Original link: https://www.latepost.com/news/dj_detail?id=1642
Report that explores the boundary between regulation and large corporations wins a Pulitzer
The “Wall Street Journal” has published at least seven long articles since October 11 last year, exposing thousands of US federal government officials buying and selling stocks of companies supervised by their agencies. The series won this year’s Pulitzer Prize for Investigative Reporting.
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The reporters obtained and analyzed more than 31,000 financial disclosure forms from approximately 12,000 senior employees, politicians and presidential appointees, covering transactions in stocks, bonds and funds by these officials and their spouses or children, including 850,000 financial assets and data on more than 315,000 transactions. The data comes from federal officials who filed public financial disclosures from 2016 to 2021.
The investigation team found that among the more than 50 federal agencies it evaluated, more than 20% had public officials or their family members investing in companies supervised by their agencies. The top five agencies that made such investments were the Ministry of Finance, the Environmental Protection Agency, Department of Defense, IRS, and SEC.
For example, a senior official of the Environmental Protection Agency invested in oil and natural gas storage companies, and an official of the Food and Drug Administration held shares in dozens of food and drug companies. A Defense Department official bought stock in a company five times before it won a new Pentagon order. When the then Minister of Transportation Chao Xiaolan participated in the epidemic response work in early 2020, she bought stock funds worth more than 600,000 US dollars.
But in terms of transaction volume, the US Federal Trade Commission (FTC) is the largest. “The Wall Street Journal” said that “the highest business regulatory agency in the United States is also the home of the most active stock trading in Washington.”
Nearly a quarter of senior FTC officials own or are trading stocks in companies such as Amazon, Microsoft, Meta, and Alphabet as the technology industry is increasingly regulated by the FTC, the report said. The FTC chairman owns shares of Microsoft, Oracle and AT&T as the FTC conducts sensitive reviews affecting the tech and telecommunications industries. The head of the international division traded Meta’s stock through a financial adviser while his department coordinated a cross-border investigation into Facebook.
According to reports, U.S. law prohibits federal officials from handling any affairs that may affect their personal financial status. Additional regulations passed in 1992 require federal employees to avoid conflicts of interest. But investing $15,000 or less in individual stocks is not considered a potential conflict, and the limit for mutual funds is $50,000.
Better to sell all their personal stock when they go into government jobs to avoid conflict, which often happens to those at the highest levels. For example, Paulson, the former CEO of Goldman Sachs, became the US Treasury Secretary in 2006, and then emptied his Goldman Sachs stock.
There is something of a paradox between regulation and innovation. A century ago, the United States’ tough anti-monopoly accelerated innovation, but the strict supervision of the manufacturing industry later made a number of companies lose their global competitiveness. But if there is a lack of effective supervision, there will be the “revolving door” described in this Pulitzer Prize-winning report. (Gong Fangyi)
Attached:
Title of the winning series:
- “Federal Government Officials Buying and Selling Stocks of Companies Overseen by Their Public Offices”
- “The agencies that regulate Facebook, Google, and Amazon are also buying and selling the company’s stock”
- “Wall Street Trader or Washington Official? Sometimes It’s Hard to Tell”
- “Washington Officials Timing Stock Trades Smartly Amid Coronavirus Shock”
- $1M Amazon Conflict of Interest: Washington’s Ethics Officer Difficult to Enforce Stock Exchange Law
- Ethics Oversight Panel Seeks to Investigate Conflicts of Interest in Official Stock Trading
- “When Federal Officials Help Corporations—and Their Own Financial Interests”
Investigative Reporting Team:
- Rebecca Ballhaus, Brody Mullins, Chad Day, John West, Joe Palazzolo, James V. Grimaldi, Coulter Jones, James Benedict
House price pusher TSMC, from Hsinchu to Phoenix
At the Berkshire shareholder meeting last weekend, Buffett said that in the chip industry, no company can compare with TSMC. Real estate agents in Taiwan think so too.
Housing prices in Hsinchu, where TSMC is headquartered, have soared 99 percent over the past five years, about three times the average price increase in Taiwan, according to real estate brokerage Xinyi. The main driving force for rising housing prices comes from the high salaries of TSMC employees. We have sorted out before that the average annual salary of TSMC’s 70,000 employees is about 720,000 yuan, of which the annual salary of new engineers (masters) is about 450,000 yuan, which is almost four times the per capita income of Taiwan.
Stories about the entry of large companies driving surrounding housing prices can be seen everywhere.
Amazon announced in 2012 that it would move its headquarters to downtown Seattle. According to real estate service provider Zillow, in the following five years (2013 to 2018), Seattle house prices rose by 73% and rents rose by 31%. People used to call this phenomenon the “Amazon Effect”. In November 2018, Amazon announced the construction of its second headquarters in Arlington, Virginia, which once again drove up local housing prices.
Portland, where Nike is headquartered, is one of the cities with the most stable house price growth in the United States after the subprime mortgage crisis, which is largely due to the continuous investment and expansion of companies such as Nike in the local area. In 2016, Nike announced a headquarters expansion plan costing about $1 billion.
The uniqueness of TSMC is that it can build one after another “TSMC Village” in different places where the housing price is much higher than the surrounding area. Because of the continuous expansion needs of chip manufacturing and the wooing of local governments, TSMC needs to go to different regions and countries to build factories. Its location is often remote and empty, and the stimulation of industrial clusters and the jobs it creates are comparable to those of traditional manufacturing giants. The treatment of employees is not inferior to that of technology companies. The influx of a large number of high-paying workers directly benefits local housing prices.
In 2020, TSMC began to expand and build a factory in Tainan to promote mass production of its most advanced 5nm and 3nm chips. TSMC’s expansion is expected to create 18,000 new jobs in Tainan, according to real estate agency Xin Yuan. TSMC’s Kaohsiung plant also started construction at the end of last year and is expected to be mass-produced in 2024. According to data from Xinyi Real Estate, housing prices in Tainan rose by nearly 9% year-on-year in the fourth quarter of last year, and housing prices in Kaohsiung rose by 14%. TSMC’s three major strongholds, Hsinchu, Kaohsiung and Tainan, are the three cities with the highest housing price increases in Taiwan over the past period of time.
In Phoenix, Arizona, where TSMC’s new U.S. factory is located, a similar scenario is happening again. Local real estate developers rushed to buy nearby land to build apartments long before the factory started. According to CBRE, a real estate statistics and consulting agency, there are about 120,000 square meters of projects under construction in the Deer Valley near the TSMC site. In addition, driven by TSMC, dozens of companies have set up new local offices, causing the surrounding commercial real estate prices to more than double within a year. (Qiu Hao)
How traditional car companies deal with the dilemma of intelligence
“Successful CARIAAD requires a software culture!” Herbert Diess wrote a year ago, “Unlike the ‘long-term, branded, complex’ corporate cultures of VW, Audi, and Porsche, CARIAAD must be Deploy once and be attractive to software talent. My concern is getting CARIAD far enough away from the group, the OEM process and the corporate culture.”
Diess, the former CEO of Volkswagen Group, resigned in July last year. CARIAD is the software development department of the Volkswagen Group established by him. It was established in 2019 and integrates the software development teams scattered in more than ten automobile brands of the group to speed up the development progress and efficiency.
The team has more than 4,500 members and plans to have 10,000 engineers by 2025. Business will cover electronics, electrical architecture, Volkswagen Operating System, Volkswagen Cloud, key applications.
However, due to over-budget and severe project delays, the Volkswagen Group has now dismissed almost all executives of CARIAD, and the new person in charge is Peter Bosch, director of Bentley Motors, the group’s ultra-luxury brand.
It is reported that Audi’s pure electric A6, pure electric Q6 and Porsche electric Macan were all delayed due to difficulties in the development of CARIAD. Volkswagen’s ambitious new electric platform SSP may also be postponed from the original plan of 2026 to 2028 for the same reason.
Due to technical constraints, industry “conventions” or corporate culture, software development is basically left to the supplier, and the realization of related software functions is extremely dependent on hardware. The same car may have completely different in-car entertainment if it is half a year behind the production date. The system version, and the lower version cannot be upgraded.
After Tesla proved the value of software and the development advantages after decoupling from hardware, mainstream traditional car companies have tried various methods to “fight” inertia. The founding of Volkswagen CARIAD and Diess’ “manifesto” a year ago are examples. There’s also GM’s plan to remove CarPlay and Android Auto from new electric vehicles.
According to reports from the Sohu Automobile team, CARIAD’s Chinese subsidiary has also been given higher authority by the headquarters. Its localization work has been changed from being listed in Germany first to localization, to joint development with the German headquarters, in an attempt to shorten the development process. In addition to establishing CARIAD, Volkswagen also invested in Argo AI, an autonomous driving research and development company, and invested 16.7 billion yuan to establish a joint venture with Horizon.
Self-owned brand car companies are also doing similar incubation or investment. For example, SAIC Group established Zero Beam Technology to develop new electronic and electrical architectures to support higher-level autonomous driving. Great Wall Motors Incubated autonomous driving R&D company Momo Zhixing has been used in at least 5 models of Great Wall Motors. Li Shufu, chairman of Geely Holdings, and Shen Ziyu, former vice president of Geely Automobile Research Institute, jointly founded Yikatong, which focuses on car-machine systems. (Gong Fangyi)
KKR’s distributable earnings fall in Q1 on slower trading environment
On Monday, private equity firm KKR & Co. said that distributable income after tax in the first quarter fell 26% year-on-year to US$720 million, and asset sales profits fell 70% year-on-year to US$170 million, mainly due to inflation, rising interest rates and financial market conditions. Volatility impact. Prior to this, Blackstone Inc and Carlyle Group Inc’s quarterly reports also indicated a decline in distributable income and a slowdown in asset divestitures. KKR shares fell about 4% that day.
Fee-related revenue decreased approximately 10% YoY to US$550 million, mainly due to a 60% YoY decline in transaction fees due to lower transaction volume. At the same time, assets under management (AUM) increased by 6% year-on-year to US$510 billion, and management expenses increased by 18% year-on-year.
KKR’s traditional private equity funds had a total return of 2% in the quarter, but -9% over the past 12 months, largely due to downward revisions to portfolio values. Additionally, infrastructure and leveraged credit funds totaled 7% and 4%, respectively, and speculative real estate funds totaled -3%.
The company’s co-CEO also emphasized the trend of investment diversification. “Over the past 12 months, 95 percent of the new capital entrusted to us was outside of our traditional private equity funds, reflecting our continued diversification.” During the quarter, $12 billion in new Among them, nearly 80% are used for credit products and liquid assets. Of the $10 billion invested, about half went to infrastructure and real estate. (Intern Meng Xiaohan)
OTHER NEWS
China’s exports rose 8.5% year-on-year in April, while imports fell 7.9%.
According to the General Administration of Customs, in terms of US dollars, exports in April increased by 8.5% year-on-year, a drop from the double-digit growth rate of the previous month, and imports fell by 7.9% year-on-year, which expanded the decline from the previous month. Compared with March this year, the growth rate of exports to ASEAN slowed down, exports to Russia continued to grow rapidly, and exports to major developed countries improved. According to the US import data in April, China’s share of US imports rebounded from 31.6% in the previous month to 36.8%, which was close to the level of the same period last year.
Kuaishou held the annual e-commerce conference, and CEO Cheng Yixiao talked about three business wind vanes.
Kuaishou held the E-commerce Gravity Conference for merchants in Shanghai today (May 9). Cheng Yixiao, the CEO who has taken over the e-commerce business for a year, put forward three business indicators of “low price, high-quality content, and caring service” in his speech, aiming to Complementing the search, mall and content fields, the shelf field undertakes the deterministic needs of users. This year, Kuaishou will use at least 60 billion traffic to encourage merchants and talents to cooperate.
In the first quarter, Xiaomi mobile phone shipments in India fell by 40% year-on-year.
According to a report released by research firm IDC, smartphone shipments in the Indian market fell 16% year-on-year to 31 million units in the first quarter of this year, the lowest level in four years. Among them, Xiaomi’s mobile phone shipments fell sharply by 41.1% to 5 million units, and its market share ranking also fell from the first place a year ago to the fourth place. Earlier, a local court in India rejected Xiaomi’s complaint against the country’s law enforcement agencies for seizing nearly $700 million in assets.
Listed real estate companies plan to raise over 210 billion yuan in direct financing this year.
According to data from Oriental Wealth Choice, as of May 8, the total scale of direct financing planned by listed real estate companies this year reached 217.37 billion yuan, of which 128.544 billion yuan was equity financing; 88.826 billion yuan was bond issuance financing, both exceeding the same period last year. Ming Ming, chief economist of CITIC Securities, said in an interview that real estate companies’ financing through multiple channels can help optimize their capital structure and improve their ability to resist risks. At the same time, the recovery of real estate companies’ refinancing capabilities can also boost the confidence of home buyers.
Consulting industry intermediary Kaisheng Rongying was investigated by the national security agency.
According to news from Jiangsu Radio and Television, the national security agency, together with relevant departments, launched joint law enforcement actions against the Suzhou branch of industry expert knowledge information service provider Capvision, as well as Shanghai, Beijing, Suzhou, Shenzhen and other places. According to the report, in an interview in July 2020, an expert hired by Kaisheng disclosed to overseas mobile phone numbers the military products, prices, market shares, manufacturers and equipment volume of a key military enterprise he had worked for. This act is suspected of committing the crime of illegally providing state secrets abroad. Based on 2020 revenue, Triumph is China’s largest provider of industry expert knowledge information services, with a market share of 33%.
Buffett’s stake in BYD fell below 10% for the first time.
According to a document disclosed by the Hong Kong Stock Exchange, on May 2, Berkshire Hathaway, a company owned by Warren Buffett, lowered its shareholding in BYD from 10.05% to 9.87%, cashing in about HK$462 million. This is the 11th time that Berkshire Hathaway has reduced its shareholding in BYD since its first reduction in August 2022. The shareholding ratio has dropped from 19.92% on August 24, 2022 to less than 10%.
The producer of Wandering Earth plans to build a Chinese science fiction movie park.
At the 2022 annual performance briefing, China Film stated that it is preparing to build a Chinese science fiction movie park, which will focus on sci-fi movie IP such as The Wandering Earth to build a tourism and entertainment park in Huairou District, Beijing. Benefiting from the current box office rankings of “Manjianghong” and “Wandering Earth 2”, Chinese films achieved revenue of 1.445 billion yuan in the first quarter, a year-on-year increase of 52.71%; net profit attributable to the parent was 182 million yuan, a year-on-year increase of 56.89%.
The variety show produced by Mango topped the B station hit list.
On May 5th, the Mango TV variety show “Ride the Wind 2023” was launched. As the only Japanese singer participating in the competition, Reya Meiyi performed her masterpiece “The Pure Land of Paradise” on the first stage. With the help of the votes of the two-dimensional supporters, Meiyi Lingya’s official popularity votes exceeded 23 million, the Baidu search index soared to 106,450, and the first stage video also reached the top of the B station rankings.
Ruixing Coffee established an Ethiopian office, where it purchased 17,000 tons of coffee beans last year.
According to Ruixing’s official account, Ethiopia is one of the key production areas of its “Global Sourcing Bean Plan”. Last year, it purchased about 17,000 tons of coffee beans locally and about 4,000 tons of specialty coffee beans. Previously, Luckin’s product aimed to get rid of the impression of low-priced coffee, Little Black Cup SOE Yirgacheffe, whose Yirgacheffe coffee beans came from Ethiopia.
Last year, TSMC’s US$17 billion in revenue came from Apple.
According to TSMC’s annual report, its largest customer (Apple) contributed nearly NT$529.6 billion (approximately US$17.3 billion) in revenue last year, a year-on-year increase of 30%. However, its share of TSMC’s revenue slipped to 23 percent from 26 percent the year before. According to industry sources, the yield rate of TSMC’s 3nm process is still not up to standard, which may affect the supply of Apple’s new products in the second half of the year.
Bill Gates reiterated that AI should be regulated, not suspended.
Today, Bill Gates once again said in an interview that government agencies should be involved in the regulation of AI, but the development of AI should not be suspended, because if “good guys” are asked to suspend the development of AI, “bad guys” guys)” will master AI and use it for malicious purposes such as cyber attacks. This view is similar to Gates’ open letter published in March, as well as a TED talk given by the Open AI co-founders last month.
The upstream is out of stock, and Nestlé will continue to cut 10% of single products this year.
On Monday, Nestle CEO said that this year will continue to cut about 10% of the single product. The company announced late last year that it would streamline product manufacturing and distribution processes and improve retailer shelf utilization in response to supply chain shortages. 20% of SKUs have been cut so far. Of the company’s 100,000 SKUs last year, the top 12% contributed 80% of sales, while the bottom third contributed only 1%. Both Nestle and Unilever have stated that sales will be difficult to continue to rely on price increases, and the latter also said in February that it will cut low-margin product lines.
Japan’s consumer spending and real wages both fell in March.
Japan’s household spending fell 1.9% in March from a year earlier, the biggest drop since March 2022. Meanwhile, Japan’s real wages fell by 2.9% in March, the 12th consecutive month of decline for the indicator, driven by persistent inflation. After 2019, Japan stimulated the economy by easing COVID-19 restrictions on domestic shoppers and international tourists, but continued price increases have reduced the real purchasing power of Japanese households, making consumption recovery more difficult.
More than 40% of Japanese manufacturing companies’ annual profits have declined.
As of May 2, 42% of the 92 manufacturing companies in Japan that have announced their financial reports for fiscal year 2022 (as of March 2023) have experienced a decline in net profit, a new high since fiscal year 2019. The surge in this ratio is mainly due to the impact of rising raw material prices and reduced demand in China, and the profits of electronics and auto parts companies such as Murata Manufacturing and Nidec have declined.
In the first quarter, the U.S. banking industry tightened credit standards, and corporate and consumer credit demand also declined.
According to the Federal Reserve’s quarterly senior loan commissioner opinion survey, affected by the US interest rate hike, the proportion of US banks tightening loan conditions for large and medium-sized enterprises has increased from 44.8% in the fourth quarter of 2022 to 46%, and the requirements for small enterprises are also stricter. At the same time, compared with three months ago, credit demand for companies of all sizes has declined, and consumer credit demand for credit cards, automobiles, etc. has weakened again.
Google is investing $100 million in The New York Times over the next three years.
The deal will cover distribution subscriptions and advertising marketing. Traditional media, portals, and social media are all facing the problem of declining advertising revenue, and the former has been criticizing Google, Meta, etc. for not paying for reprinted content. The New York Times had $2.31 billion in revenue last year. Meta paid it more than $20 million in annual fees, but announced last year that it would not renew the subscription. Google’s new investment will make up for this part of the gap.
Virgin Galactic announced it will launch commercial spaceflight at the end of June.
Space tourism company Virgin Galactic announced that it will conduct a four-person test flight this month and launch its first commercial flight at the end of next month. Affected by factors such as logistics and labor shortages, Virgin Galactic’s commercial flight date has been postponed several times. After completing upgrades to their core tourist spacecraft in February of this year, they reopened ticket sales for space travel at $450,000 per person.
Amazon will authorize the platform’s original film and television content to third-party platforms.
On Monday, Amazon said it was launching a new division to open up its original movies and TV shows to third-party streamers. The content will premiere on its own Prime Video platform, and then licensed to other streaming media platforms, foreign network TV, airlines, etc. to play. Companies are experimenting with traditional Hollywood distribution models. Last year, Amazon also announced that it would invest $1 billion a year in making movies for theaters.
Suzano, the world’s largest pulp producer, said Europe may be in an early recession.
Headquartered in Brazil, Suzano has an approximate 15% share of the global hardwood pulp market in 2020. Management said a few days ago that they have a large presence in many geographies and follow a lot of consumer packaging goods (CPG) companies, so they know exactly where they are now. In printing and writing paper, the US is somewhat weak, China is doing well, Europe is falling, and perhaps Europe is starting to show early signs of recession compared to other regions. However, the global tissue business is very stable. Suzano previously acquired Kimberly-Clark’s CPG business in Brazil.
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