Good morning! The two Koreas are at it again, and this time, it’s balloon warfare. On Wednesday, according to The Wall Street Journal, about 260 large white balloons were spotted floating across South Korea. Those balloons were packed with trash and even excrement. North Korea launched them in retaliation after South Korean activists sent balloons filled with BTS pen drives into North Korea. So, in essence: one side sends BTS, the other side sends BS. Classic sibling rivalry, right?

🎧 What YouTube’s Playables bodes for the gaming industry. Also in today’s episode: more countries advocate for Palestinian statehood. Tune in to Spotify, Apple Podcasts, Amazon Music, Google Podcasts, or wherever you get your podcasts.

Anup Semwal and Roshni Nair also contributed to today’s edition.

The Market Signal* 

Stocks & Economy: Asian indices fell on Thursday due to sustained concerns over higher US Treasury yields.

China's economy is projected to grow 5% this year, according to the IMF. But it warned of slowing growth in the years ahead, Reuters reported. The IMF's new projections come amid Beijing’s efforts to ramp up the economy and fight a protracted property crisis and its ripple effects. China will release PMI (Purchasing Managers' Index) data on Friday.

Moneycontrol reports that the share of public sector companies in India's total stock market capitalisation reached a seven-year high of over 16% in May, thanks to a strong rally in state-owned companies. That said, analysts believe that concerns about potentially exuberant valuation are being overlooked by investors.

The GIFT Nifty indicates a flat start for Indian markets. India will release Q4 GDP figures on Friday.

CLIMATE

It’s Raining Fire 

Mungeshpur in Delhi reportedly sizzled at 52.3°C, the nation's highest-ever reading, though the IMD says this could be a sensor error. But the country is so scalded that you can literally roast papad by burying it in the sand. This hellscape is coming for Indian businesses, too. 

No call, no show: Dealers in metros are complaining about virtual no-shows in car showrooms. Mint reports that May car sales have nosedived compared to the previous month and the same period last year. Carmakers and dealers are trying to woo buyers with discounts and home test drives, but it’s just too hot to step out.

The Core had reported that high temperatures will hammer India’s industrial output too. Repair bills will skyrocket as extreme heat increases the likelihood of machine breakdowns. Labourers may shun daytime shifts, forcing industries to increase the number of shifts or bear the expense of constructing worker dorms closer to factories. 

PODCAST

Tune in every Monday to Friday as financial journalist and host Govindraj Ethiraj gives you the most important take on the latest in business and economy.

In today’s episode, he speaks to Sandip Bansal, associate director and senior portfolio manager, ASK Investment Managers, about how one should pick stocks and long-term themes in a heated market. Also: Anumita Roychowdhury, executive director at the Centre for Science and Environment, on how we should respond to new urban heat patterns.

GEOPOLITICS

State Of Flux

Spain, Norway, and Ireland had long advocated Palestinian statehood, but never made it formal until May 28. This marks a shift in policy not just for some EU countries, but also for member states of the North Atlantic Treaty Organization (Nato), which until recently staunchly defended Israel and refocused attention to West Asia during the Russia-Ukraine war — much to the ire of Ukraine President Volodymyr Zelenskyy.

Why this matters: Several EU members recognise Palestinian statehood, but they did so before joining the Union. In advocating the two-state solution, Norway, Spain, and Ireland join Sweden in recognising Palestine after the bloc was formed.

Europe has long been divided over Israel and Palestine. But with other Nato countries such as Canada suspending arms sales to Israel and EU Council President Charles Michel also advocating Palestinian statehood, the US and Israel find themselves isolated by longtime allies.

CONGLOMERATES

Expensive Bets, Well Afforded

Yesterday, we broke down why Adani’s ambitions to build a super app may be futile, as it considers setting up UPI payments and ONDC-based e-commerce, per Financial Times. Now, it seems the Adani Group may be in talks with Vijay Shekhar Sharma for a stake in Paytm, The Times of India reported.  

Paytm denied it (pdf) but then, TOI reported that Gautam Adani was in talks with Sharma personally, not his firm.

Retail madness: Rival Mukesh Ambani’s Reliance Retail is also exploring an entry into everyone’s current favourite: quick commerce. Its JioMart may launch 30-minute deliveries by next month. Reliance already has a significant stake in delivery firm Dunzo that fell on hard times as it tried to shift to quick commerce. 

Meanwhile, Ambani’s right-hand man Manoj Modi has reportedly stepped in to turn Reliance’s fashion business around. The Morning Context reports that Modi is leading Chinese fast-fashion retailer Shein’s re-entry to India and cutting costs at AJIO. 

The Signal 

The Tatas, Ambanis, and Adanis have spent considerable money trying to build online consumer businesses at massive scale, but with limited success. Tata Trent’s Gen-Z fashion chain Zudio is a success, while Reliance Digital is India’s largest organised electronics retailer. But Tata’s super-app Neu is struggling more than two years since launch while Reliance’s JioMart failed to disrupt FMCG distribution. 

All three have the cash to take a crack at online payments and quick commerce. But profitability is elusive and the odds are stacked in Reliance’s favour (for now). 

FYI

No pedal to this metal: Tata Steel reported a 64% slump in year-on-year profit for the fourth quarter, mostly on account of an import surge weighing down on earnings.

Hold up: The RBI has barred Edelweiss Asset Reconstruction Company Limited from acquiring financial assets due to concerns after a supervisory examination.

Two cents: The Wall Street Journal reports that Donald Trump is mulling an advisory role for billionaire Elon Musk, possibly in matters related to the economy and US border security, if he returns as President this year.

Slick: Texas oil major ConocoPhillips is acquiring Marathon Oil in an all-stock deal worth $17.1 billion. Meanwhile, BHP has suspended its near-$50 billion bid for Anglo American after the latter refused more talks.

Fight back: A union representing Samsung workers has called a strike for the first time in the company’s history after talks broke down over wage increases.

THE DAILY DIGIT

8,302 MW

The peak power demand in Delhi on Wednesday, the highest ever recorded in the national capital. (Mint)

FWIW

Teach and beach: In Britain, according to LinkedIn, teachers, lecturers, and learning support assistants are the hottest jobs right now. Fresh grads in the UK are apparently lured by those sweet summer vacations that teachers and professors get to enjoy. Apparently, endless holidays and a killer work-life balance trump higher paychecks for young Britishers. Moral of the story: who needs extra money when you can have a summer tan?