1. The advent of container shipping in the 1950s while dramatically improving productivity also led to large-scale job losses.
Before then, the work of loading and unloading a cargo ship was a slow and dangerous process that frequently consumed several days. Dockworkers grappled with three-dimensional jigsaw puzzles while trying not to be crushed to death by shifting freight. They struggled to configure ill-fitting assortments of goods, positioning sides of beef alongside barrels of liquor, drums full of chemicals and bales of cotton. Unions applied their power over the pace of loading and unloading — or to stop the enterprise altogether — to extract hefty wages. The use of containers dramatically simplified the process, while reducing the number of working hands needed to do it. Suddenly, cargo could be loaded at factories into standard-size steel boxes that could be carried by truck and by train to ports, and then hoisted atop vessels by cranes.
On the day in April 1956 when local officials gathered at the Port of Newark to watch the departure of the first container vessel, they celebrated a milestone in American industrial efficiency. But a top official at the International Longshoremen’s Association, the union that represented East Coast dockworkers, looked on in horror... In the decades since container shipping began, union members have been focused on the equation that propels it. When the first ship set sail from Newark to Houston, it cost nearly $6 a ton to load a cargo vessel by hand, according to “The Box,” a book about the history of the shipping container by Marc Levinson. Soon that cost would drop to 16 cents, with most of the savings produced by trimming the need for longshore workers. Over the last quarter-century, a period of extraordinary global economic integration, the number of workers formally employed in handling American marine cargo has grown to about 64,000 from nearly 41,000, an increase of roughly 56 percent, according to Labor Department data.
2. Striking graphic that captures the extent of China's renewable energy investments compared to the rest of the world.
Despite these investments, China's carbon emussions have surged.
In the two decades after the turn of the century China’s emissions from burning of fossil fuels rose about 245 per cent to around 11 gigatonnes by 2021 — more than double that of the US, the world’s second biggest polluter. Among their top worries are the slow rate of retirement of older coal-fired power plants, a resurgence in the pace of new coal builds — China accounted for two-thirds of all global coal-capacity additions last year — and a move last year by Beijing to guarantee a fixed payment to coal power stations, rather than just pay for the energy they produce.
3. How Ozempic and Wegovy are transforming the use of gyms in the US.
Gyms are pushing their stair climbers and fixed weight machines to the periphery and replacing them with open space for body-sculpting classes, free weights and individual training sessions... As the drugs gain acceptance, fewer people are likely to rely on exercise as their primary weight loss tool and the drugs’ side effects, nausea and intestinal distress, can make high-impact cardio activities uncomfortable. However, GLP-1 users still need the gym. Studies suggest that the drugs cause significant muscle loss along with fat, leading to problems with balance and mobility as well as saggy skin sometimes dubbed “Ozempic butt”. Strength training seems to be the answer not just for GLP-1 users but everyone else. A growing body of medical literature suggests strength training cuts mortality, particularly for women, while also helping to prevent osteoporosis and relieving the symptoms of depression.
4. On related note, Eli Lilly is now at the forefront of the race to bring out the first weight-loss pill. It's estimated that there'll be 16 new obesity drugs launched before end of the decade by the likes of AstraZeneca, Pfizer, and Amgen.
With the most potent weight-loss shot and a pipeline of 11 experimental treatments, including what is widely expected to be the first approved small molecule GLP-1 pill, Eli Lilly stands to be the biggest winner in a market that is projected to grow to $130bn a year in peak sales by the end of the decade... In 2018, after Swiss drugmaker Roche turned down the rights to license a promising GLP-1 pill to treat type 2 diabetes from its sister company Chugai, a rivalry dating back more than a century boiled up once again. Eli Lilly beat out its Danish competitor Novo Nordisk for the rights to the experimental drug after a short bidding war, paying just $50mn upfront, according to two people familiar with discussions. Novo Nordisk declined to comment. Skovronsky could not recall whether the pill’s potential as a weight-loss treatment was even discussed at the time of the licensing deal. But the pill — now known as orforglipron, which looks set to be first small molecule anti-obesity pill if it launches as planned in 2026 — is one of several fronts in which Eli Lilly appears to be outmanoeuvring Novo Nordisk for supremacy in the weight-loss drug market.
This about the competition between Eli Lilly and Novo Nordisk
In 1923, Eli Lilly was first out of the blocks with a commercial insulin product to treat diabetes, which until then was considered a death sentence. Novo, then a standalone company before its merger with Nordisk, created a longer-lasting version and the first insulin pen. In 1982, Eli Lilly launched the first synthetic, mass-producible version of human insulin. In 2005, Eli Lilly then created the first GLP-1 drug — a twice-daily injection, but Novo Nordisk would revolutionise the market with the launch of Ozempic in the US in 2017. Despite Novo Nordisk being first to market, Eli Lilly has benefited from “a second mover advantage” with the launch of its weight-loss medicines, says Rajesh Kumar, head of healthcare equity research at HSBC. “They can see what traps the guy ahead of them is falling into,” he says, allowing them to ramp up manufacturing faster and to invest in next-generation products. This year, Mounjaro and Zepbound, which are both based on the active ingredient tirzepatide, are set to generate $18.8bn in sales between them, according to analyst consensus estimates — edging closer to Novo Nordisk’s $27bn in projected revenues from Ozempic and Wegovy, despite being on sale for a shorter period of time. Sales from Eli Lilly’s GLP-1 franchise are projected to surpass Novo Nordisk’s by 2027.
5. India is set to eclipse the US and become the country with the largest pool of software programmers.
The it sector is a juggernaut, generating about $250bn in annual revenues, or 7% of GDP. But GCCs are increasingly important, too. The country now hosts some 1,600 of them. Amazon’s biggest office in the world is in Hyderabad. A fifth of Goldman Sachs’s staff are in India, as are a fifth of the world’s chip designers. New GCCs are opening at a rate of roughly one a week... they are thought to employ some 1.7m of its IT sector’s 5.4m workers, with salaries over four times the national average. By one estimate, they create about $120bn in value and are growing by 11-12% a year. If so, GCCs already represent over a third of India’s services exports, which would make them its biggest export category after it services themselves.
The first article also highlights that software programming is the one sector where generative AI appears to be delivering on its promise.
One reason why generative AI can be especially useful for developers is the availability of data. Online forums, such as Stack Overflow, hold enormous archives of questions asked and answered by coders. The answers are often rated, which helps AI models learn what is helpful and what is not. Coding is also full of feedback loops and tests that check if software works properly, notes Nathan Benaich, of Air Street Capital, a venture-capital (VC) firm. aimodels can use this feedback to learn and improve. The consequence has been an explosion of new tools to help programmers. PitchBook, a data provider, tracks some 250 startups making them. Big tech is leading the charge. In June 2022 GitHub, which is owned by Microsoft, launched Copilot. Like many tools it can, when prompted, spit out lines of code. Around 2m people pay for a subscription, including employees at 90% of Fortune 100 firms. In 2023 Alphabet (Google’s parent company) and Meta (Facebook’s parent) released rivals. This year Amazon and Apple followed suit. Many firms have built ai coding tools for internal use, too.
6. Excellent Bloomberg long read on how China went past the US to become the solar cell manufacturing monopolist.
7. More disappointing experience from the role of private equity investments in retail. Asda, the UK's third largest supermarket which will turn sixty next May, was taken over in 2020 through a leveraged buyout by the PE firm TDR Capital for £6.8bn. It's now struggling to survive on the face of competition from Aldi and Lidl. This is only the latest example of problems with PE investments in retail, raising questions about PE in retail sector.
It remains fair to ask whether private equity ownership of supermarket chains is a good idea. Clayton, Dubilier & Rice acquired Morrisons for nearly £10bn in a deal later called a “fiasco” for the banks involved. Morrisons made a £1bn loss last year because of its high debt costs and Rami Baitiéh, former chief executive of Carrefour France, is now trying to revive it. Supermarkets are fine targets in theory, with famous brands and strong cash flows. But competition is too intense to deploy the old private equity strategy of cutting costs and raising margins: shoppers can too easily go down the road (or online) for better bargains. The only way to succeed is by investing enough to increase sales and seize market share.
Also on excessive leverage assumed by PE firms
As private equity groups struggled to exit investments, they had been using more complex and opaque forms of borrowing, such as leveraging up funds that own several already-indebted companies to finance payouts for their investors. “Recently as exits have been difficult, I think [buyout groups] needed to go back to financial leverage” to make money, David Hunt, the chief executive of $1.3tn asset manager PGIM, told the Financial Times. “That can help you on the upside” but it could “really accelerate things on the downside”. “It’s complicated enough that many people don’t understand it,” said Hunt, adding regulators should insist on more disclosure about such debt. “I think [introducing] some common way of understanding how much leverage is in the system is a good idea.” Buyout groups have for decades loaded debt on to the balance sheets of the companies they buy in order to pay for their acquisition. In recent years they have been increasingly using so-called net asset value loans, where a buyout fund borrows against the stakes it holds in those companies. The entities that manage those funds can also take on debt, representing another layer of leverage. Groups including Vista Equity Partners, Carlyle and Hg Capital have used NAV loans to pay dividends. The loans can also be used to support struggling companies within a fund. However, they are controversial because they add more leverage and cross-collateralise the fund’s investments, meaning that troubles with one company can spill over to others and put the entire fund’s returns at risk.
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