Aurelia Butler

A top Republican donor to Donald Trump’s past presidential campaigns is helping to bankroll Robert F Kennedy Jr’s long-shot White House bid, as conservative cash keeps flowing to Joe Biden’s main challenger for the Democratic nomination.According to federal filings released late yesterday, Timothy Mellon gave $5mn to American Values, the main political action committee supporting Kennedy’s White House bid.Mellon, 81, is the grandson of Andrew Mellon, the former US Treasury secretary and senior banker, and a former executive in the transportation and infrastructure sector. He was one of Trump’s top donors in 2016 and 2020.Kennedy, who is the son of the late Senator Robert Kennedy and nephew of the former president John F Kennedy, is known for his scepticism towards vaccines and his questioning of the US’s support for Ukraine in its war with Russia.He is a distant threat to Joe Biden, who remains the firm favourite to secure the Democratic party’s nomination for next year’s presidential election, but he could still be a thorn in the president’s side if he continues to attract financial support. On the Republican side, the leading oil tycoon Harold Hamm has called for Donald Trump to drop his bid for the White House. Hamm, who has a net worth estimated at more than $20bn, urged the former president to play the role of “kingmaker” in the Republican party and back another candidate instead of seeking office himself in an interview with the Financial Times. Meanwhile, Trump’s rival for the 2024 Republican presidential nomination, Ron DeSantis, vowed to “rein in” the Federal Reserve yesterday, in a major speech on the economy in New Hampshire.The Florida governor blamed the US central bank for the high inflation, considering a digital currency and straying into social policy as he sought to reboot his struggling campaign.More on US politics: Robert Kennedy Jr’s appeal to conspiracists poses a genuine threat to Joe Biden, Edward Luce wrote in June.Here’s what else I’m keeping tabs on today:Results: Two large drugmakers, Pfizer and Merck, report second-quarter earnings. There are also results due from Starbucks, Uber, Caterpillar, Chesapeake Energy and Electronic Arts.Economic data: Data from the US Bureau of Labor Statistics is expected to show job openings decreased in June compared to May and the Institute for Supply Management’s Manufacturing PMI is expected to confirm that activity contracted for the ninth consecutive month.Five more top stories1. Exclusive: The owner of Facebook and Instagram plans to launch a range of artificial intelligence chatbots that exhibit different “personas” that are capable of having humanlike discussions. People close to the company said the new technology could be deployed as early as next month to interact with Meta’s nearly 4bn users. Read more on what form the chatbots could take, including Abraham Lincoln or a surfer.Twitter: Elon Musk’s X Corp has threatened to sue a non-profit group that suggested there had been a rise in hate speech and disinformation on the social media platform since Musk took over.2. HSBC has unveiled its second $2bn share buyback of the year after rising interest rates helped the UK bank post bumper quarterly profits of $8.8bn. The performance was largely driven by rising interest rates in the UK and US, which helped boost earnings even as growth faltered in its largest markets of Hong Kong and mainland China. Read more on the results which beat analysts’ expectations. 3. The US effort to increase munitions supplies for Ukraine is facing hurdles. Plans to deliver more 155mm calibre shells used in howitzers on the front line include supplies from international allies in the short term, but US Army efforts to increase monthly output of the crucial munitions to 90,000 will take until 2025. Read more about why production is taking so long.More on the war in Ukraine: A skyscraper in Moscow’s business district has been hit by a drone for the second time in three days. 4. The private equity owners of Birkenstock are considering an initial public offering that could value the German sandal maker at $8bn, according to people familiar with the matter. Goldman Sachs and JPMorgan are advising on the potential listing that could take place as early as next month. Read more why the owners are looking to monetise their investment. 5. China’s leader Xi Jinping has replaced the two missing generals who had been in command of the country’s missile forces, in effect confirming the largest purge at the top levels of the military in a decade. Read more on Xi’s crackdown on the top generals running China’s army.The Big Read

© FT montage/Getty Images/AP

From semiconductors and electric-car batteries to biotech and telecoms, South Korean companies are crucial players in sectors critical to Washington’s and Beijing’s national security and industrial strategy. But experts, officials and company executives all note that the country has already embarked on an unmistakable — albeit untrumpeted — pivot away from the Chinese economy.We’re also reading . . . Barbenheimer: The marketing success of Barbie and Oppenheimer has much to teach us about misplaced rivalry in politics and life, writes Stephen Bush.Global headwinds: Market optimism about convergence in the global economy is overdone, with western and Asian countries facing a bumpy road ahead, writes Mohamed El-Erian.Work & Careers: The old-fashioned bullying boss is disappearing, according to Grace Lordan, but in their place is a new type of negative persona.Chart of the day

The S&P 500 rose 3.1 per cent in July after closing up 0.2 per cent yesterday at 4,588.96. It was the blue-chip index’s fifth consecutive monthly increase, the longest such winning streak since the summer of 2021. Read more on the “weirdest” of market rallies.Take a break from the news. . . and enjoy this mouthwatering review of the best lobster rolls in the Hamptons. The expensive beach enclave on New York’s Long Island is still home to down-to-earth shacks and diners where you can tuck into this simple yet succulent snack.

Lobster rolls at the Clam Bar, Montauk

Additional contributions by Tee Zhuo and Benjamin Wilhelm More

European stocks followed China lower on Tuesday as fresh economic data pointed to weak factory activity across Asia and the eurozone, raising investor concerns about a global slowdown in demand for goods.The region-wide Stoxx Europe 600 index fell 0.7 per cent, extending early morning losses, while Germany’s Dax lost 0.9 per cent and London’s FTSE 100 gave up 0.5 per cent. The consumer goods sector led declines, down 1.2 per cent.France’s Cac 40 was the biggest faller in the region, down 1 per cent, with shares of luxury groups LVMH and Hermes International both down about 2 per cent. The moves came as fresh data pointed to a continued slowdown in manufacturing activity across the eurozone, in a sign that the region’s high borrowing costs and inflation weighed on demand. HCOB’s final eurozone manufacturing purchasing managers’ index fell to 42.7 in July from 43.4 in the previous month, hitting its lowest level since May 2020 when the region’s economy was hit by the onset of the Covid-19 pandemic. The index measuring factory activity in Germany, the eurozone’s largest economy, fell to 38.8 from 40.6 in the previous month. A reading below 50 means the majority of respondents reported a contraction in activity. The declines echoed markets in China, where the CSI 300 index of Shanghai- and Shenzhen-listed stocks fell 0.4 per cent and Hong Kong’s Hang Seng lost 0.3 per cent, as investors worried about the country’s stalled post-pandemic recovery.The Caixin manufacturing purchasing managers’ index, a private sector survey tracking monthly changes in factory activity, slipped to 49.2 in July from 50.5 in June, undershooting analysts’ forecasts of 50.3.The politburo, China’s top decision-making body, had earlier vowed to extend further support to prop up the world’s second-largest economy but offered few details, testing investors’ nerves.“This limited policy support means that China’s recovery probably will continue to be ‘tortuous’, uneven and drawn out,” said Duncan Wrigley, chief China economist at Pantheon Macroeconomics.Elsewhere in Asia, Japan’s Topix index was up 0.6 per cent, and South Korea’s benchmark Kospi rose 1.3 per cent. Meanwhile, slowing inflation prompted Australia’s central bank to keep its key interest rate unchanged for the second consecutive meeting, at 4.1 per cent, defying market forecasts of a 0.25 percentage point increase. The S&P/ASX 200 gained 0.5 per cent.The meeting came a week after central banks in the US and Europe raised rates but refrained from their usual hawkish guidance in a sign that the global tightening cycle could soon draw to a close.In the US, contracts tracking Wall Street’s benchmark S&P 500 fell 0.2 per cent, while those tracking the tech-focused Nasdaq 100 slipped 0.3 per cent ahead of the New York open.US stocks clocked their longest monthly winning streak in two years in July, as signs of falling inflation and resilient growth raised investors’ hopes that the US Federal Reserve could complete its monetary tightening cycle without causing a recession.“The attitude of the market is assured and investors expect upside for the foreseeable future, and any downside along the way is being dismissed as trivial noise,” said Mike Zigmont, head of research and trading at Harvest Volatility. More

1. Futures inch lowerU.S. stock futures edged under the flatline on Tuesday as a new month of trading begins with a stream of corporate earnings set to be released.By 05:16 ET (09:16 GMT), the Dow futures contract slipped by 97 points or 0.27%, S&P futures lost 12 points or 0.25%, and Nasdaq 100 futures dipped by 48 points or 0.30%.The main indices closed out July in the green, with the benchmark S&P 500 jumping by 3.1% during the month after the close of dealmaking on Monday. It was the index’s fifth straight month of gains – the longest such streak since 2021. The Dow Jones Industrial Average also climbed by more than 3% in July, while the tech-heavy Nasdaq Composite added around 4.1%.Emerging signs of cooling inflation, resilient economic activity, and expectations that the Federal Reserve may soon back away from an aggressive campaign of interest rate hikes have combined to help underpin a wide-spread rally in stocks. The second-quarter earnings season, meanwhile, has featured stronger-than-expected results from a host of major companies.2. Busy earnings week kicks into gearA rush of corporate returns is due out on Tuesday, accelerating the pace of a busy week that will see more than 160 S&P constituent firms report their latest quarterly earnings.Headlining Tuesday’s releases before the start of U.S. trading are pharmaceutical companies Merck (NYSE:MRK) and Pfizer (NYSE:PFE), as well as construction equipment giant – and economic bellwether – Caterpillar (NYSE:CAT). Chipmaker AMD (NASDAQ:AMD) and coffee chain Starbucks (NASDAQ:SBUX) will also unveil results after the bell.Later in the week, tech giants Amazon (NASDAQ:AMZN) and Apple (NASDAQ:AAPL) are scheduled to deliver their latest earnings.More than half of the companies in the S&P 500 index have already reported. According to FactSet data cited by CNBC, four-fifths of these businesses have posted earnings that topped Wall Street estimates.3. Meta preparing to launch AI chatbots – FT Meta Platforms (NASDAQ:META) is preparing to release new artificial intelligence-powered chatbots that have different personalities, according to a report in the Financial Times, as the Facebook parent attempts to boost user engagement.Citing people familiar with the matter, the paper said Meta is working on prototypes that can carry on humanlike conversations. Some versions of the AI, known internally as “personas,” can take on various characters, the FT added. Sources also told the paper that Meta is exploring one chatbot that speaks like Abraham Lincoln or another that gives travel advice in the style of a surfer.The chatbots, which the FT said could be launched as soon as September, are being designed to create a new search function and offer recommendations.Meta declined to comment to the FT.The report comes as the Menlo Park, California-based tech giant has been facing fierce competition to attract users and keep them engaged with its platforms. Like other Silicon Valley players, Meta is also in a race to develop — and ultimately profit from — AI technology.4. Controversial X sign dismantledA large glowing X on the roof of the San Francisco headquarters of X – the short-text messaging company formerly known as Twitter – has been removed following a string of complaints from neighbors.The flashing sign had been placed on top of the firm’s Market Street high-rise offices last Friday. Over the weekend, 24 complaints about the X were filed with the city’s building department, Reuters reported. Locals had been taking videos showing the pulsating light, criticizing it as an intrusive presence in the area.A spokesperson from San Francisco’s Department of Building Inspection told Reuters that inspectors had observed the structure being dismantled on Monday, adding that the property owners will be fined for the “unpermitted installation of the illuminated structure.”X, meanwhile, claimed the sign was taken down voluntarily.The controversy comes as X’s owner Elon Musk is attempting to overhaul the social media group and turn it into a so-called “everything app” that includes everything from payments to ride hailing. Musk has also said he would keep X in San Francisco despite what he described as a “doom spiral” of businesses leaving the city.5. Oil drifts lowerOil prices slipped on Tuesday in a sign of potential profit-taking following a July rally that was supported by tightening global supplies and hopes for a rebound in demand in the second half of the year.By 05:17 ET, U.S. crude futures traded 0.37% lower at $81.50 per barrel, while the Brent contract dropped 0.29% to $85.18 a barrel.Analysts cited by Reuters argued that oil prices may be correcting after being overbought in recent months. Meanwhile, sentiment was dented by a private survey that suggested further weakness in the Chinese economy, the world’s biggest crude importer.However, both U.S. crude and Brent settled at their highest levels since April on Monday, boosted in part by the prospect of output cuts by Saudi Arabia and Russia this month. Riyadh is also reportedly expected to extend its reductions into September at a meeting this Friday of the Organization of Petroleum Exporting Countries and allies.Meanwhile, investors are becoming more confident that the Federal Reserve may be able to bring down inflation without causing a wider collapse of the U.S. economy. According to analysts, such a scenario, which has been dubbed a “soft landing,” could help bolster fuel demand later this year in the U.S., the world’s biggest oil consumer. More

FRANKFURT (Reuters) – Germany’s property sector is under stress, prompting firms to call for government support, property developers to file for insolvency and share prices of landlords to plunge.The real estate industry in Europe’s largest economy long benefited from an era of cheap money that fed a decade-long boom, but now it is grappling with a major about-face in fortune, a dynamic also rearing its head in the United States and Sweden.Here are five charts that show the extent of the sector’s crisis in Germany: 1. CONSTRUCTION JOBSJobs in the building industry have risen steadily since the financial crisis more than a decade ago, but growth is slowing sharply.Data published on Tuesday showed just a 0.1% year-on-year increase in May in jobs, the slowest rise in 10 years. “No improvement in the situation is foreseeable,” the federal labour office said.2. PLUNGE IN NEW CONSTRUCTIONCranes may still line the horizons of Berlin and Frankfurt, but new construction plummeted in Germany during the first half of the year.It’s just the latest in a flurry of indicators that show real estate in Germany is in a deep funk. New building permits in Germany dropped 27% during the first five months of this year, compared with the same period last year. “Many, many property developers at the moment are postponing projects or slowing them down,” said Francesco Fedele, chief executive of BF.direkt, a property financing consultant.3. VONOVIA VS. THE DAXVonovia, Germany’s largest real estate group, serves as a bellwether for Germany’s property sector. Its shares have underperformed Germany’s blue-chip DAX index.Analysts at Stifel recently downgraded Vonovia and other property companies to “sell” from “hold”, noting they would be subject to “a protracted hangover” after “a seemingly endless party of growth fuelled by ever cheaper finance”.4. HOME PRICESGermany now belongs to a small group of European countries, including Sweden and Denmark, where residential prices have been falling, marking a reversal from years of gains.5. TRANSACTIONSGermany is the largest real estate investment market on the European continent.Investment volumes are down across Europe, but the fall in Germany brings transactions to 2012’s levels, according to Jones Lang LaSalle. More

SINGAPORE/TOKYO (Reuters) – Japan’s government bond market has turned into a cat-and-mouse arena for investors and the Bank of Japan, as the latter tries to slow a rise in yields towards its new policy ceiling and hungry investors go a step ahead and snap up the bonds. The game began after the Bank of Japan (BOJ) tweaked its complex seven-year old yield-curve-control (YCC) policy on Friday, saying yields on the 10-year Japanese government bond (JGB) it targets can move flexibly and as far as 1%, rather than be capped at 0.5%.Over the two trading days since, the market has tried to second-guess the pace at which the BOJ wants yields to move, while the BOJ has run special bond-buying operations to cap yields.Analysts say the BOJ’s small shift in policy has opened investor floodgates to the world’s third-biggest bond market, and their pent-up demand could ironically ensure the ceiling on yields is not tested for a long time. “It’s basically happy news for us. And now we’ve started buying little by little,” said a Japanese private pension fund manager, who requested anonymity as he is not authorized to speak to media. “There is only a very, very small possibility of a sudden or very steep rise in JGB yields, because too many people want to buy the bonds. There are many potential buyers and very few potential sellers in the market.”Tuesday’s auction of the benchmark 10-year bonds was proof of such demand. The maximum yield investors demanded was 0.6%, just 10 basis points (bps) above the previous policy cap.The foreign bid for JGBs has been strong this year as rising rates in the United States and Europe meant dollar and euro investors get paid a lot for hedging their yen holdings.Local banks, pension funds and insurance companies are now joining that bid for JGBs, hoping the still negative overnight rates, a slightly steeper yield curve and reduced BOJ presence in the bond market will allow for more returns and liquidity.”The initial target for investors seems at least 0.70% to 0.80% so we continue to expect a grind higher in yields and are positioned for such,” said Ales Koutny, head of international rates at Vanguard Asset Management. “That’s the kind of level we heard over and over again from local investors. It also starts looking interesting on a risk reward for currency-hedged investors.” JGB HOLDINGSLatest surveys show most Japanese insurance firms (lifers) brought money back home into yen this year, but kept it idle rather than put it in loss-making JGB investments.”Domestic investors view this from an opportunity cost angle,” said Rong Ren Goh, fixed income investments director at Eastspring Investments in Singapore. “The cost of hedging from US dollars to yen increases with the Fed hiking continuously while BOJ continues to stay put. It makes sense to thus rotate back to JGBs which now give a better yield than FX-hedged U.S. Treasuries.”The hedging dynamics work favourably for foreigners seeking yen assets. The promise of an extra 10-20 bps of JGB yield means 10-year JGBs hedged from dollars into yen can yield upwards of 6%. As per BOJ data, lifers and pension funds held roughly 26% of a 1,132 trillion yen ($7.93 trillion) JGB market at the end of 2019. Foreigners held 12.9%, led by U.S. and Belgian investors. By March 2023, the first group’s share was down to 23%, foreigners held 14.5% and the BOJ held 47% of 1,229.8 trillion yen worth JGBs. Rising yields should allow lifers to offset the high risks in their long-term liabilities, analysts said.Through the YCC years, Japan’s pension funds too have struggled to meet their guaranteed payout obligations, ranging from 1.25% to 2.5%, on corporate plans, and some such as Nippon Life slashed their promised payouts last year.Tomoya Masanao, co-head of Japan and co-head of Asia Pacific portfolio management at PIMCO, says the BOJ’s new 1% yield benchmark may never be reached. “If yields were to rise anywhere close to 1%, there should be very strong demand for Japan duration (long-term bonds) from domestic investors, which would be enough to contain a yield rise,” Masanao said.($1 = 142.7700 yen) More