Bloomberg - Evening Briefing - China’s ‘lost decade’

Ray Dalio has a warning for China. The hedge fund titan says the country should cut its debt and ease monetary policy or face “a lost decade.” China-US tensions are causing foreign investors to diversify or leave China entirely for fear of being singled out there, Dalio wrote in a long missive posted online. That’s causing China to face difficulties in obtaining investment. And more broadly, without a reconciliation of economic and cultural clashes, the chance of war in the next 10 years is high. “When there is a lot of debt and big wealth gaps at the same time as there are great domestic and international power conflicts, and/or great disruptive changes in nature, and great changes in technology, there is an increased likelihood of a ‘100-year big storm,” Dalio said. —David E. Rovella  

China’s protracted property downturn is eroding the balance sheets of its largest state banks as bad loans pile up. They are struggling to maintain growth as Beijing tasks them with pumping up the domestic economy and rescuing debt-laden property developers and local governments. Bank of Communications just reported its property bad loan ratio jumped to 4.99% at the end of last year from 2.8% a year earlier. Industrial & Commercial Bank of China saw its bad loans from residential mortgages rise 9.6%. And Agricultural Bank of China reported a 4.7% increase in soured residential mortgage loans last year. 

FTX co-founder Sam Bankman-Fried was sentenced to 25 years in prison for stealing billions of dollars from customers, marking the (potentially) final chapter in a case that upended the crypto industry. US District Judge Lewis Kaplan delivered the sentence in federal court in Manhattan after Bankman-Fried said he was “sorry about what happened at every stage.” Convicted last year of seven offenses, including fraud and conspiracy, Bankman-Fried has said he plans to appeal.

Barbara Fried and Allan Joseph Bankman, parents of FTX co-founder Sam Bankman-Fried, outside Manhattan federal court on Thursday. Photographer: Yuki Iwamura/Bloomberg

The US and UK are said to be reviewing more than $20 billion of crypto transactions that passed through a Russia-based virtual exchange, part of allied efforts to crack down on sanctions evasion that’s supporting Vladimir Putin’s war on Ukraine. The payments under scrutiny went through Moscow-based crypto exchange Garantex using the dollar-pegged cryptocurrency Tether. Garantex has been sanctioned on suspicion of enabling financial crimes and illicit transactions in Russia. The inquiry shows the West’s continued struggle to cut off the flow of money to the Kremlin.

Two years ago, Dubai became a hot favorite with Russians looking to flee the draft or park money there. That allure is now dimming, however, as the cost of living for expat Russians in the glitzy emirate surges and banks get stricter in enforcing sanctions. Russian money flows into the United Arab Emirates are showing signs of slowing, according to bankers, executives and investment professionals.

Ukrainian law enforcement officers examine debris outside a residential building damaged by a Russian strike on Kharkiv Wednesday. Photographer: Sergey Bobok/AFP

Amazon plans to spend almost $150 billion in the coming 15 years on data centers, giving the cloud-computing giant the firepower to handle an expected explosion in demand for artificial intelligence applications and other digital services. The spending spree is a show of force as the company looks to maintain its grip on the cloud services market, where it holds about twice the share of No. 2 player Microsoft. Sales growth at Amazon Web Services slowed to a record low last year as business customers cut costs and delayed modernization projects. Now spending is starting to pick up again.

Mortgage rates in the US declined, helping to ease affordability challenges for homebuyers. The average for a 30-year, fixed loan was 6.79%, down from 6.87% last week. Borrowing costs haven’t breached 7% since early December, but they’re still about double where they were in early 2022, before the US Federal Reserve started raising rates to tame inflation.

President Joe Biden’s “Investing in America” initiative has been pumping trillions of dollars into cities and towns through federal investments in clean energy, infrastructure and microchip manufacturing. The Democrat is hoping the results of his landmark legislative agenda—the Inflation Reduction, Infrastructure and Chips Acts—will persuade middle-class and union voters to vote for him again come November. But for some, the biggest investment by the federal government since the New Deal has yet to show concrete results. Will Bidenomics be enough to carry Biden to a second term? In this Bloomberg Originals mini-documentary, we travel to a bellwether county in Pennsylvania to ask officials, business leaders and voters what they think of the US economy and where it’s going.

Watch The Race to Prove Bidenomics is Working

• Russia sends ships into Red Sea, where the US Navy is operating.
• Baltimore bridge disaster may trigger historic marine loss, Lloyd’s says.
• Senator Bernie Sanders wants to meet Novo CEO over Ozempic prices.
• How Tesla must move from Henry Ford to Legos to make cheaper cars.
• Morgan Stanley warns older US office buildings will be left “stranded.”
• Apple plans new iPad pro for May as overseas suppliers ramp up.
• Microsoft tries to stop users from tricking chatbots into weird behavior.

Hannah Storm’s analysis of how pro basketball got so big is pretty simple: That guy from North Carolina. “What happened was Michael Jordan,” Storm said on the latest episode of The Deal with Alex Rodriguez and Jason Kelly. She should know, since the pioneering television broadcaster and ESPN anchor was there from before the beginning. She had a front row seat—literally—to basketball’s popular explosion in the 1980s, when Jordan electrified not just the sport but the broader culture.

Hannah Storm, left, on the The Deal with Alex Rodriguez and Jason Kelly

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