell said in March that it will take three years to add Chinese debt into its global index, instead of the 12 months initially envisioned. That disappointed some investors who expected a faster inclusion.Defensive BuyersNick Maroutsos, head of global bonds at Janus Henderson Investors, is among those who arent yet ready to buy Chinese bonds.We get asked this a lot, and my answer to whether we own or will own Chinese bonds is, Not right now, said Maroutsos, whose firm managed more than $414 billion as of March.Ultimately, we are defensive buyers, and I have a hard time looking at emerging markets as a safe haven for investors, he said. Chinese government bonds arent going to protect you and wont behave in a manner similar to Treasuries.Chinas bonds have been dancing to their own tune, in part because they are less owned by foreign investors, and Chinas independent economic and policy cycles set them apart from the rest of the world.Over the past 10 years, their correlation with the U.S. Treasuries was less than 0.2, according to a Bloomberg analysis. Yields on 10-year Chinese bonds were little changed this year, while equivalent Treasury yields surged 69 basis points.Read More: Carry Trades in China, Korea Are Best in Low-Yield Covid EraWhile the yield spread has narrowed, at 3.1%, Chinas 10-year yield is almost double that of Treasuries. Even if U.S. yields rise further, Chinese bonds remain appealing because of their low correlation to global markets, which helps investors lower volatility in their portfolio, said Lucy Qiu, a strategist at UBS Global Wealth Management.Investors still need to look for uncorrelated sources of returns, as negative bond-equity correlations may be challenged during a rapid rise in yield, Qiu said.(Updates with performance data in third-from-last paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.2021 Bloomberg L.P.

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Big Tech Join Intel To Seek Congressional Funding For Chip Production - Yahoo Finance

The market leadership of the S&P 500s five largest stocks Facebook FB, +0.18%, Amazon AMZN, +1.05%, Apple AAPL, -0.74%, Microsoft MSFT, -0.38% and Google owner Alphabet GOOGL, -0.95% (FAAMG) is under threat from a number of risks on the horizon, according to Goldman Sachs analysts.

The group represents 21% of the index, they said, higher than the 14% average share typically held by the top five stocks.

While the prospect of decelerating U.S. economic activity supports Big Techs outperformance and the groups remarkable growth looks set to persist, analysts, led by David Kostin, noted several headwinds around the corner.

They said President Joe Bidens plans to raise corporate and capital-gains tax rates pose potential risks to the quintet.

The proposed 28% corporate tax rate would hit FAAMG earnings by 9% relative to the consensus, they said, while the latter, a potential near-doubling of the capital-gains tax rate for wealthy Americans, could spark a selloff later this year.

If the capital-gains tax rate becomes set to rise in 2022, investors subject to the higher rate may choose to realize some of their substantial capital gains in 2021 at the lower current tax rate, the analysts said.

They noted that FAAMG stocks have appreciated by $5 trillion in the past five years, or 29% of the S&P 500s market cap increase over that time.

The groups valuation multiples also presents a risk, as does the possibility of rising interest rates in the coming months. Goldmans rates strategists predict 10-year U.S. Treasury yields TMUBMUSD10Y, 1.628% will rise to 1.9% by the year-end. As yields rose sharply from November through March, FAAMG underperformed the S&P 500 by 7 percentage points (+21% vs +14%%). A similar period of rising rates in the second half of 2021 would likely hamper FAAMG returns, Kostin said.

However, the 10-year U.S. Treasury yield remains extremely low in historical terms, supporting the valuation of high growth stocks.

But those all pale in comparison to what Goldman analysts described as the groups greatest threat antitrust intervention.

With the exception of Microsoft, the other four face a laundry list of legal battles and investigations over their market power and competitive practices ranging from commercial litigation to DOJ [Department of Justice] and FTC [Federal Trade Commission] antitrust lawsuits to Congressional probes, they said. But they added that their relative valuations remain stable, implying no major impact from antitrust actions.

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This is the greatest threat to Big Techs S&P 500 dominance, Goldman says - MarketWatch

The following essay is an excerpt adapted from Sen. Josh Hawley's new book, The Tyranny of Big Tech, out now from Regnery.

When Facebook went public in May of 2012 in what was billed as the initial public offering of the decadethe century!the company dutifully filed a dutifully boring piece of paperwork known as the Form S-1 registration statement, a compendium of facts and figures, summaries and disclosures, a "risk factors" analysis, "selected consolidated financial data," "description of capital stock" and so on and so forth. Except this Form S-1 wasn't boring in the least. This Form S-1 was positively fascinating. This Form S-1 included a thesis statement direct from Big Tech on the new world the technologists hoped to create. It included a letter from Mark Zuckerberg.

Zuckerberg had put pen to paper (so to speak) and in the span of four brief pages, attempted to explain to the vast public just what was before them in this dawning Age of Tech. For the world stood again on the precipice of transformation, Zuckerberg wrote, a transformation as profound as the one occasioned by the arrival of the printing press centuries before. That earlier technology "led to a complete transformation of many important parts of society," Zuckerberg said. And now "our society has reached another tipping point." That's where Facebook came in. "Facebook was not originally created to be a company" at all. Rather: "It was built to accomplish a social mission..."

The ambition fairly leapt off the page. Like the corporate barons of the Gilded Age, Zuckerberg and his fellow technologists aimed at nothing less than the remodeling of American life. Past technologies and their inventors had "changed the way society was organized," Zuckerberg wrote. Now Facebook would do the same. And this renovation would be achieved by the advent of a new kind of economy, an information economy, built on (supposedly) the free flow of data. Tech would lead the way. It would make the countryindeed, the world"more open and connected." It would leverage the wide availability of the internet and mobile platforms to create an economy of "authentic businesses" built on "personalized" designs and products. It would deliver a "more open culture," "better understanding" between citizens and "expos[ure] to a greater number of diverse perspectives." And all this would be done with datamassive amounts of data gathered from ordinary citizens and analyzed by the supercomputers at Facebook: data so prodigious one would need miles of computer servers to contain it, yielding analysis so precise that it could predict what consumers would want before even they knew it. This was the future, an economy and society based around data and those who controlled itnamely, Facebook and the other avatars of Big Tech.

Zuckerberg spoke of change, a fresh departure from the past, but in fact his pitch was the climax of the revolution his robber baron predecessors had initiated a century before. It was the climax of corporate liberalism. The grand future Zuckerberg envisaged was a future controlled by the few companies sufficiently large and powerful to collect massive amounts of information from consumers and put it to use. It was a future organized around the priorities of the cosmopolitan professional class: "openness" and "connection." In a later letter to Facebook users and employees, Zuckerberg spoke of building a "global community." The 21st-century corporate elite hail global integrationsocial, political and economicas the great engine of progress. They prize transnational ties over any distinctly American identity, and the new society they want to build reflects their globalist preferences.

Given the business scale required to succeed at the massive data extraction and control that the Big Tech agenda required, the companies that managed it would almost by definition become monopolies. In the words of technologist Jaron Lanier, "large, highly automated businesses" built around prodigious data collection "can't help but present some of the problems of monopolies." The Age of Big Tech, like the age of the robber barons, would be the age of monopoly.

And it would be the age of addiction. Zuckerberg promised that Facebook would hasten the arrival of a better America by putting more information into the hands of more people than ever before. In fact, the truly transformative thing about Big Tech was its business model. Big Tech treated its users as sources of information to be mined and as objects to be manipulated. And the key to both was attention. Big Tech needed as many Americans online as possible for as long as possible, all in order to extract their personal data and manipulate them into buying the wares of Big Tech's advertisers. Far from empowering ordinary people, Big Tech assaulted their agency and undermined their independence. By design. This model doubled down on the legacy of last century's corporatists: elevating an ever-narrower group of professionals at the expense of ordinary citizens, consolidating powerand now informationin the hands of a few.

But there was no need to look too closely at what precisely Big Tech was about because, according to Zuckerberg, the reign of Big Tech would bring the people more of what every American wanted: liberty!where liberty meant private, personal choice. This rhetoric, too, sounded in the cadences of corporate liberalism. "Think about what people are doing on Facebook today," Zuckerberg had enthused before the company went public. "They're keeping up with their friends and family, but they're also building an image and identity for themselves, which in a sense is their brand." It was Woodrow Wilson's language of self-development transposed into a 21st-century key. Facebook would empower individuals to createtheir own image, their own identity, their own personhood. More choice! More liberty! Yet in this version of corporate liberalism, as in the earlier one, the corporate elite and the professional class would be the ones with the power.

Big Tech was the robber barons' dreams realized; it was corporate liberalism's triumph. And while Zuckerberg was perhaps Big Tech's most avid evangelist, the other tech platforms shared Facebook's transformative aspirations and trafficked in the same soaring, Wilsonian rhetoric. Explaining why people used its famous search platform, Google opined that many searched "to fulfill the need for ongoing personal growth," still others to "develop and reinforce a sense of identity." This, Google attested solemnly, "is a powerful, emotional payoff of search." Search queries on the internet could be a portal to self-fulfillment.

But if the key to the earlier corporatists' ambitions was their elevation of the giant, hierarchical monopoly, the key to Big Tech's plans was the business model of data extraction. In the words again of technologist Jaron Lanier, "The primary business of digital networking has come to be the creation of ultra-secret mega-dossiers about what others are doing, and using this information to concentrate money and power." This was the new economy Big Tech would give America, and it depended centrally on capturing and controlling Americans' attention.

Josh Hawley is a U.S. senator for Missouri, a member of the Senate Judiciary Committee and the author of the new bestselling book, The Tyranny of Big Tech.

The views expressed in this article are the writer's own.

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The Age of Big Tech Is the New Age of Monopoly | Opinion - Newsweek

In The Big Tech Oligarchy Calls Out for Trustbusters (op-ed, May 1), Sen. Josh Hawley sounds more progressive than conservative as he bemoans the exceptionalism of American businesses and adopts an eat the rich mentality to decry wealth and those who have accumulated it.

Citing political statements made by Major League Baseball, Delta and Coca-Cola, and moderation decisions made by Big Tech, Sen. Hawley argues politicians should weaponize antitrust and undermine the rule of law to go after businesses they disagree with based on purely political whims. Sen. Hawley would abandon Americas carefully constructed separation of powers and provide the Biden administration an extraordinary tool to attack industries it doesnt like. Ironically, the more power the Biden administration has to decimate businesses, the more likely woke capitalism becomes as businesses attempt to curry favor with the American left and the White House.

If adopted, Sen. Hawleys proposals would give up Americas place as a world economic leader by turning our back on our historic celebration of entrepreneurial exceptionalism.

Steve DelBianco

President and CEO, NetChoice

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Sen. Josh Hawley Sounds Like the Left on Big Tech - The Wall Street Journal

Angela Huyue Zhang is director of the Center for Chinese Law at the University of Hong Kong. She is author of "Chinese Antitrust Exceptionalism: How the Rise of China Challenges Global Regulation."

Looming regulatory challenges are clouding the future of Big Tech the world over.

In China, Alibaba received a record fine of $2.8 billion for abusing its dominant position in e-retailing business last month. The e-commerce giant was reportedly asked to divest media assets from its vast business empire, even though this was not included in the penalty decision and there is actually no legal basis under Chinese antitrust law to request the firm to do so.

And in January this year, the People's Bank of China was proposing rules that threaten to break up online digital payment platforms owned by Ant Group and Tencent. Chinese financial regulators also requested Ant and a dozen other Chinese fintech firms to decouple "inappropriate link" between their payment apps and other financial services.

China is not alone in seeking to break up its tech giants. The United States Federal Trade Commission and 48 states are suing Facebook, which could see social media giant forced to divest assets such as Instagram and WhatsApp. Meanwhile, the European Commission is proposing a Digital Services Act that could result in tech companies being broken up if they are found to be in repeated violation of competition law.

Deemed the nuclear option, the extreme structural remedy of forced divestment is not necessarily fatal for large tech companies.

Gone are the days when corporate behemoths such as AT&T, Standard Oil or the 19th century railroad monopolies were divested to resolve monopoly issues. Big Tech belongs to a completely different species that thrive on an asset-light business model. By harnessing sophisticated algorithms fed by masses of data, Big Tech has become incredibly good at adapting to government regulation.

In many ways, Big Tech resembles a starfish, those seemingly simple but incredibly resilient marine creatures. Just as starfish have five or more arms enabling it to hold on to surfaces against strong sea currents, the extraordinary variety of services provided by Big Tech permeates many aspects of our daily lives, making them similarly resistant to regulatory shifts.

Furthermore, just as starfish are often viewed as harmless grazers despite their ruthless carnivorous instincts, Big Tech preys aggressively on nascent rivals. Above all, just as starfish can regrow their body parts, Big Tech also has the ability to quickly rejuvenate by expanding into new product lines with relative ease.

In 2018, China's media regulator ordered ByteDance to permanently shut down Neihan Duanzi, a popular joke-sharing app with 17 million users, on the basis of its vulgar content. Jinri Toutiao, ByteDance's flagship news app was also temporarily removed from app stores for a similar reason.

Interestingly, the Chinese authority's ruthless intervention came at the same time that Facebook founder Mark Zuckerberg testified to Congress regarding his company's alleged failure to protect privacy in the wake of the Cambridge Analytica scandal.

In contrast to Zuckerberg's efforts to defend his company, however, ByteDance founder Yiming Zhang made no excuses and quickly apologized on behalf of his company for content that had "gone against socialist core values."

Despite this regulatory setback, ByteDance continued to flourish, with the company's valuation more than tripling in 2018 as its other apps, including Toutiao, Douyin and TikTok, saw an explosion of users.

Indeed, the permanent shutdown of Neihan Duanzi hardly affected Bytedance's most potent weapon: a smart recommendation system that pushes content to consumers and its vast database of user profiles and personal preferences. Nor did the government intervention disrupt its core human capital, especially its army of talented algorithm engineers.

Ant Group is another example. Yu'E Bao, an investment fund introduced by Alibaba in 2013, was once the world's largest money market fund. Faced with a slew of regulatory clampdowns by Chinese financial regulators since 2017, however, the fund's assets have fallen sharply.

This did not stop Ant from becoming the world's biggest fintech company. By leveraging data obtained through Alipay, Ant continued to expand rapidly into the credit and insurance businesses. By the time Ant filed its initial public offering last fall, its microloan businesses had become Ant's primary source of revenue.

As Jack Ma often claims, Alibaba is not an e-commerce company but a data company. As long as tech companies are able to hold onto their core competencies by capturing user attention and developing sophisticated algorithms to capitalize on the data they hold, they can come back from any setback caused by government intervention with relative ease.

This explains the Chinese government's growing interest in breaking data monopolies, with recent news reports indicating that Beijing is considering setting up an arm's-length joint venture company with domestic tech giants that would oversee the immense amount of data they collect from users.

This is intended to create a more level-playing field for smaller fintech companies competing with Ant Group and Tencent that have accumulated troves of customer data. However, requesting these tech giants to directly turn over data could run the risk of infringing consumer privacy since consumers have not given consent for their data to be passed on to a third party.

On the other hand, stricter data protection laws, which supposedly make it harder for Big Tech to collect and use data from consumers, may put smaller businesses at a disadvantage. The European Union, which stands at the forefront of privacy and data regulation, has seen some smaller businesses suffer more as they struggle to adapt to stringent regulatory demands under the General Data Protection Regulation.

As the German philosopher Friedrich Nietzsche once wrote: "what does not kill me makes me stronger." The same applies to Big Tech.

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Big Tech is the regenerative starfish of our times - Nikkei Asia

Editors of the USA TODAY Network Tennessee Published 5:29 p.m. CT May 10, 2021

Microsoft's President Brad Smith tells Congress it endorses the Journalism Competition and Protection Act (JCPA), that would give news organizations the ability to negotiate collectively, with Microsoft and other tech giants. (March 12) AP Domestic

The system is stacked against news publishers. Google and Facebook pay to license music and many types of content, but they have refused to fairly compensate the creators of critical journalism.

Quality local journalism is essential to creating an informed and engaged public and protecting a thriving democracy.

Over the last year, the publications of the USA TODAY Network Tennessee have published public service journalism covering the coal ash clean up in East Tennessee, the tornadoes that decimated Middle Tennessee, and West Tennessee stories including the Jackson Generals baseball team saga and theByhalia pipelinesaga in Memphis.

Our journalists are your neighbors, fellow shoppers and congregants, and volunteerswhoare dedicated to covering the communities they live, play and work in.

Local journalism, however, has suffered because of large technology company'sdominant practices for years.

Google and Facebook use and benefit from our news content and audiences, but they dont return value to news publishers.

Thats why were asking Congress to support the"Journalism Competition and Preservation Act," a bipartisan measure introduced in the U.S. Senate and U.S. Housein March.

Journalists watch the final Presidential Debate held at Belmont University on Thursday, Oct. 22, 2020, in Nashville, Tenn.(Photo: George Walker IV / The Tennessean)

Over the past 14 months, local journalism has been more important than ever.

From COVID-19s devastating blows to cities and towns of all sizes, to the reignited social justice movement and the explosive 2020 U.S. presidential election and its tumultuous aftermath, people turn to news publishers to keep them informed about the changes happening around the worldand in their own backyards.

News has been more in-demand than at any other time in recent history. But the local news publishers providing this invaluable information are struggling in an online environment dominated by a few big tech platforms.

The tech platforms have been allowed to get bigger and bigger, exerting their power and influence in ways that stifle competition and eat into news publishers revenue.

The term Big Media is thrown around but, as of 2018, Google and Facebook had nearly four times as much revenue as the entirety of the U.S. news media (TV, print and digital). And in the three years since, Google and Facebook have grown tremendously.

Those two companies alone currently attract about 80 percent of digital ad spending and 45 percent of all ad spending in the United States.

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The system is stacked against news publishers. Google and Facebook pay to license music and many types of content, but they refuseto fairly compensate the creators ofjournalism.

Because of this, in the last two years, at least 300 news publicationshave closed, with more than 6,000 journalists laid off. A few of the big, national news outlets may be doing okay, but local news publishers, who provide the information that sustains communities, are getting pushed out.

If we dont find a solution for local journalism soon, there wont be any left.

Hear more Tennessee Voices: Get the weekly opinion newsletter for insightful and thought provoking columns.

We have already seen what happened in Australia earlier this year when Facebook removed news in response to proposed legislation requiringthe companyto pay publishers for their content.

In just two days, the void where news once appeared was quickly filled with misinformation and fake news.

We cannot afford to learn what a world without quality journalism would look like.

Fortunately, Facebook reinstated news and the legislation passed in Australia. Now, the rest of the world is moving toward a new and more equitable compensation system for publishers.

After all, social media platforms compensate music publishers and other creators. Its past time for them to compensate those who deliver real local journalism.

The government cannot regulate news under the First Amendment, but Facebook and Google are de facto regulators, deciding what content people see and when.

They have undervalued quality news content and, as a result, the information ecosystem has become increasingly confusing and unhealthy.

We have the solution that will give all forms of news media a decent shot at getting a fair return for their work and checking the power of government and Big Tech.

Local news publishers just want the ability to band together to fight for their future. Ironically, however, current antitrust laws actually protect Big Tech from publishers taking any organized action.

To help resolve this crisis, we are asking our members of CongressSen. Marsha Blackburn and Bill Hagerty, and Reps. Diana Harshbarger, Tim Burchett, Chuck Fleischmann, Scott DesJarlais, Jim Cooper, John Rose, Mark Green, David Kustoff and Steve Cohento support the Journalism Competition and Preservation Act (also known as the Safe Harbor Bill).

The Safe Harbor Billwould give news publishers the ability to seek fair compensation for use of their content, and which would allow them to continue to invest in the critical newsgathering and reporting on which Americans depend.

With the passage of this bill, all news publishers, especially small local publishers, would finally be able to ask the tech platforms for the compensation they need, and deserve.

We applaud those members of Congress across the country and on both sides of the aisle who have already shown their commitment to local journalism by co-sponsoring the Journalism Competition and Preservation Act.

But we need support from every member of Congress.

We hope our congressional representatives will agree that quality reportingfor our community and the future of all local journalism is worth fighting for and will co-sponsor the Safe Harbor Bill today.

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The editors of the USA TODAY Network Tennessee adapted and endorsed this editorial from the News Media Alliance.

Read or Share this story: https://www.tennessean.com/story/opinion/editorials/2021/05/10/safe-harbor-bill-stop-big-tech-harming-local-news-publishers/5027724001/

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Safe Harbor Bill will stop Facebook and Google from harming local news publishers | Editorial - The Tennessean

A closed retail shop near Zillows downtown Seattle headquarters in summer of 2020. While tech jobs are holding steady in many tech hubs, retail jobs are sinking. (GeekWire photo)

The great migration of tech talent out of large tech hubs like Seattle, San Francisco and Boston may be overblown. At least thats one of the findings of a new report by Indeed, which compared job postings in eight large tech hubs to other major metropolitan areas.

Even as remote work increases, tech jobs remain as concentrated in the big tech hubs as before the pandemic, the report concluded. According to the findings, tech job postings fell less in the eight major tech hubs than other metro areas, which meant the tech geography pattern changed little during the pandemic.

But heres the rub. Overall, job postings across a variety of sectors particularly in retail, childcare and food preparation declined precipitously in the 8 major tech hubs surveyed when compared to other metro areas. The 8 major tech hubs studied included Seattle, San Francisco, Baltimore, Boston, Austin, Washington, D.C., San Jose and Raleigh.

Whats going on here?

With high shares of people working from home, local businesses like shops and restaurants have been getting less traffic. As a result, job postings and employment have suffered, the report noted.

The story is evident for those whove wandered downtown Seattle, where small retail shops and restaurants once bustling with workers grabbing a lunchtime sandwich or after work cocktail remain closed or occupied by a small fraction of patrons. GeekWire explored the impacts of this trend last summer, speaking with small businesses near Zillow Groups downtown headquarters.

As community leaders discuss how urban centers like Seattle rebound from the pandemic, the data from Indeed paints a troubling picture. Booming tech companies hiring remote and non-remote workers stand in contrast to the decimated industries that have historically served those industries in downtown districts. That could be bad news for downtowns.

Jed Kolko, who produced the report for Indeed, told Axios that its too early to tell whether the retail and food service work declines are permanent. But he also speculated that remote workers could shift the economic balance from downtown environments to outlying residential areas.

Could that mean a boom for Burien and Ballard?

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Tech jobs hold steady in Seattle and other big tech hubs, but theres another disturbing trend line - GeekWire