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Morning Bid: Eyes switch to inflation vs elections, Powell up

A look at the day ahead in U.S. and global markets from Mike Dolan

After an intense month focused on election risk around the world, markets quickly switched back to the more prosaic matter of the cost of money - and whether disinflation is resuming to the extent it allows borrowing costs to finally fall.

Thursday's U.S. consumer price update for June is the key moment of the week for many investors - with the headline rate expected to have fallen two tenths of a percentage point to 3.1% but with 'core' rates still stuck at 3.4%.

With Federal Reserve chair Jerome Powell starting his two-pronged semi-annual congressional testimony later on Tuesday, the consensus CPI forecast probably reflects what the central bank thinks of the situation right now - encouraging but not there yet.

But as the U.S. unemployment rate is now back above 4.0% for the first time since late 2021, markets may look for a more nuanced approach from the Fed chair that sees it increasingly wary of a sudden weakening of the labor market as real time quarterly GDP estimates ebb again to about 1.5%.

There were some other reasons for Fed optimism in the lead up to the testimony.

The path U.S. inflation is expected to follow over coming years generally softened in June, amid retreating projections of price increases for a wide array of consumer goods and services, a New York Fed survey showed on Monday.

Inflation a year from now was seen at 3% as of June - down from the expected rise of 3.2% in May - and five-year expectations fell to 2.8% from 3%.

Crude oil prices are better behaved this week, too, falling more than 3% from the 10-week highs hit late last week and halving the annual oil price gain to 10%.

The losses on Tuesday came after a hurricane that hit a key U.S. oil-producing hub in Texas caused less damage than many in markets had expected - easing concerns over supply disruption.

Before Powell starts speaking later, there will also be an update on U.S. small business confidence for last month.

BRI: embracing Chinese green practices for a sustainable future
Editor's Note: This year marks the 10th anniversary of the Belt and Road Initiative (BRI) proposed by Chinese President Xi Jinping. Through the lens of foreign pundits, we take a look at 10 years of the BRI - how it achieves win-win cooperation between China and participating countries of the BRI and how it has given the people of these countries a sense of fulfillment. In an interview with Global Times (GT) reporter Li Aixin, Erik Solheim (Solheim), former under-secretary-general of the United Nations and former executive director of the UN Environment Programme, recalled how the BRI helped shorten a previously long journey in Sri Lanka to a half-hour trip. "We will all be losers in a de-globalized, de-coupled world. The BRI can play a key role in bringing the world together," Solheim said. This is the 18th piece of the series. GT: How do you evaluate the role of the BRI in promoting development in participating countries over the past 10 years? Solheim: The BRI has been a major driver of development since it was announced by President Xi Jinping in Kazakhstan 10 years ago. The China-Laos Railway has connected landlocked Laos to the Chinese and European rail network, making it possible for Laos to sell more goods and welcome more tourists. Rail corridors in Kenya and from Djibouti to Addis Ababa connect the interior of Africa to the coast, bringing opportunities for much faster development in East Africa. The Bandung-Jakarta railway in Indonesia, Hanoi metro, roads and ports in Sri Lanka - there are great examples of good south-south and BRI projects in almost every corner of the world. GT: In your experience of traveling around the world, has any BRI-related story left a deep impression on you? Solheim: Yes, many! I'll just mention two. When I was chief negotiator in the Sri Lanka peace process 15 years ago, it took a long time to travel from the airport to Colombo, the capital of Sri Lanka. When I came back last year, it took half an hour on wonderful Chinese-built highways. Traveling through Mombasa, a coastal city in Kenya, you see a lot of poverty and run down houses. Then all of a sudden, a green, clean, well-run oasis opens up. It's the end station of the Nairobi-Mombasa railway which links the capital Nairobi to the coast. The rail station stands out and is showing the future for Kenya. GT: The EU proposed the Global Gateway, and the US proposed the Build Back Better World. What do you think are the similarities and differences between these projects and the BRI? Solheim: I really wish success for the Western initiatives. What developing nations ask for is a choice of good cooperation with both China and the West. Unfortunately, up to now, a number of the Western-led initiatives have been more like media events. They lack structure, secretariat, finances and clear direction. Nearly all nations in the world want to see close people-to-people relations, investment and political cooperation with both China and the West. No one wants to choose. GT: Some people from the West are talking about "de-coupling" and "de-risking." Both seem to be another way of saying "de-globalization." Do you think "de-coupling" and "de-risking" will affect the BRI? And what role will the BRI play in maintaining globalization? Solheim: Decoupling is probably the most unwise idea in the world today. It's outright dangerous. Facing climate change, environmental degradation, economic troubles, war in Ukraine and other places, and the threat of pandemics, we need more, not less, cooperation. We will all be losers in a de-globalized, de-coupled world. The BRI can play a key role in bringing the world together. Almost all developing countries have made BRI agreements with China. As an example, when President Xi met all the leaders of Central Asia recently in Xi'an, Northwest China's Shaanxi Province, they made a very ambitious declaration on future green cooperation between China and Central Asia. GT: You have previously said that the BRI is a fantastic vehicle to promote green global development, which can boost the economy and ecology at the same time. Could you elaborate on how you think the BRI has achieved development of the economy and ecology? Solheim: In the beginning there were too many fossil fuel projects among BRI programs. In the BRI International Green Development Coalition, we argued this should stop. When President Xi pledged to stop building new coal-fired power projects overseas, it was one of the most important environmental decisions ever. Also, it happened at a time when important BRI nations like Bangladesh, Kenya and Pakistan decided they could grow their economies and go green without coal. The BRI will in the next decade become the world's most important vehicle for green energy and green transport. We will see massive investments in solar and wind power, hydrogen, electric batteries and more. GT: How do you view China's goal of achieving harmony between humanity and nature in modernization? In what way is China's story in pursuing harmony between humanity and nature relevant to other countries? Solheim: China now covers between 60 percent and 80 percent of all major green technologies in the world - solar, wind, hydro, batteries, electric cars and high-speed rail. Companies like Longi, BYD and CATL are the world leaders in their sectors. More remarkably and maybe less noticed abroad, China is also a global leader in protecting nature. It's embarking upon one of the most massive national park programs, with a focus on Qinghai Province and Xizang Autonomous Region. China is by far the biggest tree planter in the world and the global leader in desert control in Kubuqi, Inner Mongolia and other places. China has been hugely successful in the recovery of endangered species like the Giant Panda, Tibetan Antelope and Snow Leopard. A new center for mangrove restoration is being set up in Shenzhen and the fishing ban in the Yangtze will restore that magnificent ecosystem. The Belt and Road is a great opportunity for the world to learn from good Chinese green practices.
"Corrupt Politicians GPT" "Fiscal Bill GPT", Kenyan protesters use AI to "protest"
In the past few weeks of anti-government activities in Kenya, AI tools have been creatively used by protesters to serve protests. According to the US "Flag" News Agency on July 5, protests in Kenya triggered by the 2024 fiscal bill are still continuing. In the past few weeks, Kenyan protesters, mainly young people, have creatively developed a series of AI tools to assist anti-government activities. The Kenyan government expressed concern about the risks associated with the use of AI tools in protests. Kelvin Onkundi, a software engineer in Kenya, developed the "Fiscal Bill GPT", which operates similarly to ChatGPT and can receive questions about the fiscal bill and generate responses. Martin Siele, a reporter from the "Flag" News Agency, analyzed: "The 'Fiscal Bill GPT' can convert professional terms in many legislative fields into easy-to-understand information for protesters, helping Kenyans understand the potential impact of the fiscal bill." Another software engineer, Marion Kavengi, developed the "SHIF GPT" to provide Kenyans with information about the upcoming Social Health Insurance Fund (SHIF). In addition to AI tools designed to help people understand controversial policies, protesters have also developed "Corrupt Politicians GPT" to assist protest demonstrations. After entering the name of a politician on the platform, the platform will generate a list of corruption scandals about the politician in chronological order. Developer BenwithSon wrote on the social platform X on June 28: "'Corrupt Politicians GPT' allows people to search for any scandal related to any politician. I have seen some leaders stand at the forefront of the political arena, but they are corrupt behind the scenes." Kenyan Chief Minister and Foreign Minister Mudavadi issued a communiqué to ambassadors of various countries in Nairobi on July 2 local time on protests and relevant government measures, expressing concerns about the use of AI and false information in protests. Mudavadi said: "AI technology is used by people with ulterior motives, which will fill the global information system with false narratives." The Kenya Times reported on June 30 that AI technology enables people to force the government to increase transparency and strengthen accountability, and its role in Kenyan political activities is becoming increasingly prominent. Martin Siller believes that AI is reshaping African political behavior in many ways. AI is a new tool for both governments and opposition parties in Africa, but Kenya is one of the African countries with the most developers, and its young protesters are particularly good at using AI technology to fight the government. The 2024 fiscal bill voted and passed by the Kenyan National Assembly on June 25 clearly stated that additional taxes will be levied to repay the interest on high sovereign debt, triggering large-scale demonstrations. After President Ruto announced the withdrawal of the tax increase bill on the evening of the 26th, demonstrations in many parts of Kenya continued. According to Reuters on July 3, Kenyan anti-government protesters are re-adjusting their activities to prevent the protests from turning into violent incidents.
Google extends Linux kernel support to 4 years
According to AndroidAuthority, the Linux kernel used by Android devices is mostly derived from Google's Android Universal Kernel (ACK) branch, which is created from the Android mainline kernel branch when new LTS versions are released upstream. For example, when kernel version 6.6 is announced as the latest LTS release, an ACK branch for Android15-6.6 appears shortly after, with the "android15" in the name referring to the Android version of the kernel (in this case, Android 15). Google maintains its own set of LTS kernel branches for three main reasons. First, Google can integrate upstream features that have not yet been released into the ACK branch by backporting or picking, so as to meet the specific needs of Android. Second, Google can include some features that are being developed upstream in the ACK branch ahead of time, making it available for Android devices as early as possible. Finally, Google can add some vendor or original equipment manufacturer (OEM) features for other Android partners to use. Once created, Google continues to update the ACK branch to include not only bug fixes for Android specific code, but also to integrate the LTS merge content of the upstream kernel branch. For example, the Linux kernel vulnerability disclosed in the July 2024 Android security bulletin will be fixed through these updates. However, it is not easy to distinguish a bug fix from other bug fixes, as a patch that fixes a bug may also accidentally plug a security vulnerability that the submitter did not know about or chose not to disclose. Google does its best to recognize this, but it inevitably misses the mark, resulting in bug fixes for the upstream Linux kernel being released months before Android devices. As a result, Google has been urging Android vendors to regularly update the LTS kernel to avoid being caught off guard by unexpectedly disclosed security vulnerabilities. Clearly, the LTS version of the Linux kernel is critical to the security of Android devices, helping Google and vendors deal with known and unknown security vulnerabilities. The longer the support period, the more timely security updates Google and vendors can provide to devices.
Exclusive: India's Paytm gets government panel nod to invest in payments arm, sources say
NEW DELHI, July 9 (Reuters) - India's beleaguered Paytm (PAYT.NS), opens new tab has secured approval from a government panel that oversees investments linked to China to invest 500 million rupees ($6 million) in a key subsidiary, three sources with direct knowledge of the matter said. The approval, which still has to be vetted by the finance ministry, will remove the main stumbling block to the unit, Paytm Payment Services, resuming normal business operations. Paytm Payment Services is one of the biggest remaining parts of the fintech firm's business, accounting for a quarter of consolidated revenue in the financial year ended March 2023. A separate unit, Paytm Payments Bank, was wound down this year by order of the central bank due to persistent compliance issues, triggering a meltdown in Paytm's stock. The government panel had earlier held back approval due to concerns about the 9.88% stake in Paytm held by China's Ant Group. India has intensified scrutiny of Chinese businesses since a 2020 border clash between the two countries. All in all, Paytm has been waiting for the nod from the government panel for about two years and without it, it would have had to also wind down its payment services business, which was forbidden from taking on new customers in March 2023. Once the approval has been formalised, it will be able to seek a so-called "payment aggregator" licence from the Reserve Bank of India. The sources, two of whom are government sources, declined to be identified as the decision has not been formally announced. India's foreign, home, finance and industries ministries, whose representatives sit on the panel, did not reply to emails seeking comment. A Paytm spokesperson said the company does not comment on market speculation. "We will continue to make disclosures in compliance with our obligations under the SEBI Regulations, and will inform the exchanges when there is any new material information to share," the spokesperson said.
EV maker Lucid to recall over 5,200 Air luxury sedans for software error, US regulator says
July 9 (Reuters) - Lucid Group (LCID.O), opens new tab will recall about 5,251 of its 2022-2023 Air luxury sedans due to a software error that could cause a loss of power, according to a notice from the U.S. National Highway Traffic Safety Administration published on Tuesday. The regulator added the EV maker will also recall about 7,506 of its 2022-2024 Air luxury sedans due to an issue with a coolant heater that could fail to defrost the windshield. Lucid had released an over-the-air software update in June as a fix for the software error and a separate update to identify a high voltage coolant heater failure and provide a warning to the drivers of the affected vehicles. The company had reported second-quarter deliveries above market expectations on Monday, as price cuts helped boost demand for its luxury electric sedans.