Aurelia Butler

(Reuters) -TikTok displayed a notification to some U.S. users on Friday, urging them to call their senators and ask them to vote no to a bill that would ban the popular short-form video app if it is not divested from Chinese tech company ByteDance.”Tell your Senator how important TikTok is to you. Ask them to vote no on the TikTok ban,” the notice said, which allowed users to enter their zip code to locate their senator’s phone number.”Now, if the Senate votes, the future of creativity and communities you love on TikTok could be shut down,” the notice read.On Wednesday, the U.S. House of Representatives overwhelmingly voted to pass the bill giving ByteDance about six months to sell the U.S. assets of the app, or face a ban. The White House said the Senate should take “swift action,” and President Joe Biden said he would sign the bill.”We’ll continue informing our community about how the ban bill will affect them and what they can do to make their voices heard,” a TikTok spokesperson said, adding the alert is only being served to users of voting age.The alert was displayed when some people opened the app, and it also appeared when users searched “TikTok ban.”TikTok sent a similar alert to users ahead of the House vote, warning that “the government will take away the community that you and millions of other Americans love.”Lawmakers complained their offices were inundated with calls from TikTok users opposing the legislation. More

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.A strange thing happened this week: calm. US inflation data showed that prices were rising faster than analysts had expected or hoped in February — an outcome that, on the margins at least, bolsters the case for keeping interest rates higher for longer. At one point last year, “higher for longer” were the three scariest words in the English language for investors — enough to strike terror in to any portfolio manager. This time around, however, government bonds wobbled only slightly and both US and global stocks held it together around record highs.This is a sign that interest rates are shedding their suffocating dominance over global markets, and that stocks are climbing not because they are huffing the speculative fumes of imminent and aggressive potential rate cuts but because they’re worth it. We are in a new era where the apparent need to keep interest rates high in an effort to suppress inflation (now running at 3.2 per cent in the US) is a bullish signal for risky assets like stocks, not a reason to panic. This is always an unstable little dance in markets. Sometimes bad news on the economy is good news for markets, because it suggests lower interest rates ahead. And sometimes the relationship flips around again. Now we are back to good news being good news.Well, sort of. You can argue we have been in this era for quite some time, and that in a brutal 2022 and largely also brutal 2023, nervy stocks investors, spooked by a recession that never came and still blindsided by the supply shocks of the Covid era, misread high rates as a threat, rather than as a sign that the economy was humming along nicely. This year, by contrast, stocks have proven to be perfectly able to sail higher without the fuel of low rates.“We’ve seen a breakdown in correlations since January,” said Greg Peters, co-chief investment officer at PGIM Fixed Income. “I always felt it to be a spurious correlation anyway. The equities folks were worried when rates were going higher without understanding why they were. Today, rates being higher is a byproduct of much stronger than expected growth. The market has smartened up.”Life would be very boring — and markets would cease to function — if everyone agreed with each other. So naturally enough, doom mongers are still doing their thing.“Complacency is dangerous,” proclaimed Albert Edwards at Société Générale in a note this week. “Now that almost every market guru has walked back their recession call, wouldn’t it be just typical if the US economy now slides into recession?”Some economic data still looks fragile, and echoes with previous run-ups to market shocks are striking, he said. Record highs in stock markets have also “buoyed the economic narrative”, he said. “Something does not look right.”Something always looks skewiff to permabears like Edwards, but he does have a point. One recent academic paper argued that animal spirits or bubbles in markets can themselves be responsible for as much as an additional 0.8 percentage points on US inflation rates. Feedback loops like these can make it even harder to predict what’s coming next.In addition, investors know that markets are on a tightrope. (Pictet Wealth Management has clearly been investing in thesauruses — it has labelled this “the year of the funambulist”.) A resurgence in growth and inflation strong enough to restart rate rises is unlikely, though impactful enough to take seriously, while the chance of a recession in the US, also improbable, also obviously matters.Neil Sutherland, a fixed income portfolio manager at Schroders in New York is not in the recession camp, but he does suspect some of the gloss on the US economy will start to fade soon. “Risk assets could struggle,” he said, and he’s not referring only to stocks. Sutherland said any deviation to the idea that US inflation will generally keep sinking while the economy holds up “could be a negative scenario, particularly when you look at valuations in credit”. The extra premium that corporate debt offers on top of super safe government bonds is close to its slimmest on record, reflecting runaway demand for this asset class. Still, the market’s mindset is shifting around higher rates. “I’m surprised when investors are still so nervous about rates staying high,” said Karen Ward, chief markets strategist for Europe at JPMorgan Asset Management. “Zero interest rates were a sign of the ill-health of the economy. Rates were low because economies were really struggling. Good riddance.” As this past week has proved, we now know for sure that for stocks to keep demolishing record highs (in nominal terms at least) and for corporate debt to remain so firmly in favour, clearly does not require the Fed to cut rates six times, as the market had been anticipating just a few weeks ago. It might not even hinge on the Fed cutting rates three times — the path it has outlined. That leaves fund managers able to cheer positive news as and when it lands. Stop worrying and learn to love higher [email protected] More

NEW YORK (Reuters) -The dollar rose to a more than one-week high on Friday after a mixed batch of data showed the U.S. economy remained stable with small pockets of weakness, suggesting the Federal Reserve could keep interest rates higher for longer or reduce the planned number of rate cuts this year.The dollar index, which tracks the U.S. currency against six major peers, was on pace to post a weekly gain of 0.7%, the largest since mid-January. The index was last flat at 103.43.Data on Friday showed a solid U.S. manufacturing sector, with output rebounding by 0.8% last month after a downwardly revised 1.1% decline in the prior month. Analysts at Citi, however, said in a research note that the rebound in February partly reflects the revisions lower to January output and the reversal of a “weather-related drag in January in non-durable goods manufacturing sectors.”U.S. consumer sentiment and inflation expectations were little changed in March, a survey showed on Friday. The University of Michigan’s preliminary reading on the overall index of consumer sentiment came in at 76.5 this month, compared to a final reading of 76.9 in February. The survey’s reading of one-year inflation expectations, a measure tracked by the Fed, was unchanged at 3.0% in March. The survey’s five-year inflation outlook held steady as well at 2.9% for the fourth straight month.The Fed is scheduled to meet next week and while it is not expected to make any interest rate moves, hotter-than-expected U.S. producer and consumer price data this week has led traders to rein in bets on future cuts.”Ahead of the meeting, there’s nothing to indicate that the Fed can afford to be dovish at this point,” said Eugene Epstein, head of structuring for North America at Moneycorp in New Jersey.”That’s why we have Treasury yields going up and that’s why we have the dollar stronger. Gold fell as well. It’s all the standard correlations. So the Fed maybe gets higher for longer: they’re not being given any room to cut sooner than later.”The rate futures market on Friday has priced in a 57% chance of the Fed cutting rates in June, compared to 71% on Monday, according to LSEG’s rate probability app. The market has also reduced the number of rate cuts it expects this year to less than three, from between three and four earlier this year.Investors are also looking to a highly-anticipated meeting at the Bank of Japan next week.The BOJ is close to ending eight years of negative interest rate policy, with internal preparations for an exit in the works since Kazuo Ueda took office as BOJ governor.At the same time, Japan’s biggest companies agreed with labor unions to raise wages by the highest level in 33 years on Friday, reinforcing views the country’s central bank is poised to make a landmark shift away from negative interest rates.The dollar continued to rise against the yen, up 0.5% at 149.02. On the week, the greenback rose 1.3%, on track for its biggest gain since mid-January.The focus is also on other central bank decisions for signs of how quickly they will cut interest rates after a period of rapid rises to curb rampant inflation. The Bank of England and Swiss National Bank are due to meet next week.The euro was slightly up at $1.0889. The European Central Bank council last week began a discussion on when to reduce its own rates, council member Olli Rehn said on Friday. Sterling slipped 0.1% to $1.2737.In cryptocurrencies, bitcoin prices fell as much as 7% in volatile trade from a record high touched on Thursday as risk sentiment took a hit. It was last down 0.3% at $70,483. More

HONG KONG (Reuters) – The U.S. House of Representatives overwhelmingly passed a bill this week that would give TikTok’s Chinese owner ByteDance about six months to divest the U.S. assets of the short video app, or face a ban, in the greatest threat to the app since the Trump administration.Below is what we know about the Chinese company, which was valued at $268 billion in December.WHO IS BYTEDANCE?Nicknamed “App Factory” due to its frequent releases of mobile applications, ByteDance was founded by software engineer Zhang Yiming in 2012 in Beijing.It is often seen as the world’s leading company on algorithms because its flagship apps such as TikTok, Douyin and Toutiao are powered by commanding recommendation engines that make its apps appealing to users.Its first breakout hit was Toutiao, a news aggregation app released in 2012 that leverages machine learning algorithms to provide each user a personalized content feed.Douyin, TikTok’s sister app in China launched in late 2016, was an instant success and became ByteDance’s second app with more than 100 million users in under a year after release. ByteDance launched an international version of Douyin called TikTok the following year. While ByteDance said the two apps were positioned as two different products from the beginning, they share the same logo and similar user interface design.FOUNDER, CEO AND KEY INVESTORSBorn in the southeastern coastal province of Fujian, Zhang studied software engineering at Nankai University of Tianjin. Before founding ByteDance, he worked at multiple tech companies including a brief stint at Microsoft (NASDAQ:MSFT).In ByteDance’s early years, he spent much of his time in Beijing working on Toutiao and Douyin, but since the COVID-19 pandemic outbreak, he has been spending more time abroad, with Singapore a key base, according to people familiar with the matter. They declined to be named because they were not authorized to speak to media.In 2021, Zhang stepped down as ByteDance’s CEO and passed the reins to Liang Rubo, his co-founder and university roommate. At the time, he said he lacked the social skills to be an ideal manager and would rather spend time thinking about long-term strategy for the company away from the limelight. According to a release published by TikTok last May, about 60% of ByteDance is “beneficially owned by global institutional investors such as Carlyle Group (NASDAQ:CG), General Atlantic, and Susquehanna International Group,” 20% by employees, and the rest by Zhang.Still, Zhang holds over 50% of ByteDance’s voting rights, sources said.RELATIONSHIP WITH CHINESE GOVERNMENTLike with most big Chinese companies, China’s ruling Communist Party has set up a party branch at ByteDance – in 2014, according to state media, raising concerns about Beijing’s influence over the company. Scrutiny over ByteDance expanded further after the government took a 1% stake in its local subsidiary Beijing ByteDance Technology in 2019 that awarded the Chinese government a board seat at the subsidiary. ByteDance became a prominent target of the U.S. government during the Trump administration which issued executive orders in 2020 that required ByteDance to sell TikTok’s U.S. assets or face being banned in the country. The orders were blocked by federal courts.Beijing, which opposed Trump’s executive order, at the time revised a list of technologies that would need Chinese government approval before they are exported. Experts said TikTok’s recommendation algorithm would fall under the list. U.S. officials have criticised TikTok’s security and privacy, suggesting user data might be shared with Beijing. TikTok, used by about 170 million Americans, has said the firm has never shared, or received a request to share, U.S. user data with the Chinese government.To try to alleviate concerns, TikTok formed an alliance with Oracle (NYSE:ORCL) and started to host its American user data in the U.S. firm’s cloud infrastructure from 2020.TikTok has been pushing back on the newly proposed bill. Its CEO Shou Zi Chew said this week that the company would exercise its legal rights to prevent a ban. More

Why are US officials trying to ban TikTok?U.S. officials warn TikTok’s management is beholden to the Chinese government. For example, China could use the social media app to influence the 2024 U.S. elections, Director of National Intelligence Avril Haines told a House of Representatives intelligence committee hearing this week.The Department of Justice recently warned lawmakers that because ByteDance is headquartered in Beijing, TikTok’s American users are at risk because “foreign governments like the PRC (China) that are known for their surveillance and censorship.” What does the bill mean?In an election year when many politicians do not want to be seen as soft on China, the bill is the latest in a series of moves responding to national security concerns. Officials in both political parties have raised red flags about TikTok along with other issues ranging from connected vehicles to advanced artificial intelligence chips to cranes at U.S. ports. On the other side, many younger voters oppose a ban because they use the app to express their views and follow politics. Last month, President Joe Biden’s re-election campaign joined TikTok, raising hopes among company officials that legislation was unlikely this year.Who voted in favor of the ban?The bill passed 352-65 in a bipartisan vote, with most Republicans members of Congress voting in favor of it. Mike Gallagher, the Republican chair of the House of Representatives’ select China committee and Representative Raja Krishnamoorthi, the top Democrat, introduced the measure March 5 with more than a dozen lawmakers.A number of prominent Democrats in the House voted against the bill including House Democratic Whip Kathleen Clark, Arizona Senate candidate Ruben Gallego, Alexandria Ocasio-Cortez as well as the top Democrats on the Judiciary, Ways and Means, Transportation and Intelligence committees.”There are serious antitrust and privacy questions here, and any national security concerns should be laid out to the public prior to a vote,” Ocasio-Cortez said.Fifteen Republicans and 50 Democrats voted against the bill.How would a ban be enforced?If passed by the Senate in its current form and signed into law by Biden, the bill would give TikTok’s Chinese owner ByteDance about six months to divest the U.S. assets of the short-video app.It is unclear whether China would approve any sale or if TikTok’s U.S. assets could be divested in six months.If ByteDance failed to do so, app stores operated by Apple (NASDAQ:AAPL), Alphabet (NASDAQ:GOOGL)’s Google and others could not legally offer TikTok or provide web hosting services to ByteDance-controlled applications.In theory the ban would make it difficult, if not impossible, for users to access TikTok in the U.S.  Is TikTok banned in other countries? India banned TikTok along with dozens of other apps by Chinese developers in June 2020, saying they could compromise national security and integrity. Nepal’s government banned the app in November 2023.Several countries, including the U.S., Australia, Canada and New Zealand have banned TikTok from federal government-owned devices. What’s next for TikTok in the U.S.? The TikTok bill passed by the House faces a more uncertain path in the Senate where some favor a different approach to regulating foreign-owned apps posing security concerns. Senate Majority Leader Chuck Schumer said the Senate will review the legislation.Senate Commerce Committee chair Maria Cantwell, who will play an important role in the Senate’s next move, said she wants legislation “that could hold up in court,” and is considering a separate bill, but is not sure what her next step is. More

(Reuters) – The U.S. market for one of the riskiest types of corporate debt is resurging this year, as companies cater to investor demand for assets that can lock in high yields for several years ahead of an expected decline in interest rates.Holders of these bonds, called junior subordinated debt, are among the last to be paid in case of a default and companies can defer interest payments. The reward for such high risk is yields that exceed those of senior bonds, for maturities of up to 40 years, though issuers typically call, or redeem, the bonds in five or 10 years.Like stocks, these hybrid bonds rank low in a company’s capital structure, but they resemble bonds with interest payments.With the Federal Reserve widely expected to start cutting rates later this year, investors are scrambling to get their hands on securities that will pay the current levels of high interest for years to come.To meet this demand, five companies this year have issued $4.6 billion of junior subordinated debt, and a sixth hit the market on Thursday. This pace is significantly faster than in the last two years, Barclays data shows, with $8 billion issued in full-year 2023.Barclays’ analyst Bradford Elliott estimates sales of junior subordinated bonds could reach $15 billion to $20 billion this year. Investors have plowed in a net $1 billion into funds that invest in hybrid bonds since October, he noted. The renewed interest is giving companies an additional financing option as debt comes due. INCREASING ATTRACTIVENESSA change in Moody’s (NYSE:MCO) rating methodology on Feb. 1 has made hybrid bonds more attractive for companies, bankers and analysts said.Last month, Moody’s said it would start giving 50% equity credit when rating a company’s hybrid debt or count half of an issuer’s subordinated debt as equity capital, up from 25% previously. The move, in line with S&P and Fitch, means companies can reliably use hybrid bonds to raise more capital without hurting their credit ratings.Among issuers of junior subordinated debt so far this year, NextEra Energy (NYSE:NEE) Capital used some of the proceeds to refinance short-term commercial paper. Energy Transfer (NYSE:ET), which owns and operates a diversified portfolio of energy assets, said it refinanced preferred shares, another type of hybrid bond that is riskier than junior subordinated debt.Daniel Botoff, global head of debt capital market syndicate at RBC Capital Markets, said junior subordinated debt also had a tax advantage over preferred shares.”It is more cost-efficient for companies to issue junior subordinated debt whose interest payments were tax-deductible to refinance taxable preferred stock that is becoming callable,” Botoff said.STRONG DEMANDWith strong demand, the average credit spreads on corporate hybrid bonds, or the premium paid over Treasuries, tightened nearly 200 basis points since it peaked at 523 basis points in October, Elliott said.The six companies that have issued subordinated bonds this year paid 6% to 8% in yields, just 150-200 basis points more than on their higher ranked senior bonds.In another sign of firm demand, Energy Transfer increased its offering in January to $800 million from an initial $500 million. It received $5 billion in orders, Informa Global Markets data showed.Hybrid bonds are “sensitive to macro conditions,” said Tim Crawmer, global credit strategist at Payden & Rygel. “They have a higher correlation to improving credit quality and improving equity risk sentiment than they do to interest rates.” More

This article is an on-site version of our Disrupted Times newsletter. Sign up here to get the newsletter sent straight to your inbox three times a weekToday’s top storiesFor up-to-the-minute news updates, visit our live blogGood evening.Voters go to the polls today in a Russian presidential election set to extend Vladimir Putin’s 24-year rule until at least 2030 and which he is likely to use as proof of support for his “special military operation” in Ukraine.As one focus group put it, only a meteorite hitting the earth, nuclear war, or his own death can prevent Putin’s “ritual reappointment”. The three Kremlin-controlled opponents on today’s ballot admit they’re not trying to win, while any real challengers have been barred from running, are exiled, or in jail. Opposition instead comes in the form of planned protests at polling stations including “political flash mobs” to honour the memory of Alexei Navalny, Putin’s fiercest critic, who died in a remote Arctic prison colony last month.The vote, which lasts until Sunday, comes as European leaders attempt to patch up their differences over aid for Ukraine and the FT reveals how Moscow’s “dark fleet” of tankers are operating without oil spill insurance, exposing coastal states in Europe and Asia to huge potential clean-up costs in the event of a disaster. It is the latest example of how Russia is circumventing sanctions — at times with the assistance of western executives.With a $60bn aid package frozen in Congress, Kyiv is stepping up efforts for alternative donors to fund its defence and avert massive cuts to public spending, with its deficit set to be widened further by the need to mobilise another 500,000 troops to relieve depleted and exhausted soldiers on the frontline. Brussels is stepping up its efforts, including a plan to fast-track up to €3bn for Kyiv from frozen Russian assets. As we highlight in today’s interview with Oleksandr Kamyshin, Ukraine’s minister for strategic industries, Kyiv is urging western allies to fund its domestic weapons production. The country’s freshly retooled factories, he says, can churn out weaponry cheaper and faster than allies but need more contracts to stay sustainable. Putin meanwhile remains bullish, ramping up his military rhetoric this week, saying Russia was “prepared” for nuclear war if the west threatened its sovereignty. G7 nations are also concerned at Iran’s role in supplying weapons to Moscow.In the latest news on the conflict, at least 14 people were killed today in the Ukrainian port city of Odesa in what was characterised as a Russian “double tap”: when forces fire a second missile targeting rescuers at the scene of an earlier attack.Putin is buttressed by the knowledge that his country, at least in the short term, appears to be weathering the effect of sanctions (the IMF has even doubled its prediction for Russian economic growth). Kyiv in turn is stepping up efforts to “deprive the enemy of resources and reduce the flow of oil money and fuel” by targeting oil refineries deep inside Russia. Need to know: UK and Europe economyPublic expectations for UK inflation have fallen to a three-year low, according to a Bank of England survey, coming close to their long-term average and reinforcing the case for interest rate cuts this year. Only 10 per cent of the £10.5bn earmarked for UK economic regeneration as part of the government’s “levelling up” agenda has been spent since 2020, according to a parliamentary report. One of those places sorely in need of help is the seaside town of Blackpool where life expectancy is the lowest in England.You are seeing a snapshot of an interactive graphic. This is most likely due to being offline or JavaScript being disabled in your browser.Sir Keir Starmer is on a mission to reassure business over his proposed reforms to workers’ rights should Labour win the general election. Unions are urging the party’s leadership to scrap rises in the state pension age, saying they could push retirement out of reach for today’s young.Far-right politician Geert Wilders said he would not become the prime minister of the Netherlands, despite his Freedom party coming first in November’s general election. The centre-right NSC party, which Wilders needs the support of to form a coalition government, made clear that it would not accept him as PM.A rally in Italian government bonds has narrowed the closely watched gap between the country’s borrowing costs and Germany’s to the lowest level in more than two years, as investors become increasingly optimistic about the prospects for Italy’s economy and position for interest rate cuts.Need to know: global economyThe US held secret talks with Iran this year to convince Tehran to use its influence over Yemen’s Houthi movement to end attacks on ships in the Red Sea, according to US and Iranian officials. Global trade however seems to be holding up remarkably well.China has started to offer visa-free entry to visitors from selected countries as it tries to revive a tourism industry struggling to recover from the Covid-19 pandemic, geopolitical tensions and a weak economy.Diamonds are not forever, it appears, at least not in China where waning consumer confidence and Covid-19 restrictions led to a drop in engagements in the world’s second largest consumer market for the gemstones. Even those still tying the knot are shifting to gold.Is there a way out of Haiti’s political crisis? Listen to the new edition of the Rachman Review podcast.Need to know: businessJapanese auto rivals Honda and Nissan are joining forces to work on electric vehicle technology as they try to survive the influx of low-cost, high-tech cars from China. Mercedes is trialling humanlike robots for “demanding and repetitive” work.The humanoid Apollo robots from Apptronik will be used to deliver parts to car assembly lines as well as carry out quality inspections US President Joe Biden confirmed his opposition to the takeover of US Steel by Nippon Steel of Japan, arguing it was “vital” for the American steel company to remain “domestically owned and operated”. The Lex column is not convinced there are national security reasons for blocking the deal. Energy giant Shell diluted its climate targets to allow its gas business to keep growing, even as it reaffirmed its intention to cut all emissions by 2050. The move was echoed in a survey by the Bain consultancy showing oil and gas executives now expect a slower transition to net zero. Thousands of companies, including big names such as Microsoft, have been removed from a validation process for failing to submit sufficiently ambitious climate plans.Global corporate defaults are at their highest level since the financial crisis as subdued consumer demand, rising wages and high interest rates take their toll.A group of Nestlé shareholders has demanded the world’s biggest food company reduce its reliance on unhealthy products, citing regulatory and reputational risks and growing public health concerns.  Artificial intelligence editor Madhumita Murgia tells the tale of how a tech-savvy Uber Eats delivery rider, who had become convinced the app was consistently making errors and underpaying, decided to take on the algorithms that controlled him. Science round upNeurological conditions such as stroke, dementia and migraine are the biggest global cause of ill-health, affecting billions of people and hitting poorer countries hardest, according to a wide-ranging study. More than 40 per cent of the global population suffered nervous system problems in 2021 despite improvements in prevention and treatment.UK researchers are working to slash artificial intelligence computing costs by developing cheaper and less energy-intensive alternatives to the current silicon-based digital infrastructure.The need for better pandemic preparedness was highlighted by a Lancet study showing the Covid-19 pandemic temporarily reversed the 70-year trend in falling global mortality rates. Commentator Anjana Ahuja says the UK risked forgetting the lessons of the pandemic when it comes to the production of vaccines.Jim Skea, head of the UN’s climate science body, said record temperatures over the past year had thrust the world into “unknown territory” and that “more science” was needed to understand why.Intuitive Machines will attempt to revive its Odysseus spacecraft as it tries to extend the first successful commercial Moon mission. Odysseus’s systems were put to sleep on February 29 when sunlight no longer reached its solar panels but engineers hope the probe can be rebooted after sunlight returns to the Moon’s south pole. SpaceX’s Starship rocket reached orbit on its third attempt but failed at the final hurdle of its test mission as it attempted to return to Earth. Some good newsScientists using artificial intelligence to explore the human body’s “dark genome” have developed a potentially powerful new approach to cancer detection, monitoring and treatment. The research shows how AI and other advanced computing technologies are deepening understanding of diseases and how to deal with them.   Recommended newslettersWorking it — Discover the big ideas shaping today’s workplaces with a weekly newsletter from work & careers editor Isabel Berwick. Sign up hereThe Climate Graphic: Explained — Understanding the most important climate data of the week. Sign up hereThanks for reading Disrupted Times. If this newsletter has been forwarded to you, please sign up here to receive future issues. And please share your feedback with us at [email protected]. Thank you More