On the political front, Netanyahu declares that Israel will maintain control of security in Gaza indefinitely after the conflict.
From an economic point of view, China is providing multi-million dollar loans to financially troubled countries, while establishing a global network of strategically relevant ports.
In the corporate sector, banks are transferring risk to hedge funds and private equity firms through a mechanism known as synthetic risk transfers. Meanwhile, UBS has reported its first quarterly loss in almost six years due to expenses from the Credit Suisse integration. On the other hand, Uber announces profits in its second consecutive quarter.
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Policy
- Israel will maintain control over Gaza indefinitely after its war against Hamas ends, Benjamin Netanyahu said, stating that his country will assume “overall security responsibility” in the territory. His comments offered the clearest indication yet that Israel plans to maintain tight control over the territory that is home to 2.3 million Palestinians. Despite pressure to reach a ceasefire or allow pauses in the influx of humanitarian aid and the evacuation of wounded and foreigners, the Israeli armed forces continue their ground operation in Gaza and regular bombing.
Economy
- After initially providing $1.3 trillion in loans to developing countries, mostly for infrastructure projects, China has shifted its focus to the task of rescuing many of those same countries from their bloated debts. The initial loans were mostly related to the Belt and Road Initiative project, which was launched in 2013 by Xi Jinping, China’s top leader, with the purpose of strengthening transport, communication and policies in more than 150 countries. Bailout loans rose to 58 percent of China’s financing to low- and middle-income countries in 2021, up from 5 percent in 2013.
- A decade ago, Chinese President Xi Jinping launched the Maritime Silk Road, the ocean component of his flagship Belt and Road Initiative aimed at improving China’s access to global markets through investments in transportation infrastructure. Investments in the initiative have since slowed as Chinese growth weakens, the United States exerts pressure and countries question the debt the projects entail. However, China has already secured a significant share in a network of global ports that are critical to global trade and freedom of navigation.
Business
- American banks have found a new way to shed risk as they rush to adapt to tighter regulations and rising interest rates. JPMorgan Chase, Morgan Stanley, US Bank and others are selling complex debt instruments to private fund managers as a way to reduce regulatory capital charges on the loans they make. These so-called synthetic risk transfers are onerous for banks, but are less costly than assuming full capital charges on the underlying assets. On the other hand, they are beneficial for investors, who can usually obtain returns of around 15% or even more.
- UBS has announced its first quarterly loss in almost six years, revealing expenses associated with the integration of Credit Suisse following the state-coordinated rescue of its competitor. The deal is expected to ultimately benefit UBS by consolidating its position as a leader in global wealth management. However, expenses related to the integration of its competitor led UBS to report a net loss of $785 million in the third quarter, higher than the $444 million expected by analysts, as the bank incurred expenses worth $2.2 billion related to the deal. Credit Suisse, which operates as a subsidiary of UBS, will legally merge with the group as a whole next year.
- Uber announces record passenger numbers and its second consecutive quarter of profits. Riders took 2.4 billion trips on Uber in the quarter, representing a 25 percent increase from a year ago. The company had $9.3 billion in revenue in its most recent quarter, an 11 percent increase from a year ago, and generated $221 million in net income. This was the second straight profitable quarter for Uber, thanks to the strength of its business operations, marking a milestone for a company that has long faced questions about its profitability.
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