1. Some facts about the Swiss franc
In June 2022, the Swiss National Bank started to favour a policy of implicit franc appreciation as a means of reducing imported inflation. It correctly judged that the rise in Swiss inflation had been driven largely by imported effects, and franc appreciation would reduce those effects. Since then, roughly speaking, the euro has fallen from 1.05 to 0.95 against the franc. Even the dollar, so strong against other major currencies recently, has fallen from 1.00 to a July level of 0.85. The policy has been successful, since Swiss inflation is now back below 2 per cent, meaning that the SNB is the only major central bank currently hitting its inflation target. Its latest forecasts project headline inflation of about 2 per cent over the coming two years. The key to this policy of nominal franc appreciation has been the use of the SNB’s large stockpile of foreign exchange reserves, built up over the previous decade. The SNB’s latest quarterly foreign exchange transaction data shows that since the first quarter of 2022, it has spent just over SFr100bn on interventions to prop up the franc, selling euros and dollars and buying the Swiss currency. Without these interventions, the franc would probably be weaker. To get an idea of how overvalued the franc currently is, it is useful to look at its exchange rates with similar currencies. A cursory look shows that the Swiss franc is trading around 50 per cent above its pre-pandemic level against the yen. This is an astonishing development when we consider that relative inflation trends have been very similar.
If you are opening a restaurant that sells sirloin steaks for £760 each, you must pick your spot carefully. So Aragawa, a Japanese steakhouse that opened in Tokyo in 1967, has come to Clarges Street in Mayfair, near Berkeley Square and squarely in London hedge fund territory. Mayfair has enough people who will not think too hard before paying that sum for a top-grade sirloin steak from cattle reared at Nishizawa farm, near Kobe. Nor will they feel the pinch of the £900 that it charges for a 400g Tajima black Wagyu steak from Okazaki ranch in Shiga prefecture. This is not an offering for those who need to check their bank balances.
Irrespective of the cost required to prepare such artisanal cooking with imported ingredients and skills, the point of interest is the price.
The article also points to a uniquely Japanese trait of taking distant cultural traditions and fine-tuning them.
The steakhouse is not an ancient Japanese institution. Meat was rarely eaten there until the 20th century, and New York restaurants such as Peter Luger and The Old Homestead long predated the first Aragawa steakhouse, which opened in Kobe in 1956. This is instead a prime example of Japan’s peculiar talent for taking foreign products and refining them. Anyone who has lived in Tokyo is familiar with Italian restaurants run by Japanese chefs that somehow improve on the pizza and pasta one eats in many places in Italy. The same goes for coffee, and I used to frequent a perfect pastiche of a French bistro on a side street in the Yutenji district. Call it affectionate tribute or cultural appropriation, it is executed precisely. This also applies to Japanese denim, and to single malt whiskies from distilleries in the Kansai region around Kobe and Osaka. They are traceable products whose mystique and price often rises with distance from their origins. Bottles of 100th anniversary 18-year-old Mizunara whisky from Suntory’s Yamazaki distillery are now selling for £1,850 at Fortnum & Mason. Beef is a classic case of Japanese adaptation.Having dabbled in crossbreeding with western cattle in the early 20th century, it focused on pure Japanese breeds, including the top Tajima strain of black Wagyu. The unique marbling of Wagyu beef is created by the intensive feeding of cattle to produce intramuscular fat, which makes the steaks unusually fragrant and soft. When agricultural trade was liberalised in the 1990s, the country responded by making domestic beef even more Japanese: farmers steadily increased the amount of marbling in their animals. Wagyu cows are also raised in the US (despite Wagyu meaning “Japanese cattle”), but Japan contrived to keep its own steak as distinctive as its best whisky is from Scotch or bourbon. Japan’s steakhouses layer on top of this meticulous supply chain artisanal cooking that takes years for chefs to perfect. The high-end binchotan charcoal that Aragawa burns is not only costly but becoming rarer, since fewer heirs to the family businesses that produce it want to keep going. The end result is an intricate but potentially endangered form of craft cuisine.
3. India whisky facts of the day
India now accounts for almost one in every two bottles of whisky sold in the world. The planet’s most populous country also recently leapfrogged France to become the world’s biggest market for Scotch. The country is a big consumer of whisky and it’s a major producer too – no fewer than seven of the top 10 global whisky brands, by volume, are Indian. You may not have heard of Officer’s Choice, Royal Stag or McDowell’s, but these Indo-Scotch blends do huge volumes on their home turf.
4. The rise of oligarchs,
David Lingelbach, who with Valentina RodrÃguez Guerra has written a new book, The Oligarchs’ Grip, which reworks Aristotle’s definition. An oligarch, say the authors, is “someone who secures and reproduces wealth or power, then transforms one into the other”... Every oligarch is always working out where the next threat to his money (or life) will come from. American tech billionaires live in fear of Washington or Brussels breaking up their near-monopolies. Whereas ex-Soviet oligarchs seek favours from government, western oligarchs want governments to leave them alone. Silicon Valley’s barons may sincerely think that their libertarianism is good for the world. As Jack London wrote: “The great driving force of the oligarchs is the belief that they are doing right.” But this can lead them to intervene in democracy. Jonathan Taplin writes in his new book The End of Reality: “In order to maintain their rule, Big Tech needs political gridlock.” Its ideal is a polarised Congress that can’t agree on any regulations. Big Tech’s next battle may be to prevent effective regulation of artificial intelligence.In a democracy, oligarchs often select political candidates through donations. Just as Russian oligarchs got Boris Yeltsin re-elected in 1996, Peter Thiel backed Donald Trump in 2016. Oligarchs can also shape opinion by funding media, think-tanks and universities (Charles Koch’s preferred method) and through platforms such as Facebook. Albert Einstein observed: “An oligarchy of private capital cannot be effectively checked even by a democratically organised political society because under existing conditions, private capitalists inevitably control, directly or indirectly, the main sources of information.”
5. Defying talks of death of oil industry, FT reports of a return to mega deals in the industry. Chevron and ExxonMobile have paid $120 billion plus to buy Hess and Pioneer. The OPEC has estimated oil demand to rise by 15% between now and 2045 to reach 116 million barrels per day.
This is important because intellectuals and armchair experts in India tend to scaremonger by suggesting that investments in thermal power, for example, will find few takers. As one recent oped wrote,
Fossil fuel-based electricity production in India is waning. The financial system will generally no longer fund fossil-fuel plants.
6. Starlink decides to allow internet access to aid agencies in Gaza
Starlink, the satellite internet service operated by Elon Musk’s SpaceX, will provide connectivity to humanitarian groups in Gaza, the billionaire entrepreneur announced on Saturday. Musk was responding to a question from US congresswoman Alexandria Ocasio-Cortez, also known as AOC, who expressed her concern over the internet blackout in the territory amid the ongoing Israeli airstrikes. AOC posted on X, a social media platform, that cutting off communication to 2.2 million people in Gaza was “unacceptable” and endangered the lives of journalists, medical workers, aid workers, and civilians. Musk replied to her post by saying, “Starlink will support connectivity to internationally recognized aid organizations in Gaza.”
It really is baffling as to why Starlink is not regulated. Any satellite communication technology uses public space and regulated spectrum, and it cannot be
Gaza residents say the bombs come mostly without warning and hit indiscriminately, leading to widespread hopelessness and the feeling that imminent death is inevitable... “The war currently being waged on Gaza is, in effect, against the civilians. They don’t distinguish between combatants and civilians,” Ms. al-Kurd said, speaking from a tent encampment in the southern Gaza city of Khan Younis, where her family fled after Israel called on all residents to evacuate northern Gaza before an expected ground invasion. “So you feel like your turn is coming. We are living the last of our days,” she added. “We are just waiting our turn.”...Since the Israeli airstrikes began, Gazans have said they feel nowhere is safe. The strikes have flattened mosques, struck hospitals and schools and demolished homes with families inside without warning. When family members and friends have been able to reach each other the conversation is often the same: These could be our last days. When he hears a rocket approaching, it feels as if it’s coming directly for him, said Mosab Abu Toha, a poet, an essayist and the founder of the Edward Said Library in Gaza. “Those who were killed and had someone to bury them are the lucky ones. Who knows if anyone will bury us,” he said. “These feelings reflect the state of fear and defeat and despair caused by Israel’s barbaric airstrikes.”...“They say: ‘Go to a safe place.’ But then they strike the place they told us to flee to,” Ms. Kurd said. “This is intentional. There’s no mercy and it’s massacre after massacre and the world is just watching it happen.” When they hear Israeli fighter jets overhead, some utter the Muslim proclamation of faith and give their loved ones around them what could be a farewell kiss. Children have taken to writing their names on their hands or arms, so if they are killed, their bodies will be identified and not buried in the mass graves for unidentified bodies. Other people have posted last testaments on social media, seeking to settle any debts or unresolved disputes and asking people for forgiveness to clean the slate in case they die.
The Israeli air strikes on Gaza is arguably the biggest genocide and war crime of our times and it's happening on live TV with the entire world watching and doing nothing. One barbarity (Hamas' terrorism) cannot be countered by another barbarity (Israel's collective punishment and turkey-shoot airstrikes on civilian areas). The disproportionality and dehumanizing nature of of Israel's response to what was essentially a recurrent terrorist act, albeit at a much greater scale than earlier, is shocking. It's surprising that it has not generated outrage and condemnation within the international media.
It's very hard for a completely non-interested party with a basic understanding of the long-drawn conflict and looking at what's going on now to not come away apportioning the blame on Israel. You sow the wind, you reap the whirlwind.
The Israeli airstrikes have also exposed the striking difference between the responses of governments, business leaders, media, and opinion makers in general on the one side, and popular opinions represented in mass demonstrations across the world on the other side. Such differences reflect the growing disconnect between the elites and the masses on important issues, especially in developed countries.
In this context, the condemnation of Israel's actions by China and Russia will help them win influence among the Gulf nations and their citizens. The contrast with the responses of the US and European governments will remain in public memories. As the global public outpouring of sympathy shows, Israel has generated an immense amount of global ill-will.
Looking into the future, this has surely set-back all hopes of any peace in the region for the foreseeable future. It has set the stage for the next generation of Palestinians and Arabs to take on Israel. We cannot feign ignorance if something even more barbaric than the Hamas terrorism happens in the future. Just as the Hamas terrorism was the outcome of long-drawn dehumanisation and collective punishment meted out by Israel in Gaza.
Finally, I cannot but not help thinking that if the Palestinians were not Muslims (and perhaps Israelis were Jews), then there would be very few people who would not find the Israeli actions barbaric and a war crime. It would then have attracted the same ostracism that Russia experienced after its invasion of Ukraine.
8. Rohit Chandra points to an emerging problem in power sector associated with renewable energy generation
India’s massive RE build-out so far has largely benefited western and southern states. In August 2023, 92.5 per cent of all grid-connected RE generation came from eight states. This is largely driven by higher insolation and wind density but also bolstered by favourable state finances and investment environments. Assuming such patterns persist, RE-poor, coal-rich states are likely to face a double hit to state revenues: Coal royalties as a proportion of overall state revenue will decline as coal growth starts slowing later this decade, and the cost of power procurement will increase as new RE contracts are layered on top of existing commitments for firm power. Grid-scale energy storage technologies are still expensive and experimental, and are unlikely to be adopted at a large scale by the end of the decade. Since most coal-rich states have limited grid-scale RE-deployment, they will have to import more power from other states. This means that the quantum of inter-state financial transfers for power procurement will shoot up over the next decade. We find that the combined revenue impact of declining coal royalties and increasing electricity imports could worsen budget deficits of RE-poor power-importing states by almost 8.66 per cent on average, taking them well beyond the norms established by the Fiscal Responsibility and Budgetary Management Act, 2003.
Inter Miami is now the best-selling Adidas soccer jersey in North America, ahead of all five of the storied European clubs that the brand traditionally regards as the crown jewels of its portfolio: Manchester United, Real Madrid, Juventus, Bayern Munich and Arsenal. Since July, Fanatics, which dominates sports apparel in the United States, has sold more Messi jerseys than for any other soccer player, and any athlete at all except the Philadelphia Eagles quarterback Jalen Hurts. No player, in any sport, has ever sold more jerseys on the site in the first 24 hours after switching teams than Messi did in July... The jersey has become so coveted, so scarce, that even Beckham himself — one of the most famous soccer players of his generation, a worldwide celebrity and, as part-owner of Inter Miami, Messi’s boss — has found it hard to get hold of one. More than once, he has wanted to send a pink Messi jersey to a friend or an associate as a gift, only to be told that he will have to wait, just like everyone else.
10. Two FT long reads on battery technologies. The first is about the recent announcement by Toyota that it's close to a manufacturing breakthrough on solid state batteries. Solid state batteries, considered the industry's holy grail, are prized because of their safety, energy density, and speed of charging.
If successful, Toyota could start selling EVs that are safer, can recharge more rapidly and can drive 1,200 kilometres on a single charge — around double the company’s current average — as early as 2027... it could open up the application of batteries to new areas of transport such as aviation. Some observers believe the shift could be as momentous as that from corded telephones and landlines to mobile phones... Solid-state batteries differ from current lithium-ion cells in that the electrolyte is solid instead of liquid. Different materials, including polymers, oxides and sulphides, are being tested as potential electrolytes... Changing the electrolyte on its own would not necessarily result in a step-change in battery performance. The real excitement hinges on a technological development that it would enable: lithium metal anodes. Replacing the graphite that is used in current anodes would help double the battery’s range, in part because it would be lighter.
Solid-state batteries have faced longstanding basic technology challenges. One is the difficulty of maintaining battery performance and avoiding failure since repeated charges and discharges cause the formation of dendrites, bunches of lithium, which can lead to cracking. Another challenge is enabling a stable contact between solid materials.
Solid state batteries also have geopolitical significance. It would allow other countries to leapfrog China, which produced more than three-fourths of batteries globally last year with CATL alone having a 37% market share. It will also allow Japanese companies catch up in the EV race where they have fallen behind badly. But the solid state batteries will not only have to be manufactured, but will have to be done at scale and at a low cost to be able to compete with regular Lithium-ion batteries.
The second article is about two competing Lithium ion battery technologies. First a bit about the Lithium ion battery itself
Invented in the 1970s by US-based scientists and commercialised in 1991 by Japan’s Sony to power its Handycam video cameras, lithium-ion cells pack far more punch in smaller and lighter units than the lead acid or nickel cadmium units that previously dominated the rechargeable battery market. Having helped give birth to the portable electronics industry, lithium-ion batteries have fought off competing technologies to become the dominant force in electric cars after a 90 per cent drop in cost over the past decade. Total global deployment of the technology could top 1 terawatt-hours this year, equivalent to 17mn average-sized electric cars, according to London-based battery consultancy Rho Motion... Global lithium ion battery revenues will grow to $700bn a year by 2035, according to consultancy Benchmark Mineral Intelligence, by which time $730bn will have to be poured into battery plants, mines and processing facilities to meet the need not just for lithium but for other ingredients including nickel and cobalt.
This about the two technologies
Anodes are typically made of graphite and dictate how quickly a battery can charge while cathodes, which come in a variety of materials, are the main determinant of a battery’s cost and the amount of energy it can store. In the electric car market two main cathode chemistries are fighting it out: NMC, which uses lithium, nickel, manganese and cobalt in varying quantities, and LFP made of lithium, iron and phosphate.
South Korean manufacturers LG Energy Solution and Samsung SDI excel at producing NMC cathodes, which are used in the majority of electric vehicles sold in the west where their longer range is better suited to driving habits. But Chinese companies still account for 75 per cent of global production, according to Benchmark data. China is almost totally dominant in LFP batteries, accounting for 99 per cent of world output. The technology has taken the country by storm thanks to improvements in energy density, its higher safety levels and its lower cost compared with cells containing cobalt and nickel, as well as manufacturing breakthroughs. LFP’s share of the Chinese market has surged to 60 per cent from 18 per cent in just three years, Rho Motion estimates.
NMC batteries currently dominate the EV market.
11. The NHAI have resumed the monetisation of national highway roads by awarding two bundles for 84 km for Rs 2156 Cr and 316 km for Rs 4428 Cr to Cube Highways and IRB Infrastructure respectively. The ToT bids are for 20 years. Excluding this, the NHAI has so far monetised 1614 km of projects for Rs 26,366 Cr, and 636 km projects for Rs 10,200 Cr through Infrastructure Investment Trusts.
12. In the context of India's decision to impose a Minimum Export Price (MEP) of $1200 per tonne on basmati exports, Ashok Gulati writes,
India has been exporting, on an average, about 4.5 million tonnes (MT) a year over the last five years or so. This is a premium rice consumed by the upper middle class and the rich in India, and is exported to Gulf countries, some European countries and also the US. Punjab and Haryana are the primary producers. The export price normally hovers between $800 to $1,000/tonne. By putting an MEP of $1,200, practically, much of the basmati export is restricted. And if this MEP continues, in all likelihood, India’s basmati exports this year will register a sharp fall.In many mandis of Punjab-Haryana, traders were shy in buying basmati and as a result, prices for farmers have been low compared to what they were when exports were fully open. So, the losers are ultimately the farmers of Punjab and Haryana, while the gainers would be the domestic upper income urban class. Externally, it must be remembered that it takes years to develop export markets, and by putting such a high MEP, India is basically handing over our export markets to Pakistan, who is the only other main competitor of basmati rice... There is a need to revisit and revise this MEP as soon as possible, preferably fixing it at $800 to $850/tonne range. The restrictive export policies are not just limited to basmati rice. They cover even broken rice, non-basmati white rice, parboiled rice, either through complete export bans or export duties.
13. One of the thorniest problems in agriculture in India is the issue of recognising tenant farmers. While the 2018-19 NSO estimates put tenancy at 17.3% in terms of holdings, the real extent could be multiples higher.
“The UK has some of the highest regional inequalities of any advanced country. Today, these are larger than those between east and west Germany and north and south Italy. New technologies, global competition, the loss of old industries — and the failure to support new ones — have all driven that divide.”
London and Southeast, with just 27% of the population make up over 42% of UK's GDP!
Martin Wolf has the summary of the report
These are the main conclusions: first, widening regional divisions are not inevitable but correcting them is hard; second, “past policies to grow the UK’s regional economies were geographically biased and insufficiently ambitious”; third, the government has relied too heavily on centralised approaches to delivering more balanced regional growth in England; fourth, policy instability has led to short-termism and damaged outcomes; fifth, sustained top-level political will and leadership are necessary to overcome Whitehall’s centralising tendencies and empower local government; and sixth, today’s cross-party support for the “combined authority” model, in which local governments work together within city-regions, might produce a workable consensus.
US-based private equity major Blackstone said on Monday it had completed the acquisition of a 72.5 per cent stake in Quality Care India Ltd (QCIL), which operates a network of Care Hospitals, from Evercare, a platform backed by TPG Rise funds. This marks Blackstone’s foray into India’s health care services sector. TPG will continue to hold the remaining stake of 27.5 per cent in QCIL. With QCIL valued at Rs 6,600 crore ($800 million), the deal is estimated at about Rs 4,800 crore ($580 million). In a separate deal, QCIL has signed a definitive agreement to acquire around 80 per cent in KimsHealth, a Thiruvananthapuram-headquartered quaternary care hospital network offering end-to-end healthcare services. The valuation of KimsHealth is estimated at Rs 3,300 crore ($400 million). Blackstone’s overall commitment, including its investment in QCIL and KimsHealth, is estimated to be around $1 billion... KimsHealth runs four hospitals in Kerala with around 1,400 beds... The acquisition of Care Hospitals by Blackstone and, in turn, of KimsHealth by Care Hospitals would create one of India’s largest hospital platforms spread over 11 cities, with 23 facilities and 4,000 beds. Aster DM India and Fortis Healthcare roughly operate around 4,000 beds each, while Apollo Hospitals Enterprises and Manipal Hospitals have over 9,000 and 8,000 operational beds, respectively.
16. With 184 small and medium sized companies having gone public this year till date, India has a record-breaking year of IPOs.
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