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  • Russia scores double hit with missile attack on Chernihiv theater

    Russia scores double hit with missile attack on Chernihiv theater

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    KYIV — Russia’s missile strike on the Ukrainian city of Chernihiv at the weekend not only killed seven people and injured 120, it also scored a second hit for the Kremlin by stoking internal anger against drone-makers, who are accused of turning the city into a target with a security blunder.

    On a bright holiday morning, as Ukrainians were returning from church on Saturday after celebrating the Apple Feast of the Savior — a harvest festival of the Orthodox church — a Russian Iskander-type ballistic missile exploded over the theater in the center of Chernihiv, a city north of Kyiv, only some 70 kilometers from the border with Russia.  

    The prosecutor’s office has started an investigation into a war crime that led to a mass murder.

    Online commentators, however, are already pronouncing guilty verdicts on an unexpected group of former national heroes, blaming not only Russia, but also Ukrainian drone producers and military volunteers who organized and advertised an event on the same day at the theater that was ultimately targeted, with the help of local military administration.

    “Is Russia to blame for the fact that it struck the theater in Chernihiv and killed civilians there? Of course. But didn’t the organizers have to turn on their brains and think that such an event is highly likely to become a target for Russian missiles? Especially if they constantly say that drones are a weapon of victory? This is about responsibility,” Sergiy Fursa, deputy director of Dragon Capital, an investment company, said in a Facebook post.

    Ukrainian military volunteer Roman Sinicyn chimed in, adding that by organizing their event in the city center so close to Russia, Ukrainian military producers, soldiers, and volunteers, as well as the local military administration, demonstrated supreme recklessness. “However, we should not shift all the blame on a specific and effective volunteer organization. The event was approved by officials, not volunteers. And quite specific representatives of ministries, special services, and the military were aware of the event,” Sinicyn said.   

    Maria Berlinska and Lyuba Shypovych from the Dignitas Fund, a Ukrainian military volunteer organization that has pushed for systemic changes in Ukraine’s drone production and supply industry as well as the training of drone operators, are now taking most of the online hate from Ukrainians.

    Dignitas Fund was among the organizers of the “Angry Birds” event, together with Chernihiv’s regional military administration and Ukraine’s defense innovation cluster Brave 1.

    The event organizers publicly announced the time and date of the meeting and said what city it was happening in, but revealed the exact location only to participants some four hours before the start.

    Someone then leaked that information to the Russians or Russia intercepted the communication. Russian state news agency RIA Novosti reported Russian forces were targeting a military meeting and even published an invitation with detailed maximum-security measures for the attendees who were not supposed to wear their military uniforms.

    Both Shypovych and Berlinska are declining to give any comments to the media as they are now taking part in the investigation of the event, Shypovych told POLITICO.

    Residents of Chernihiv clean up after the missile attack | Paula Bronstein /Getty Images

    According to social media posts by both volunteers, the participants in the event survived the attack, as most of them were able to escape to a shelter. The security services are now investigating the information leak that triggered the Russian missile launch, Shypovych wrote.

    After the wave of online hate, many members of Ukraine’s military, NGOs, and cultural sphere wrote posts in support of Berlinska, who has been a vocal critic of Ukraine’s defense ministry, and who has raised awareness of the Ukrainian authorities’ initial neglect of the crucial role that military drones should play in Ukraine’s defense against Russian invasion.

    “Believe me, I would want to die instead of those people,” Berlinska said in a statement.

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    Veronika Melkozerova

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  • You can invest in market winners and still lose big. Here’s how to avoid the hit.

    You can invest in market winners and still lose big. Here’s how to avoid the hit.

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    Investors should think twice before picking an actively managed mutual fund according to its style category. By “style category,” I’m referring to the widely used method of grouping mutual funds according to the market-cap of the stocks they invest in and where those stocks stand on the spectrum of growth-to-value.

    This matrix traces to groundbreaking research in 1992 by University of Chicago professor Eugene Fama and Dartmouth College professor Ken French, and has since been popularized by investment researcher Morningstar in the form of its well-known style box.

    In urging you to think twice before picking a fund based on this matrix, I’m not questioning the existence of important distinctions between the various styles. Fama and French’s research convincingly showed that there are systematic differences between them. My point is that there also are huge differences within each style as well. You can pick a style that outperforms all others on Wall Street and still lose a lot of money, just as you can pick the worst-performing style and turn a huge profit.

    This points to the two types of risk you face when picking an actively managed fund. You have the risk associated with the fund’s style (category risk) and you also have the risk associated with the particular stocks that the fund’s manager selects (so-called idiosyncratic risk). Idiosyncratic risk often overwhelms category risk, especially over shorter periods.

    To illustrate, consider the midcap-growth style. As judged by the Vanguard Mid-Cap Growth ETF
    VOT,
    this style produced a 28.8% loss in 2022. Yet, according to Morningstar Direct, the best-performing actively managed midcap-growth fund last year produced a gain of 39.5%, while the worst performer lost 67.0%.

    This best-versus-worst performance spread of over 100 percentage points is illustrated in the accompanying chart. Notice that the comparable spread was almost as wide for many of the other styles as well. Though I haven’t done the research to compare 2022’s spreads with those of other calendar years, I have no reason to expect that they on average were any lower.

    “ The only way to eliminate idiosyncratic risk when investing in particular styles is to invest in an index fund.”

    The only way to eliminate idiosyncratic risk when investing in particular styles is to invest in an index fund benchmarked to the style in question. If you are enamored of a particular fund manager and willing to bet he will significantly outperform the category average, just know that you also incur the not-significant idiosyncratic risk that the fund will lag by a large amount.

    The bottom line? By investing in an actively managed fund in a style category, you will be incurring the risk not only of that category itself but also the not-insignificant idiosyncratic risk of that particular fund. Fasten your seatbelt if that’s the path you take.

    Mark Hulbert is a regular contributor to MarketWatch. His Hulbert Ratings tracks investment newsletters that pay a flat fee to be audited. He can be reached at mark@hulbertratings.com

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  • Sun, sea and sanctions evasion: Where Russians are spending the summer

    Sun, sea and sanctions evasion: Where Russians are spending the summer

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    Even as war rages in Ukraine, hundreds of thousands of Russians are eyeing popular holiday destinations for a summer break — or even a safe haven to wait out the conflict.

    While a weaker ruble and growing economic woes means many ordinary families will be spending the warmer months on their dachas or taking a break inside Russia, those with enough cash to travel are wasting little time jetting off to sunny spots across Europe and Asia.

    That means countries still willing to take their money are tapping into a lucrative market. But that can come at a cost, and the politics of taking tens of thousands of tourists from a pariah state is already creating trouble in paradise for some popular destinations.

    Here are six of the top places Russians are spending their vacations.

    Turkey

    As lazy travel writers so often put it, Turkey is a nation that straddles East and West. That old cliché has taken on new meaning since the start of the war in Ukraine, with the NATO member state offering support to Kyiv while at the same time refusing to impose sanctions on Moscow.

    Ankara, as a result, has seen much-needed foreign cash flood into the country as Russians look to move their assets abroad. It’s also one of the only European destinations not to have banned flights from Russia: While the EU’s skies are closed, Turkish operators are offering flights from Moscow to sunny destinations like Antalya and Bodrum for as little as €130.

    In the first half of the year, Turkey’s tourism revenues grew by more than a quarter, hitting $21.7 billion, statistics released this week show, with as many as 7 million Russians expected to visit the country this year.

    Some have even decided to stay — as many as 145,000 Russians currently have residency permits. But while they’ve escaped political instability and the risk of conscription, they are sharing their new home country with tens of thousands of Ukrainians who’ve fled Russia’s war.

    That’s created tensions in resort towns like Antalya, which is popular with both Russians and Ukrainians. And given Turkey’s growing anti-migrant sentiment in the wake of May’s presidential elections, both groups could be at risk of being sent home.

    Georgia

    The South Caucasus country holds an almost mythical status in the minds of Russians — and its reputation for having some of the best nature, food and hospitality in the former Soviet Union has made it a go-to destination for middle-class holidaymakers, who flock to its Black Sea beaches and snow-capped mountains or kick back in trendy Tbilisi.

    In 2022 alone, more than 1.1 million Russians visited Georgia, up from just 200,000 the year before. That number is on the rise after Moscow in May relaxed rules banning direct flights.

    Under the ruling Georgian Dream party, Tbilisi has sought closer relations with the Kremlin since the start of the war and aimed to profit off Russian wanderlust. But many locals are less sure.

    In 2022 alone, more than 1.1 million Russians visited Georgia, up from just 200,000 the year before | Jan Kruger/Getty Images

    In a poll conducted in March, only 4 percent of the 1,500 people surveyed said Russians are welcome in Georgia, while a quarter said Russians were tolerated because of the cash they spend when they visit. More than one in three insisted Russian visitors should be banned until Moscow relinquishes control of the occupied regions of Abkhazia and South Ossetia — accounting for around a fifth of Georgia’s territory.

    Tensions are on the rise, with local Georgian and Ukrainian activists staging protests against Russian cruise ships docking in the port city of Batumi over the weekend. Clips shared by local media show Russian holidaymakers defending Russia’s 2008 war against Georgia and taunting the demonstrators from their balconies.

    Thailand

    It’s not only about the gleaming luxury resorts and party beaches. For Russians, the appeal of traveling to Thailand has a lot to do with the month of visa-free travel they’re granted.

    The number of Russians visiting Thailand has shot up by more than 1,000 percent over the past year, according to a Bloomberg report. Official statistics show 791,574 Russians traveling to the country in the first half of this year alone.

    The party city of Phuket has seen a particular influx, with close to half of all villas sold there since January being bought up by Russians — either as holiday homes or as party pads where they can wait out the war.

    That rise in tourism comes as Moscow has also sought to forge closer ties with the kingdom. Russian Foreign Minister Sergey Lavrov — one of the most committed supporters of the war in Ukraine — flew into Bangkok in July to hail “the importance of boosting cooperation in trade and investment.”

    United Arab Emirates

    Dubai isn’t to everyone’s taste. But the billionaires’ playground and its pristine beaches have become a sought-after destination for many wealthy Russians looking for a friendly welcome — and a place to spend huge sums in opulent malls.

    The number of Russians jetting to the Gulf nation shot up by 63 percent last year, making them the second largest tourism market. The UAE has also seen a surge in Russian expats, who report feeling more at ease in the desert city than in Western countries because there are no public displays of support for war-ravaged Ukraine.

    The influx comes as ties between Russia and the UAE are also booming, with Russian firms relocating to the Gulf nation and the Kremlin selling vast volumes of discounted oil to the country.

    But analysts warn that pressure from the U.S., U.K. and EU is making it increasingly difficult to the UAE to profit from sanctions evasion, meaning Russian tourists may find their welcome doesn’t last forever.

    Cyprus

    The island of Cyprus has long been known as Moscow on the Med — a homage to the country’s largest tourist market.

    Those beach holidays are now largely out of reach for ordinary Russians, after Cyprus followed other EU member states in banning commercial flights from Russia and last year imposed an €80 fee for visas. The decision, officials say, has cost the country €600 million worth of income.

    The island of Cyprus has long been known as Moscow on the Med | Roy Issa/AFP via Getty Images

    But, for those who can stump up the costs, flights from Russia with a brief stop in Istanbul or Yerevan cost around €250. Cyprus has also been one of the most prolific issuers of so-called “golden passports,” which offer EU citizenship in exchange for as little as €2.5 million in investment.

    While no statistics exist on how many Russians have taken advantage of the scheme, the country has been under pressure to cancel travel documents for sanctioned oligarchs. As many as 222 passports have already been withdrawn, including those belonging to several Russian billionaires.

    Ukraine

    For Russians with regular jobs and limited cash to spend abroad, country houses and holiday parks are still the most popular option.

    Until recently, many of them would be headed to Ukraine’s occupied Crimean peninsula. An iconic spot for vacations and sanatorium breaks since the days of the Soviet Union, many Russians have bought second homes or paid for package holidays to the region’s Black Sea coast since it was illegally annexed by Moscow in 2014.

    Now, a spate of explosions at military facilities and Kyiv’s insistence that Crimea will come back under its control when it wins the war has worried many Russians.

    With air traffic close to the border diverted, one of the only remaining routes into the peninsula is across the car and railway bridge opened by President Vladimir Putin in 2018. That bridge has repeatedly been struck by Ukrainian forces looking to disrupt Russian military convoys.

    As a result, officials say, hotels are on average more than half empty — despite heavy promotions and discounts. Local proprietors say the situation is even more dire than the government is prepared to admit.

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    Gabriel Gavin

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  • France bets big on open-source AI

    France bets big on open-source AI

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    France has a dream: to make a name for itself in the surging global artificial intelligence industry. 

    France also has a problem: It’s right in the heart of the EU, currently known more for regulating AI than for encouraging it.

    To carve out a spot in that tricky landscape, French leaders are now hoping to foster one particular segment of the industry, called open-source AI.

    “Open-source” computer code — publicly posted to be used and repurposed by anyone — straddles the line between the public interest and a private-sector product. Sometimes developed by universities, sometimes by companies, open-source AI systems are now playing a growing role in the industry. For example, Meta’s powerful LLaMA2, an AI model released in July, is open-source.

    In June, French President Emmanuel Macron announced new funding for an open “digital commons” for French-made generative AI projects, a €40 million investment intended to attract significantly more capital from private investors. “On croit dans l’open-source,” Macron stressed in his speech at VivaTech, France’s top tech conference: “We believe in open-source.”

    A matter of national pride

    There’s a bit of pride involved as well: Officials see it as a way to take on the overwhelming power of U.S.-based firms in the AI industry.

    “We don’t want to live in a world with two or three or four monopolies and to have to negotiate the rights to innovate. So open-source can be a very important answer,” said Henri Verdier, the French ambassador for digital affairs and the country’s top tech diplomat.

    France’s open-source focus comes as part of a hard push toward developing a domestic, francophone AI industry. At the same event, Macron said France would invest €500 million in creating AI “champions” — market and research leaders in the emerging technology.

    One of its existing champions is an open-source AI firm. In June, Paris-based startup Mistral.ai — whose French founders hail from U.S. tech giants including Meta and Alphabet’s Deepmind — raised a whopping €105 million in funding by promising to create an open-source competitor to OpenAI’s ChatGPT. The firm’s backers include Cedric O, the former digital minister for Macron’s government.

    Alexandre Zapolsky, a co-founder of French tech firm Linagora who, ahead of Macron’s set-piece announcement, had co-written a newspaper column calling on France to foster its open-source AI ecosystem, saw Macron’s speech as a major signal to investors, as well as his own administration.

    “Our president endorsed open-source AI — and became a promoter of it — while speaking in front of over 2,000 of France’s top technology entrepreneurs and investors,” Zapolsky said. “And his message has been heard by all the layers of the French government.”

    Following the speech, Zapolsky’s co-founder Michel-Marie Maudet launched OpenLLM France, a collective of developers and researchers collaborating via messaging platform Discord to build open-source Al. 

    France has some academic strengths to build on. It has also been pitching itself as the best place in Europe to train power-intensive advanced AI models because its nuclear power plants offer cheap and abundant electricity. Irene Solaiman, policy director for leading open-source AI provider Hugging Face, said that France was “exceptional in the EU in having labs that develop high-quality language models.”

    Some of the top minds in this field are already French nationals — including Meta’s Chief AI scientist, Yann LeCun — but that doesn’t mean it will be easy to attract talent in an extremely competitive industry. “The U.S. has a lot going for it. Like, it has really stellar academic institutions that work on a lot of the research that’s relevant to the field. It has a lot of cloud [computing] providers,” Solaiman said.

    A Continent-wide opportunity

    In embracing open-source, France is hoping to take advantage of an EU loophole that might offer a friendly regulatory lane for open-source systems. The bloc is currently finalizing its Artificial Intelligence Act, which would ban some AI uses and create obligations for those deemed risky.

    The European Parliament, in its version of the AI Act, exempted open-source AI systems from following the strict compliance rules imposed by the law. Kai Zenner, chief policy assistant to Axel Voss, an influential German member of the European Parliament, says that EU governments support this approach, which suggests “chances are quite high” it will make it to the final version of the law. (The AI Act’s final text, expected to pass in late 2023, is currently being negotiated by representatives of European governments and the European Parliament.)

    Europe’s Parliament sees open-source as an AI opportunity not just for France, but for the whole Continent. “We completely agree with the French assumption: We see open-source AI as a big chance,” Zenner said. “If Europe really wants to catch up with the United States and China in AI, then without drawing on models or data sets from the open-source community, we would never have a chance.”

    Industry skepticism

    Industry leaders, though, aren’t so sure the EU law will give them enough running room. The proposed exemption does not apply when open-source AI is used for commercial purposes, which would likely discourage investors and startups in the space. Members of the open-source AI ecosystem — including Github and Hugging Face — have asked European policymakers for more clarity on what constitutes commercial activity when it comes to making open-source AI components available to the public.  

    They also worry that so-called foundation models — the big software engines powering generative AI tools such as ChatGPT — would separately have to abide by a set of obligations under the EU law whether they’re open-source or not. This worries tech giants as much as it does open-source startups.

    “The latest amendments from the European Parliament — they seem to impose potentially some pretty complex and potentially somewhat unworkable conditions on open-sourcing large language models altogether,” said Nick Clegg, Meta’s president of global affairs. 

    For France and other European Union economies, it feels like a big piece of the future is at stake. Despite being home to world-class universities and talent, European leaders have spent decades watching their countries fail to capitalize on various waves of tech innovation, with the riches going to giants in the U.S. and China. The EU, meanwhile, has established itself more as a technology rulemaker than as a creator and exporter. Policymakers now are determined not to let the same thing happen with AI.

    Cedric O, the former French digital minister turned Mistral.ai’s shareholder and adviser, says that Europe has one other advantage when it comes to developing open-source AI. Unlike the U.S., it lacks powerful corporate actors lobbying against the open-source model on security grounds. 

    “Europe has the ability to be part of the AI race,” O said. “I would say that — regardless of the fact that its AI is open-source or not — Europe has to do whatever it can to be part of the game.”

    Laura Kayali contributed reporting.

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    Mohar Chatterjee and Gian Volpicelli

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  • August used to be the best month for the stock market. Then it became the worst.

    August used to be the best month for the stock market. Then it became the worst.

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    August the best month for average stock market performance? Or is it the worst?

    The answer depends on the period of stock-market history you examine. Over the 90 years from the Dow Jones Industrial Average’s
    DJIA,
    +0.50%
    inception in 1896 until 1986, August on average was far ahead of the other months — more than four times larger, as you can see from the table below. August outperformed the other months’ average by 1.4 percentage points. This difference is significant at the 95% confidence level that statisticians often use when determining if a pattern is genuine.

    In the years since then, in contrast, August has been the worst month for the stock market, on average, lagging the other months’ average by 1.7 percentage points. Since 1986, in fact, August has been a worse month for the stock market than even September, whose reputation for stock market losses is widely known.

    August’s average DJIA return

    		 Average return of all other months

    		 August’s rank among all 12 months
    1896 to 1986

    		 +1.8%

    		 +0.4%

    		 1st
    After 1986

    		 -0.8%

    		 +0.9%

    		 12th

    If the 36 years since 1986 were all that statisticians had to go on, they would conclude that August’s underperformance was significant at the 95% confidence level — just the opposite of the conclusion that emerges from the 90 years prior. But when analyzing the Dow’s entire history since 1896, August’s performance is no better or worse than average.

    This August, in order to use history as a basis for investing, you’d first need to come up with a plausible explanation of what changed in the 1980s that caused August to swing from best to worst.

    Though I’m not aware of any such explanation, it’s always possible that one exists. To search for it, I analyzed monthly values back to 1900 for the Economic Policy Uncertainty (EPU) index that was created by Scott Baker of Northwestern University, Nicholas Bloom of Stanford University, and Steven Davis of the University of Chicago. We know from Finance 101 that the stock market responds to changes in economic uncertainty, so we’d be onto a possible explanation of August’s seasonal tendencies if the EPU underwent some fundamental change in 1986.

    But no such change shows up in the data. August’s average EPU level is no different than for any of the other months of the calendar, either before or after 1986.

    Another possible explanation might trace to investor sentiment. To investigate that possibility, I analyzed stock market timers’ average recommended equity exposure levels, as measured by the Hulbert Stock Newsletter Sentiment Index (HSNSI). I was looking to see if, after 1986, the HSNSI was significantly different at the beginning of August than in other months, on average. The answer is “no.”

    A plausible explanation might still exist for August’s change of fortune beginning in the mid-1980s, notwithstanding my inability to find one. But absent such an explanation, the most likely explanation is that it’s a random fluke.

    It would hardly be a surprise if randomness is the culprit. Most of the patterns that capture Wall Street’s attention are in fact nothing more than statistical noise. The reason we nevertheless insist that significant patterns exist is because — as numerous psychological studies have shown — we’re hardwired to find patterns even in randomness.

    That’s why your default reaction to all alleged patterns, not just those involving August, should be skepticism. The odds are overwhelming that they aren’t genuine. Only if those patterns can survive the scrutiny of a skeptical statistician should you even begin to be interested.

    Mark Hulbert is a regular contributor to MarketWatch. His Hulbert Ratings tracks investment newsletters that pay a flat fee to be audited. He can be reached at mark@hulbertratings.com

    More: Puzzled by the stock-market surge? Overshoots are the new normal, Bank of America strategist says

    Plus: Here’s how long the stock market rally may last

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  • Cameron’s Seafood Takes the Lead in Sustainability Efforts by Investing in I-Hemp Katalyst

    Cameron’s Seafood Takes the Lead in Sustainability Efforts by Investing in I-Hemp Katalyst

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    CAPITOL HEIGHTS, Md., July 25, 2023 (Newswire.com)
    –
    I-Hemp Katalyst, a recognized leader in the growing, processing, and promoting of the industrial hemp supply chain in the United States, announces an investment by Cameron’s Seafood, a leading provider of high-quality seafood. This groundbreaking collaboration signifies Cameron’s Seafood’s commitment to promoting a cleaner environment by investing in renewable materials.

    Recognizing the urgent need to address environmental concerns associated with plastic waste, Cameron’s Seafood has taken a proactive step towards a sustainable future. By aligning with I-Hemp Katalyst, the company has become the first major consumer of plastics to invest in the industrial hemp sector, a move that holds immense potential for reducing its environmental footprint.

    The cultivation and processing of industrial hemp offers tremendous advantages when compared to traditional materials such as plastics, which have a detrimental impact on our air, soil, and water resources. Hemp is a highly renewable resource and has the potential to replace a wide range of products derived from fossil fuels. It offers biodegradable alternatives to single-use plastics, reducing the amount of waste entering our ecosystems.

    “Our decision to invest in I-Hemp Katalyst was motivated by our commitment to making a positive impact on the environment,” said Peymon Manesh at Cameron’s Seafood. “By partnering with a leader in industrial hemp production, we are proud to contribute to the growth of a sustainable supply chain and promote a cleaner future.”

    I-Hemp Katalyst brings a wealth of expertise and experience in hemp cultivation and processing, ensuring a consistent and high-quality supply of hemp-based materials to meet Cameron Seafood’s requirements. I-Hemp Katalyst’s focus on sustainable practices and dedication to environmental stewardship align perfectly with Cameron Seafood’s vision and commitment to sustainability.

    “We are thrilled to welcome Cameron Seafood as our valued investor in promoting the adoption of industrial hemp,” stated Duane Shugars, CEO at I-Hemp Katalyst. “Together, we aim to demonstrate the immense potential of hemp-based materials in reducing our reliance on plastics while also minimizing the negative environmental impacts associated with their usage of to-go containers.”

    Cameron’s Seafood’s investment in I-Hemp Katalyst represents a significant step forward in its sustainability journey. By choosing to embrace renewable materials, the company is not only reducing its environmental impact but also setting an example for other industry players to follow suit.

    For more information about Cameron’s Seafood’s sustainability initiatives and its partnership with I-Hemp Katalyst, please visit HempKatalyst.com or contact press@hempkatalyst.com.

    About Cameron’s Seafood:

    Cameron’s Seafood is a renowned provider of high-quality seafood with a commitment to sustainability. Known for their exceptional taste and freshness, Cameron Seafood’s products have delighted seafood enthusiasts for 33 years. By investing in renewable materials, the company aims to promote a cleaner future for generations to come.

    About I-Hemp Katalyst:

    I-Hemp Katalyst is a recognized leader in the growing, processing, and promoting of the industrial hemp supply chain in the United States. We are dedicated to sustainable practices and empowering businesses with high-quality hemp-based materials that have a reduced environmental impact. I-Hemp Katalyst’s mission is to drive the growth of the industrial hemp industry and spearhead a shift towards sustainable alternatives.

    Source: I-Hemp Katalyst

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  • ‘Oppenheimer’ gives stock investors another reason to be bullish about nuclear energy

    ‘Oppenheimer’ gives stock investors another reason to be bullish about nuclear energy

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    One of the hottest movies of the summer is the staggeringly good biopic “Oppenheimer,” about the man who oversaw the frantic race to develop the atomic bomb during World War II. 

    The atom bomb dropped on Hiroshima, Japan on Aug 6, 1945 was a fission-style device. This also happens to be the same basic physics behind nuclear reactors that are in use today. It’s a reminder that technology can be, at its essence, agnostic: Whether it is used for malevolent or benevolent purposes (in nuclear fission’s instance, an instrument of death or clean, carbon-free electricity) depends upon the intent of the user. 

    Fission reactors generate about 10% of the world’s electricity today. The United States gets even more of its electricity this way, about a fifth.

    These percentages are likely to rise as global demand for electricity — and concerns about global warming and climate change — rise. This will present opportunities for long-term oriented investors. The lion’s share of this demand — about 70%, says the Paris-based International Energy Agency (IEA), will come from India, which the United Nations says is now the world’s most populous country, China, and Southeast Asia. Put another way, “the world’s growing demand for electricity is set to accelerate, adding more than double Japan’s current electricity consumption over the next three years,” says Fatih Birol, the IEA’s executive director.

    While fossil fuels remain the dominant source of electricity generation worldwide — the Central Intelligence Agency estimates that it provides about 70% of America’s electricity, 71% of India’s and 62% of China’s, for example—the IEA report says future demand will be met almost exclusively from two sources: renewables and nuclear power. “We are close to a tipping point for power sector emissions,” the IEA says. “Governments now need to enable low-emissions sources to grow even faster and drive down emissions so that the world can ensure secure electricity supplies while reaching climate goals.”

    “ The Biden administration is a big booster of nuclear energy. ”

    It’s helpful that the Biden administration is a big booster of nuclear energy, which the White House sees as an integral part of its broader effort to move the U.S. economy away from fossil fuels. The Department of Energy says that the country’s 93 reactors generate more than half of America’s carbon-free electricity. But price pressures from wind, solar and natural gas (which the feds call “relatively clean” even though it emits about 60% of coal’s carbon levels) have putseveral reactors out of business in recent years. 

    The bipartisan infrastructure bill that Biden signed into law in November 2021 includes $6 billion, spread out over several years, for the so-called Civil Nuclear Credit Program, designed to keep reactors — and the high-paying jobs that come with them — running. If a plant were to close, it would “result in an increase in air pollutants because other types of power plants with higher air pollutants typically fill the void left by nuclear facilities,” the administration says. U.S. Energy Secretary Jennifer Granholm has said the Biden administration is “using every tool available” to get the country powered by clean energy by 2035.

    The private sector is beginning to stir. Last week, Maryland-based X-Energy said it would build up to 12 reactors in Central Washington state, for Energy Northwest, a public utility. These wouldn’t be the behemoth-type reactors we’re used to seeing, but “advanced small, nuclear reactors.” X-Energy, which is privately held,  has also been selected by Dow
    DOW,
    -1.40%
    to construct a similar facility in Texas.  

    Other companies are also rolling out new technology to meet demand. Nuclear fusion — a breakthrough in that it creates more energy than the Oppenheimer-era fission model and at a lower cost — is likely to be the basis for reactors in the years ahead; the Washington, D.C.-based Fusion Industry Association thinks the first fusion power plant could come online by 2030. After seven rounds of funding, one fusion company, Seattle-based Helion Energy, is currently valued at around $3.6 billion, and appears headed for a public offering.    

    Here too, the Biden administration is getting involved. In May, the Department of Energy announced $46 million in funding for eight other fusion companies. “We have generated energy by drawing power from the sun above us. Fusion offers the potential to create the power of the sun right here on Earth,” says Granholm.  

    There are several opportunities here for long-term investors. You can pick your way through any number of publicly held companies, including more traditional utilities, or spread your bet across the industry through a handful of exchange-traded funds. The largest of these is the Global X Uranium Fund
    URA,
    +0.78%    ,
    with about $1.6 billion in assets. It’s up about 9% year-to-date. The VanEck Uranium + Nuclear Energy Fund
    NLR,
    +0.41%
     is up almost 10% and sports a 1.8% dividend yield. These are respectable year-t0-date returns, even though they lag the S&P 500
    SPX,
    +0.32%
    (up close to 19%) by a wide margin. 

    More: Net-zero by 2050: Will it be costly to decarbonize the global economy?

    Also read: Fukushima’s disaster led to a “lost decade” for nuclear markets. Russia, low carbon goals help stage a comeback.

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  • Sourcing Debt In Today’s Real Estate Investment Market

    Sourcing Debt In Today’s Real Estate Investment Market

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    Taking out a loan for a real estate investment may seem tougher than ever—especially for those new to the game. In the wake of three bank failures, rising interest rates, and a contraction of credit among lenders, clearly there are additional challenges in today’s market. In early 2023, Silicon Valley Bank collapsed, followed closely by the falling out of Signature Bank and then First Republic Bank, as reported in the Financial Times. In May, the Federal Reserve announced increased rates from 5% to 5.25% in an effort to tame inflation and spur job growth.

    That said, debt typically takes up a portion of the capital stack and is often necessary to acquire a property. Once you’ve found a great opportunity, you’ll usually gather two main types of equity, known as preferred equity and common equity (I explained how these work in a previous article). The capital stack also includes layers of debt, which we’ll look at in depth here. These are senior debt and mezzanine debt, and it’s important to both understand what they are and how today’s lending environment could impact your financing activity.

    Sourcing Senior Debt

    Banks and lending institutions issue this type of debt, which is secured by a mortgage, or a pledge of the property. Senior debt could also be available from insurance companies and CMBS markets. (CMBS stands for commercial mortgage-backed security.) If payments are not made, the lender typically retains the right to take over the place through foreclosure. They can then resell the property to recoup their expected return.

    Senior debt takes the bottom of the capital stack, as it has the lowest risk. Lenders will be paid first, before mezzanine debt holders and equity investors. Senior debt also has the lowest opportunity for rewards, as the interest rate will be established and is typically lower than what mezzanine and equity participants will receive.

    Sourcing Mezzanine Debt

    In the capital stack, mezzanine debt falls into place in the middle, below common and preferred equity, and above senior debt. It is a hybrid lending tool that serves as a bridge between the debt and equity portions. It acts as a secondary loan against the ownership of the property. This type of financing could come from sources such as a family office or another privately negotiated transaction. Mezzanine debt lenders generally expect to receive regular payments at an interest rate that is higher than the senior debt rate. They usually hold the right to convert the debt into an equity interest if the borrower defaults on the loan.

    In terms of payments, the mezzanine debt is serviced after the operating expenses and senior debt. For this reason, it carries higher risk in the capital stack than senior debt. However, it also has priority over preferred equity and common equity. As such, it is generally considered safer than preferred equity and common equity. It also has less potential for rewards than the equity portions of the capital stack.

    Debt in Today’s Market

    During the past year, banks have been tightening their lending policies for all categories of commercial real estate loans, per the Senior Loan Officer Opinion Survey released by the Federal Reserve in April 2023. The most frequent changes included greater spreads of loan rates over banks’ cost of funds, along with a drop in loan-to-value ratios. (Loan-to-value refers to the loan amount divided by the total value of the property).

    That said, U.S. banking officials are recognizing these trends and addressing the stresses of the market. In June, top regulators asked lenders to work with commercial real estate owners who are facing such a difficult environment, as reported in Bisnow. Borrowers with good credit standing may be able to make agreements on loan repayments to accommodate their situations.

    Given these trends, investors today can expect the need to bring more equity to the table when acquiring properties. The types of financing available may carry more risk as well. Pay attention to collateral, as personal guarantees could cost you if the unexpected happens. For this reason, I always advise making sure you’re not overleveraging your funds as you enter a deal.

    When sourcing debt, a good mortgage broker will be able to bring you lending options and help evaluate what’s available to you. We’ll look at this more in-depth in the next article. With the right plan and financing tools in place, you could be on your way to getting long-term returns that outperform the market.

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    James Nelson, Contributor

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  • Optimizing The Capital Stack In Today’s Market

    Optimizing The Capital Stack In Today’s Market

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    Once you’ve found a great real estate investment opportunity, it will be time to raise capital for the transaction. This step typically involves structuring the layers of equity and debt. In simple terms, equity refers to money that you’ll bring to the table and debt includes the different types of financing you’ll secure for the deal. You’ll likely be working with a partner for this step, along with other investors and lenders.

    For simplicity purposes, in this article we’ll look at two types of equity: common equity and preferred equity. In a future article, we’ll consider two forms of debt: senior debt and mezzanine debt. Let’s look at the equity portion of the capital stack in the following sections, along with the risks and rewards that each layer brings and how they play out in today’s market.

    Common Equity in a Real Estate Investment

    In a transaction, the common equity portion reflects basic ownership, and typically includes the individuals in the deal who have “skin in the game.” This could be you, your partner, and other investors on your team. Common equity could come from personal savings or a lump sum of income (such as a bonus or inheritance) that you receive and want to invest.

    There is often a general partner, or sponsor, who runs the day-to-day activities of the deal and raises money from limited partners. The sponsor may contribute anywhere from 5% to 50% of the common equity, depending on the size of the transaction. If you’re the general partner and are putting in your own funds, it can resonate well with your investor partners and show that you have confidence in a deal.

    Those who contribute common equity carry the highest amount of risk, as they hold the lowest priority in the capital stack. They’ll be paid last, after lenders receive their funds and those with preferred equity have been given their share. On the upside, those who contribute common equity have the greatest potential for reward too. Once a certain threshold is met, they’ll receive a share of the profits called promote, and there generally is no cap on how high of a return they can receive. If the investment yields a significant return, the extra funds will be theirs to keep.

    Preferred Equity in a Real Estate Investment

    Investors who contribute preferred equity have benefits which go above basic ownership. The rate of return for preferred equity is typically fixed, which makes it have less potential for reward than common equity. However, it also carries less risk, as those who contribute preferred equity will be paid before individuals who put in common equity.

    When the general partner seeks preferred equity, one of the first networks to tap is often friends and family. As Jordan Vogel, co-founder of Benchmark Real Estate Group, mentioned on my podcast, “The Insider’s Edge to Real Estate Investing,” when raising capital, he and his partner created a list of everyone they knew that they thought could write a $50,000 check. Some investors gave $25,000 and the higher amounts averaged $100,000.

    Before asking for an investment, it’s good practice to begin educating potential investors about the market and your business plan. You’ll want to cultivate the relationship and build an audience; once you have a deal to present, you’ll have established credibility with them. Most of the time when you’re raising capital, you’ll be interacting with accredited investors by using a private placement. Given this, you’ll definitely want to consult an attorney on how to approach them and make sure you’re raising money the correct way without violating any of the rules.

    There is typically an order for how preferred equity investors and common equity investors receive their funds and profit share. The sequence is usually that investors get their equity back and then the general partner gets their equity returned. Following this, investors receive their preferred return. Then the sponsor receives their return, and lastly the promote.

    Equity in Today’s Real Estate Market

    When building a capital stack, bear in mind that in recent times, the lending environment has grown more challenging. In previous years, it might have been possible to have a 65% or 70% loan to value in a deal. (Loan to value refers to the loan amount divided by the total value of the property.) However, those figures may now be in the rearview mirror. As a result, you may be asked to bring more equity to the table than in the past. This can be true even for a cash-flowing asset. Many of the transactions today may require 40%, 45%, or even 50% of equity.

    When gathering funds in today’s market, keep in mind that equity is typically more expensive than debt. Even with rising interest rates, the senior debt for a cash-flowing multifamily property might still be below 6%, whereas equity investors are usually looking for more. Depending on the risk profile of the transaction, preferred equity contributors might ask for a single high digit return. They’ll also usually be looking to benefit from the upside potential too. Many equity investors out there are ultimately aiming to solve for mid- to high-teens rates of return, which is not all that different than institutional investors.

    Given the need for more equity, along with the additional expense it carries in a transaction, it’s important to raise this portion of the capital stack in the right way. With that in mind, we’ll cover this topic in depth in an upcoming article, which will explain how to build your best investor presentation.

    We’ll also discuss the remaining layers of the capital stack—senior debt and mezzanine debt—in a future article. With a solid grasp of these concepts, you’ll be able to properly structure a transaction and move forward with the deal. Even in today’s market, there are plenty of opportunities for those who have the right team in place and the inside track needed to gain a competitive edge.

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    James Nelson, Contributor

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  • EU finalizes migrant deal with Tunisia

    EU finalizes migrant deal with Tunisia

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    The EU finalized an agreement with Tunisia on Sunday to boost trade relations and stem migrant departures from the African country to Europe.

    Under the deal, which the European Commission had been struggling to push over the line, the EU is to provide cash to Tunis in exchange for stronger border controls.

    Exact financial details of the agreement were not given in the EU statement on Sunday. But Commission President Ursula Von der Leyen said last month that the EU was ready to provide Tunisia with more than €1 billion in areas including trade, investment and energy cooperation.

    The statement said the agreement covers five pillars: migration, macro-economic stability, trade and investment, green energy transition, and people-to-people contacts.

    On economic development, von der Leyen told a press conference in Tunis that the EU is “ready to support Tunisia by mobilizing macro-financial assistance as soon as the necessary conditions are met.” She added that as a “bridging step, we are ready to provide immediate budget support.”

    While she didn’t give details on Sunday, von der Leyen said in June that the Commission was considering up to €900 million in macro-financial aid, plus “up to €150 million in budget support” directly.

    Von der Leyen traveled to Tunisia on Sunday along with Italian Prime Minister Giorgia Meloni and Dutch Prime Minister Mark Rutte to meet again with Tunisian President Kais Saied. A similar meeting last month had failed to propel the talks to conclusion before a late June EU leaders’ summit as had been hoped. 

    “Migration is a significant element of the agreement we have signed today,” Rutte told the press conference on Sunday. “It is essential to gain more control of irregular migration.”

    Von der Leyen said that under the agreement, the EU will provide Tunisia with €100 million to improve border management, search and rescue, anti-smuggling measures and other initiatives to address the migration issue.

    “The tragic shipwreck a few weeks ago, in which many people lost their lives, was yet another call for action,” von der Leyen said. “We need to crack down on criminal networks of smugglers and traffickers.”

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    Jones Hayden

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  • How to Start Investing in Real Estate With as Little as $5,000 | Entrepreneur

    How to Start Investing in Real Estate With as Little as $5,000 | Entrepreneur

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    Opinions expressed by Entrepreneur contributors are their own.

    Investing in real estate has always been regarded as a lucrative way to build wealth, but the common perception is that it requires a substantial amount of capital to get started.

    Is it possible to become a real estate investor starting with as little as $5,000? The short answer is yes. You can find financial independence through strategic and creative investment approaches. Let’s explore some practical tips on how to invest in real estate with limited funds, proving that size doesn’t always matter when it comes to building your investment portfolio.

    Education is key

    Before diving into any investment venture, it is crucial to arm yourself with knowledge. Spend time learning about your local real estate market. Learn about real estate tactics, investment methods and techniques. Read books, attend seminars, listen to podcasts and connect with experienced investors in your area to gain valuable insights. This knowledge will be your foundation for making informed decisions and maximizing your returns.

    Related: 6 Effective Real Estate Investment Strategies

    Crowdfunding for real estate investments

    Crowdfunding platforms have revolutionized the way people invest in real estate. They’ve enabled individuals to pool their resources and invest in projects collectively.

    With just $5,000, you can participate in a variety of crowdfunding campaigns. Using this strategy, your investments can be spread across multiple properties or development projects. This approach allows you to diversify your investments, mitigate risk and benefit from potential high-yield opportunities that were once inaccessible to small-scale investors.

    Explore real estate investment trusts

    Investing in real estate investment trusts (also known as REITs) is an excellent way to get started with limited funds.

    REITs are companies that own, operate or finance income-generating real estate. By investing in REITs, you can indirectly invest in a diversified portfolio of properties without the hassle of property management. Many brokerage firms offer access to REITs with low investment minimums, making them an attractive option for investors with smaller budgets.

    Related: 10 Reasons Why Every Entrepreneur Should Invest in Real Estate

    Partnering with experienced investors

    Collaborating with experienced investors who share similar financial goals can help you leverage your limited funds.

    By pooling resources and piggybacking on a seasoned investor’s expertise, you can collectively invest in properties that may have been out of reach individually. Look for local real estate investment clubs or online communities where you can connect with experienced investors and potential partners. Together, you can share the financial burden, allowing you to expand your investment opportunities.

    Wholesale some properties

    Wholesaling real estate can be a profitable way to invest with limited capital.

    Wholesaling involves finding distressed properties at a significant discount, negotiating a contract and assigning that contract to another real estate investor for a fee. This strategy requires a keen eye for identifying undervalued properties and a knack for negotiating deals. When done right, wholesaling can be very profitable.

    Spend some time researching and learning the wholesaling process to insure you minimize costly rookie mistakes.

    Related: Why Real Estate Investment is the Ultimate Adventure

    This can be your reality

    Embarking on a real estate investment journey with just $5,000 may seem daunting, but it is entirely possible. By educating yourself, exploring alternative investment options, leveraging partnerships and adopting creative strategies like crowdfunding and wholesaling, you can kickstart your wealth-building process.

    Remember, the key is to start small and work your way into bigger investments and larger profits.

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    Michael Ligon

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  • Greece’s conservatives win election majority to secure second term

    Greece’s conservatives win election majority to secure second term

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    Voiced by artificial intelligence.

    ATHENS — Greece’s conservatives won big on Sunday’s parliamentary elections, securing an outright majority. Far-right parties also made gains, while the left struggled, giving Greece’s parliament its most rightward slant since the restoration of democracy in 1974.

    The New Democracy party of Kyriakos Mitsotakis managed to widen its double-digit lead over its main rival, the left-wing Syriza party, and secured 158 seats in the country’s 300-seat parliament, under the new electoral system which awards the winning party 50 bonus seats.

    “Our goals are high and must be high in a second term that can transform Greece with dynamic growth rates that will raise wages and reduce inequalities,” Mitsotakis said in his first message from his party’s headquarters.

    “People gave us a safe majority. The major reforms will therefore proceed with speed as this is the choice of the Greek people and I will honor it in full.”

    Sunday’s elections were the second held in the country in five weeks, after New Democracy came first on May 21 but fell short of an outright majority.

    New Democracy got 40.5 percent of the vote on Sunday, while Syriza was lagging with only 17.8 percent and 47 seats, according to official results. The socialist PASOK party had 11.9 percent and 32 seats, and the communists KKE had 7.6 percent and 20 seats. The participation rate was at 52.7 percent, the Interior Ministry reported.

    Far-right gains

    Four fringe parties — mainly from the far-right — also managed to top the 3 percent threshold to make it into parliament.

    Last-minute contender the Spartans party — which recently added a jailed MP from the neo-Nazi Golden Dawn party, Ilias Kasidiaris, to its list of backers — saw its support rise to 4.7 percent within days and secured 13 seats in parliament. The conservative government had passed an amendment aiming to ban him from parliament.

    New Democracy’s dominance is another sign of how Southern European countries are moving to the right, after a decades-long financial crisis in the eurozone that led the rise of left-wing parties.

    Ultra-nationalist, pro-Russian Greek Solution got 4.5 percent and 12 seats, while anti-abortion, religious party Niki got 3.7 percent and 10 MPs. To the left, Course of Freedom, led by former member of Syriza Zoi Konstantopoulou, got 3.1 percent and 8 seats.

    The far right has performed well in recent elections in Finland and Spain, and is polling particularly well in Germany. Its savvier elements — like Italian Prime Minister Giorgia Meloni — are beginning to assert themselves at the European level.

    But the main story of Sunday’s election was New Democracy’s dominance, which is another sign of how Southern European countries are moving to the right, after a decades-long financial crisis in the eurozone that led to the rise of left-wing parties.

    “This is a clear victory for Kyriakos Mitsotakis, for [New Democracy] and for the EPP,” said Thanasis Bakolas, the center-right European People’s Party secretary general.

    “In politics, what you stand for matters. This is what we see in Greece, also what we saw earlier this year in national elections in Finland and regional elections in Spain. And this is precisely what we will see again in upcoming parliamentary elections in Spain in July and Poland in October. EPP parties are dominating the centre, while the centre-left is barricaded to its fringes.”

    The election outcome is considered market-friendly and puts Greece firmly on track to regain an investment-grade rating towards the end of the year, analysts say.

    Mitsotakis has promised that his first two bills will include a further reform of the public administration and the economy. He has also promised overhauls in the judicial, health and education sectors and expressed his intention to create a family ministry to help address Greece’s shrinking, and ageing, population.

    “The resounding victory will provide ND with a comfortable majority, putting Mitsotakis in a good position to push through investor-friendly reforms,” said Wolfango Piccoli, co-founder of risk analysis company Teneo.

    But the fringe parties will have a platform to broadcast their populist message and attempt to disrupt the government’s agenda, exploiting politically toxic issues like migration, the relationship with Turkey, abortion, the role of religion in education, Russia sanctions, he added.

    “It remains to be seen how Mitsotakis — often perceived to be more vulnerable to attacks from the far-right given his distinct liberal, center-right orientation — will manage to deal with the possible challenge posed by far-right opposition lawmakers.”

    Main opposition Syriza performed very poorly, raising questions about whether its status as the main opposition could now be challenged by Pasok party. It also means that conservatives could govern without particular scrutiny.

    “Although the danger of collapse was avoided and Syriza remains the official opposition, we have suffered a serious electoral defeat,” the party’s leader Alexis Tsipras said, setting the European elections next year as a goal for the party’s reimposition and adding that he will put his leadership to the judgment of the party members.

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    Nektaria Stamouli

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  • Max Life Insurance picks 2.99% stake in Capital Small Finance Bank for ₹49.5 crore

    Max Life Insurance picks 2.99% stake in Capital Small Finance Bank for ₹49.5 crore

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    Max Life Insurance Company Limited (Max Life), has picked a 2.99 per cent equity stake in Jalandhar-headquartered Capital Small Finance Bank (CSFB) for a consideration of ₹49.50 crore.

    Towards this investment, as many as 10,57,700 equity shares of CSFB of ₹10 each at a premium of ₹458 per equity share has been allotted to Max Life.

    Sarvjit Singh Samra, MD & CEO, Capital Small Finance Bank said, “We are thrilled to announce the equity investment from Max Life Insurance Company Limited. This investment marks a significant milestone for Capital Small Finance Bank and reinforces our commitment to delivering exceptional value to our customers. It is a testament to the strength of our bank and the trust that Max Life Insurance has placed in us”.

    As of May 31, 2023, this strategic investment has increased the Capital Adequacy Ratio (CAR) of CSFB by more than 1 per cent, raising it to 20.77 per cent. This enhancement reflects the bank’s commitment to maintaining regulatory compliance and strengthening its financial position, according to CSFB.

    CSFB started operations as India’s 1st Small Finance Bank on April 24, 2016 after conversion from Capital Local Area Bank. Prior to conversion to a Small Finance Bank, Capital Local Area Bank was operating as India’s largest local area bank since January 14, 2000. 

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  • Build better ties instead of only asking for microchips, Taiwan tells Europe

    Build better ties instead of only asking for microchips, Taiwan tells Europe

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    Europe cannot ignore Taiwan’s desire for “better relations” if EU countries such as Germany are keen to acquire advanced microchip-making technologies from the island, Taiwanese Foreign Minister Joseph Wu said.

    Speaking to POLITICO and other media on his trip to Europe, Wu questioned the enticements Europe is offering TSMC when asked why the world-leading chipmaking giant based in Taiwan has still not come to a decision to build a new plant in Germany.

    “If Europe has provided very positive incentive, and also speak with the TSMC in a way that will make the TSMC feel comfortable, that their investment in Europe is going to produce very positive results … their investment in Europe is certainly not going to be stopped by the government,” Wu said.

    “Even though we are not selfish in stopping the TSMC, for making investment in other countries, we certainly hope that other countries who want to attract TSMC to make investment can also think about the situation Taiwan is in, or TSMC’s position in Taiwan, and the position Taiwan is seeing in this geo-strategical landscape,” he said.

    In contrast, Wu called Japan and the U.S. — where TSMC plants will be completed next year — a “like-minded partner” and “a very good partner of Taiwan,” respectively.

    “I think this is some philosophical thinking, rather than government policy of putting conditions on TSMC making investment in other [countries],” Wu said. “That philosophical issue is that when a country is in shortage of computer chips, they will ask Taiwan, ‘you should do this, and you should do that’ — but they don’t seem to be thinking about a broader picture of better relations with Taiwan, economic or otherwise.”

    Wu’s comments are a pointed though veiled criticism aimed at Germany.

    At the height of the coronavirus pandemic in 2021, then-German Economy Minister Peter Altmaier asked his Taiwanese counterpart, Wang Mei-hua, to intervene regarding TSMC’s reduced supply to the German auto industry, according to a letter reported by Reuters. “I would be pleased if you could take on this matter and underline the importance of additional semiconductor capacities for the German automotive industry to TSMC,” said the letter written by Altmaier, who was a key member of Angela Merkel’s government which put a priority on trade with China.

    Deterring China

    One of Wu’s main missions in Europe — in a trip that took him to Prague, Brussels and Milan — was to shore up diplomatic support for Taiwan among European leaders.

    He welcomed the EU’s repeated calls on Beijing to maintain the status quo in the Taiwan Strait. “China might also sense that it might come down with some economic price for their possible aggression against Taiwan, so sanction or other types of economic means against China, and I think the European countries have been discussing about that as well,” he said.

    Even if the EU has taken a more critical view of China as a result of the coronavirus pandemic, which began in China, as well as Beijing’s stance on Russia’s war against Ukraine, Taiwan still faces challenges while engaging with Europe.

    On trade, the European Commission has been reluctant to begin negotiations for a bilateral investment agreement (BIA) with Taiwan, apparently out of concern about retaliation from Beijing.

    Taiwanese Foreign Minister Joseph Wu traveled to Europe to shore up diplomatic support from European leaders | Vladimir Simicek/AFP via Getty Images

    “We are very concerned that the BIA between Taiwan and EU seems to be called as a hostage to the stalling CAI negotiations,” Wu said, referring to the comprehensive agreement on investment between the EU and China. “But if you look at the linkage — close linkage — between Taiwan and the EU, in economic sense, I think EU needs to find an alternative to strengthen the bilateral economic or trade relations, rather than get bogged down by the CAI which is not going anywhere,” he said.

    “We hope we can persuade the EU leadership to think about this in a positive way,” Wu added.

    Due to diplomatic protocol under which all EU member countries recognize the “one China” policy, the Taiwanese officials requested that POLITICO and the other media not disclose the location where the interview was conducted. Nor could Wu say which EU officials he met with, or whether he planned to have meetings at NATO, also based in Brussels. (One of the few EU figures confirming Wu’s presence in Brussels was European Parliament Vice President Nicola Beer, who tweeted about their meeting and called Taiwan a “firm member of the democratic family.”)

    Despite the EU’s lack of public acknowledgment of his visit — as well as the European public’s preference of “staying neutral” in the event of a U.S.-China conflict over Taiwan — Wu still has high hopes that the bloc’s attitude would change.

    “I don’t think morally, any sensible country, any sensible leader can stay neutral and say, ‘No, we’re not going to pay any attention to [the] atrocity,'” he said, referring to potential Chinese invasion of Taiwan.

    “And I think the same can apply to the situation between the U.S. and China. If China initiated any aggression against other countries, in killing innocent people, violating international laws, causing atrocities and destructions, and killing innocent people, and all that, and the United States is trying to help, I don’t think the European countries can say that it’s a matter … between the U.S. and China,” Wu said.

    “When the international community discuss about the major international principles,” he said, “I think it’s going to be very hard for Europe to say that ‘I don’t care’.”

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    Stuart Lau

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  • TD Bank uses 80% rule to evaluate platform upgrades | Bank Automation News

    TD Bank uses 80% rule to evaluate platform upgrades | Bank Automation News

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    TD Bank’s small business ops look to speed of operations, reusability, ability to update and cost to upgrade when determining when it’s time to modernize. If a bank platform is achieving at least 80% of what TD wants it to do, it probably isn’t time to replace the system, Alyson Karow, head of small business […]

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    Whitney McDonald

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  • Capri Global Holdings acquires 51% stake in CarLelo for ₹150 crore

    Capri Global Holdings acquires 51% stake in CarLelo for ₹150 crore

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    Capri Global Holdings Pvt Ltd (CGHL) has acquired 51 per cent stake in CarLelo, an online new car selling platform, for ₹150 crore.

    CGHL is the holding company of non-banking financial company, Capri Global Capital Ltd (CGCL).

    “This investment is a testament to our commitment to driving the growth of the online new car sales and financing market while empowering new-age techpreneurs to overcome existing market challenges,” said Rajesh Sharma, Managing Director and Founder, CGHL.

    Also read: SBI Funds Management gets RBI nod to raise upto 9.99% stake in HDFC Bank

    CGHL, in a statement, said with this fresh influx of capital, CarLelo will improve its presence, services, and technology, which will be utilised to acquire new customers.

    “CarLelo currently has 1,200 associatesacross 34 cities in India who regularly interact with customers, delivering them end-to-end services for all their new vehicle-related needs,” as per the statement.

    In addition, the company will also handhold 8,000 plus authorised dealerships in the country to enhance customers’ digital buying and selling experience.

    Further, CarLelo, with its innovation in online new car sales, intends to sell around 7,000 to 8,000 cars every month, CGHL said.

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  • Embattled Macron struggles to reconnect with France

    Embattled Macron struggles to reconnect with France

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    DUNKIRK, France — Emmanuel Macron couldn’t have hoped for a more engaging crowd.

    A group of women — workers with hard helmets and protective gear — were asking for a photo. “You’re being mobbed by the women of Aluminium Dunkerque!” they laughed.

    Standing amid the crowd of factory workers in the port city of Dunkirk, the French president was in his element: shaking hands, fielding questions and taking selfies. “Any more questions?” he asked.

    But he did not address the elephant in the room. And none of the blue-collar workers shouted about Macron’s unpopular, controversial pensions reform. It wasn’t that nobody dared ruin the unveiling of an electric battery giga-factory project; Rather these workers had been hand-picked by their employer.

    In the past weeks, Macron has been hitting the road across France visiting towns big and small, in what he has called a bid to “engage” with the people after the bruising debates over his controversial pensions reform.

    France has been rocked by weeks of protests in the wake of the French president’s decision to bypass parliament and push through a reform raising the age of retirement to 64 from 62. The forcing through of the reform was widely seen as yet another manifestation of Macron’s famously “Jupiterian” governance style — a vertical, top-down manner of running the country.

    Though nationwide protests have ebbed since the reform became law in April, Macron’s initial visits had been dogged by ad-hoc demonstrations called casserolades [casserole protests], organized by trade unionists and protesters against his reforms. The tightly-controlled show in Dunkirk followed more tumultuous scenes during his initial visits. In the eastern region of Alsace, Macron faced booing crowds and power cuts during his visit to a local factory in April, which were claimed by the hard-line CGT trade union.

    In Dunkirk, police secure the area ahead of the French president’s visit | Clea Caulcutt

    For the French president, it has meant a clampdown on visits. Encounters with the public are minutely choreographed to avoid bad publicity, with details unveiled at the very last minute.

    In Dunkirk, over 1,000 police officers were deployed to secure the area visited by the president, erecting barricades, closing streets and banning cars in the town center. Such scenes are unusual in France where successive presidents have enjoyed freely mingling with the people. On the sidelines of his visit, POLITICO caught up with the French president to ask him about his charm offensive.

    “Of course, it’s great … I’m trying to reach out [to the people] … to explain the coherence of what we are doing. We get results when we are coherent and consistent,” he said.

    On his difficulties in connecting with the public, Macron said: “My visits are simple … The overwhelming majority of the French may be against the pensions reform … But I do not confuse people who disagree with me with the small minority that are prone to disrespect and invective.”

    Police surround a protestor during Macron’s visit to Alsace, April 2023 | Frederick Florin/AFP via Getty Images

    Grabbing the limelight

    In addition to touring the country in recent weeks, Macron has relentlessly blitzed the media sphere, granting multiple interviews to the French and international press, while putting forward a string of government proposals for improving education, tackling immigration and bringing back industry.

    “In appearance, Emmanuel Macron and [his prime minister] Elisabeth Borne adopted a very efficient strategy. In drowning out the news, with their visits, their proposals and their new measures, they were able to impose a new agenda,” said Bruno Cautrès, a politics researcher at Sciences Po University.

    “But the data shows that the public has not moved on,” he added. This month several polls showed a majority of the French still support the protest movement against the president’s centerpiece reform.

    Even if nationwide protests over the pensions reform have tapered off, concerns are rising about increasing violence against elected officials and personal attacks against the president. In the southern city of Avignon, residents woke up last week to find dozens of posters depicting the French president as Hitler. That same week, Brigitte Macron’s great-nephew was assaulted in Macron’s hometown of Amiens in an apparent politically-motivated attack.  

    Fixing France

    Beyond the accusations that Macron’s pensions reform push was too brutal, and too disrespectful of parliamentary democracy, the recent political turmoil has political commentators discussing a “democratic crisis” in France.

    Some say France needs a constitutional reform, others that political life has become too polarized. According to Sylvain Fort, a former advisor to the French president, the mainstream left and right in France still haven’t recovered from his victory in 2017.

    “My great surprise is that opposition parties are still shadows of their former selves. It’s not the president that is stopping the opposition from rebuilding itself. The president doesn’t want the democratic debate to be sterile, it’s the result of years of neglect,” he said.

    Instead, the far-right and the far-left parties have dominated the political debate in France.

    In Dunkirk, Macron eschewed ideology and hoped to make one point clear: his tough choices are bringing jobs and investment back to France. But by the same token, if Macron’s reform drive grinds to a halt, his government will face significant challenges.

    “If after all the [recent] proposals he has made, we see that in a year’s time, nothing has progressed … then yes, he will find it very difficult to finish his mandate,” said Cautrès.

    The government has already had to delay tackling a key issue — migration — because of a lack of consensus and parliamentary support. Depending on the evolution of Macron’s reconnect-with-the-people tour, his second-term agenda could be severely upended, rendering him a lame-duck president.

    Fixing the economy may not be enough to rekindle trust between the French and their president.

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    Clea Caulcutt

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  • Investment Decisions In Today’s Development Market

    Investment Decisions In Today’s Development Market

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    Investors looking at development opportunities may face obstacles this year as speculation about a recession looms and interest rates rise. The market uncertainty and shifting demand could cause extensive delays or abandoned developments. Property developers, who are the parties that oversee the project, will need to make tough decisions ahead.

    If you’re thinking about investing in a development project, there can be higher returns, but a lot more risk too. In this article of the series, “Making Investing Decisions in Today’s Real Estate Market,” we’ll go over some of the factors that need to be weighed as you consider development investments. (See the first, second, third, and fourth articles of the series.) Keep these in mind as you peruse land for sale.

    Look at entitlement requirements: Getting entitlement refers to the legal process you’ll need to go through to obtain a city’s approval for your project. Some places, such as New York City, grant a right of development which allows you to build without seeking entitlements. Still, there could be a variety of issues and complications that arise. You might face restrictions in historic districts or neighborhoods near transportation infrastructure, which could ultimately make it difficult to build. Bring in zoning and transactional counsel when going through the approval process. To avoid risk, you might look for projects that are already fully entitled.

    Be aware of environmental issues: Is it possible to build on the land you buy, based on the soil’s consistency? Will your project interfere with environmental codes in the region? You’ll need a Phase 1 Environmental Site Assessment, which will research the history of the project. If there is reason to believe that contamination is possible, you may need a Phase 2 Environmental Site Assessment. This step involves soil samples. Gather good counsel for this, as making a clean environmental report (or at least capping the exposure) will be essential in a contract.

    Recognize capital for development is key: Even if you create a timeline for your business plan, delays for approvals and supplies could lead to long wait periods. Unexpected costs might increase your forecasted financial needs. If you are not properly capitalized, and you borrow money or commit to paying returns to a group of investors, it could drain the cash flow of the project.

    That said, some savvy investors do look to get sites tied up, meaning they put soft deposits on contracts that are contingent on approvals. If you’re able to do this, and you’re willing to speculate the cost to get entitlements and approvals, that could be a way to come out ahead. You might sell or flip the contract to get a return. (However, remember there is no guarantee in this space!)

    Know that lenders will be careful: Getting financing can be especially tough in today’s market. Lenders tend to be very cautious about the riskiest types of real estate investing, meaning they will often only look to provide construction financing for the most experienced and credited developers. Oftentimes, the construction loans require personal guarantees. For a private individual, this could be catastrophic if the project falls through. It’s essential to consult your attorney before moving forward. Also check with a mortgage broker to understand the realities of financing in today’s market.

    Ask about incentives for development: If your city or state offers assistance for projects, it can open doors to opportunities and ease the cost burden. In some markets, these perks are virtually a requirement to get started. For instance, with the current land prices in New York City, it can be tough to make the numbers work for rental development without a tax abatement. Other municipalities might have pilot programs or incentives based on your project’s plan to support public infrastructure.

    In certain pro development markets, such as Houston, it could be easier to build. However, that also creates a chance for a neighboring developer to step in and compete with your project. Oftentimes it’s helpful if there’s income in place, such as from a parking operator or short-term retail tenants. In these cases, make sure the leases are all cancellable so they don’t hold up your development.

    Finally, remember that when you’re investing in a development project, it’s not a question of where the market is today. You’ll want to be looking two to three years down the road, when the project is ready to bring to market. It can be difficult to predict the future, but if you’re in a supplied constrained market and you deliver the right product at the right time, it can lead to a very successful project.

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    James Nelson, Contributor

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  • Philadelphia Fed’s factory gauge shows ninth straight month of declining activity in May

    Philadelphia Fed’s factory gauge shows ninth straight month of declining activity in May

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    The numbers: The Philadelphia Federal Reserve said Thursday its gauge of regional business activity rose to negative 10.4 in May from negative 31.3 in the prior month. Any reading below zero indicates deteriorating conditions. This is the ninth straight negative reading and the eleventh in the last twelve months. 

    Economists polled by the Wall Street Journal expected a negative 20 reading in May.

    Key details: The barometer on new orders increased 13.8 points but remained at negative 8.9 in May. The shipments index rose slightly to negative 4.7.  The measure on six-month business outlook worsened to negative 10.3 in May from negative 1.5 in the prior month.

    Big picture: The continued contraction in activity is a sign that U.S. manufacturing continues to struggle.

    The Philadelphia Fed index is closely followed to give economists an advance signal of factory conditions across the country.

    The national ISM manufacturing index has been in contractionary territory for six months.

    Earlier this week, the similar Empire State survey released by the New York Fed showed manufacturing activity plummeted 42.6 points to negative 31.8 in May. 

    Market reaction: Stocks
    DJIA,
    -0.23%

    SPX,
    +0.05%
    were set to open mixed on Thursday. The yield on the 10-year Treasury note
    TMUBMUSD10Y,
    3.627%
    rose to 3.62%.

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  • China fears threaten to shatter G7 unity

    China fears threaten to shatter G7 unity

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    Press play to listen to this article

    Voiced by artificial intelligence.

    HIROSHIMA, Japan — As the leaders of the Group of Seven gather for their annual summit in Japan this week, three world-changing conflicts — past, present and potential — will converge. 

    The atomic bomb that ended World War II destroyed much of the city of Hiroshima, where the leaders will meet. Today, Russia’s war in Ukraine is costing thousands of lives and billions of dollars as it drags on. And then there’s the risk of another horrifying catastrophe to come, as China threatens Taiwan. 

    And it’s over China where the alliance may come unstuck. 

    For hawks like the U.S. and Japan, the summit beginning Friday offers a timely opportunity to make the case to Europe’s leaders directly that it’s time to get off the fence when it comes to confronting China. 

    “This G7 Summit will be an appropriate venue to also discuss security issues and our security cooperation not only in Europe, but also in the Indo-Pacific region,” Noriyuki Shikata, cabinet secretary at the Japanese prime minister’s office, told POLITICO. 

    The U.S. is betting on at least the appearance of common ground with allies about the People’s Republic of China. Ahead of the summit, U.S. National Security Council spokesperson John Kirby told reporters: “You can expect to hear at the end of those discussions that all the G7 leaders are of a common mind about how to deal with the challenges that the PRC presents.”

    But — beyond the inevitably bland diplomatic lines of a summit communique — getting consensus on meaningful security measures for the Indo-Pacific region will be hard, even in the symbolic setting of Hiroshima. 

    East Asia is again descending into a state of growing security risks and military imbalance, this time due to China’s aggressive moves against Taiwan and the South China Sea. 

    “There’s a feeling that there’s a little bit of a gap, perhaps, between where the Europeans are on some China issues and where the U.S. is,” said Zack Cooper, former aide to the U.S. National Security Council and a senior fellow at the American Enterprise Institute. 

    Chief among the points of tension is how far to go in trying to stop a potential Chinese invasion of Taiwan, which could trigger world war and wreck the global economy. The self-governing island, which Beijing claims as its own, provides most of the world’s advanced computer chips that are vital to the tech and defense industries. Not all European governments are convinced it’s something they need to prioritize. “It’s going to be a continuing challenge,” Cooper said. 

    Picking friends

    NATO is set to extend its footprint in Asia and set up a new liaison office in Tokyo to better coordinate with regional partners, such as Australia, South Korea and New Zealand. 

    However, French President Emmanuel Macron has repeatedly called on NATO to focus only on the Euro-Atlantic theater, saying Asia — China — is not covered geographically. He also triggered an outcry with recent comments to POLITICO, suggesting that Taiwan’s security was not Europe’s fight, and that the EU should not automatically follow America’s lead.  

    Justin Trudeau comes to the G7 following months of intelligence leaks that have painted his government as weak on foreign interference | Yuchi Yamazaki/AFP via Getty Images

    Macron’s stance sets France — which is the EU’s biggest military power — apart from the U.S. and Japan, and also from the U.K., where Prime Minister Rishi Sunak is expected to announce a new security deal with Japan during his visit.

    “Ukraine today could be East Asia tomorrow,” Japanese Prime Minister Fumio Kishida said last year, not long after Russia’s full-scale invasion began. Last week, Japan’s Foreign Minister Yoshimasa Hayashi made an even more explicit warning in a speech made to his 27 EU counterparts in Sweden.

    “China is continuing and intensifying its unilateral attempts to change the status quo by force in the East and South China Seas. China is also increasing its military activities around Taiwan,” Hayashi said. “In addition, China and Russia are strengthening their military collaboration, including joint flights of their bombers and joint naval exercises in the vicinity of Japan.”

    The Chinese-Russian ties will be part of the G7 leaders’ discussions, according to two officials involved in the process, who spoke on condition of anonymity because summit preparations are not public. While the Chinese authorities stop short of openly arming Russia in its war against Ukraine, a long-term strategic partnership between Beijing and Moscow is unshakable for President Xi Jinping.

    G7 countries such as the U.S. and Japan are expected to raise the need to sanction countries that work around Western trade restrictions on Russia, according to the officials. Chinese companies found to be selling dual use goods to Russia would be a top focus. 

    Bully tactics

    China’s willingness to throw around its economic weight is one area where there’s likely to be more unity between G7 allies. 

    The need to fight back against economic coercion will take center stage at the summit. The EU, U.S., Canada and Japan are going to rally around calls to combat China’s use of its economic power to bully smaller economies that act against its political interests.

    “The sense of urgency and unity is a force factor in and of itself. For example, never before has the G7 addressed economic coercion,” Rahm Emanuel, the U.S. ambassador to Japan, told POLITICO. 

    “When measured against the recent past, the G7 and EU are more strategically aligned in key economic and military matters,” added Emanuel, who served as chief of staff to former U.S. President Barack Obama.

    When it comes to the European view, EU Commission President Ursula von der Leyen is clear that the bloc is “competing with China” and will need to up its game. “We will reduce strategic dependencies — we have learned the lessons of the last year,” she said in a press conference ahead of the trip.

    Justin Trudeau, the Canadian prime minister, comes to the G7 following months of intelligence leaks that have painted his government as weak on foreign interference, specifically from China. He’ll be carrying Canada’s message that it can be a safe, non-authoritarian alternative to Russia and China for supplying critical minerals and energy, including nuclear power. 

    Despite the toughening rhetoric on China, what still unites the G7 countries is an eagerness not to shut the door on talks with Beijing. 

    US President Joe Biden arrives to attend the G7 Summit in Hiroshima on May 18, 2023 | Brendan Smialowski/AFP via Getty Images

    The Biden administration has for months been seeking to secure a visit to China for top Cabinet members, such as Treasury Secretary Janet Yellen. Biden’s national security adviser, Jake Sullivan, held eight hours of talks with the Chinese Communist Party’s foreign policy chief, Wang Yi, this month. 

    Just before he left for Japan on Wednesday, U.S. President Joe Biden was asked whether his last-minute decision to truncate his trip abroad could be seen as “almost a win for China.” Instead of staying in the region for a summit of the Quad — Japan, India, the U.S. and Australia — Biden plans to return to Washington Sunday to deal with domestic issues. 

    The president downplayed the move as something China could use to its advantage, noting he will still meet with Quad nation leaders in Japan. “We get a chance to talk separately at the meeting,” he said

    Then, Biden was asked whether he has plans to speak with the Chinese president soon.

    “Whether it’s soon or not, we will be meeting,” he said, before leaving the room. 

    Cristina Gallardo in London and Zi-Ann Lum in Ottawa contributed reporting.

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    Eli Stokols, Phelim Kine and Stuart Lau

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