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Biden slams Nippon Steel deal — but Tokyo plays it cool
US President Joe Biden on Thursday came out against Japan’s largest steel producer acquiring Pittsburgh-based US Steel, saying America must “maintain strong American steel companies powered by American steelworkers.”
Nippon Steel made an offer worth over $14 billion in December, and shortly afterward the White House indicated it would be scrutinized by the Committee on Foreign Investments in the United States. For now, the deal is still on, but CFIUS review is usually reserved for deals involving companies from potential adversaries – not from trusted allies like Japan — and presidents rarely comment before the committee finishes.
But this is 2024. Biden and presumptive GOP nominee Donald Trump are battling over blue-collar workers in key swing states like Michigan and Pennsylvania in November. Trump promised to block the deal “instantaneously” during a meeting with Teamsters earlier this year, and Biden has never been shy to flex his union bona fides.
How does Tokyo feel? Discretion seems to be the better part of valor for Prime Minister Fumio Kishida.
“Tokyo understands that in love and politics, timing is everything and that the political timing of this deal is awful for Biden,” says Eurasia Group’s Japan analyst David Boling. “That doesn’t mean that Tokyo is happy that Washington is treating an ally this way. But it’s not putting up a big fuss.”
Will Japan raise interest rates … to zero?
Japan’s central bank will debate a landmark interest rate rise next week that could bring interest rates to a staggering 0% after nearly a decade of negative rates.
As the saying goes, there are four types of economies: developed, underdeveloped, Argentina, and Japan. While most countries have been working hard to cool inflation, Japan has struggled with the opposite problem, deflation, since the 1990s. Lower prices at the grocery store are nice, but consumers pay for it on the other end: Businesses see revenues fall, struggle to pay their debts, and lower wages or downsize to break even (mostly the former in Japan). The economy stagnates and ordinary families suffer.
Tokyo started running 0% interest rates in 1999 and negative interest rates in 2016 – in other words, encouraging companies to borrow money and keep cash flowing through the economy. It’s helped drive recent inflation, currently around 2.2%, above the target of 2%.
But is it the right kind of inflation? The Bank of Japan wants to make sure price increases are being driven by consumers spending more, and not costs on the producers’ side, before they hike rates. There are some promising signs, including Japanese trade unions securing the largest pay increase in 30 years from Japan’s largest corporations.
“All eyes are on the annual wage negotiations that will wrap up this week,” says Eurasia Group’s Japan analyst David Boling. “The Bank of Japan wants to see strong wage growth before it scotches the negative interest rate policy.”
We’re watching how cautiously central bankers choose to tack — if the climb to zero looks too steep next week, they can always wait until their April meeting.
IAEA chief backs Japan-North Korea talks
International Atomic Energy Agency head Rafael Grossi said Tuesday that the UN body supports Japan’s efforts to hold a summit with North Korea to boost engagement, even if nuclear weapons aren’t on the agenda.
Japanese Prime Minister Fumio Kishida has said he is prepared to meet with North Korean leader Kim Jong Un as he tries to bring back Japanese nationals abducted to North Korea between 1977 and 1983. Kim’s sister Kim Yo Jong, who holds considerable sway, indicated that Pyongyang would be open to talks with Japan last month.
Japan secured the release of five abductees in 2002, and of their children in 2004, but Pyongyang has since stonewalled. Of the 12 people Japan believes remain imprisoned, North Korea claims eight are dead and that four were never abducted.
Why the change of heart? Kim may be hoping to use the talks to muck up the growing closeness between Tokyo, Seoul, and Washington. The Supreme Leader has made significant rhetorical changes toward the South, renouncing the goal of reunification and referring to Seoul as “the main enemy.” Hawkish South Korean President Yoon Suk-yeol wasn’t eager for rapprochement anyway, while the Biden administration has mostly ignored Pyongyang.
Only Kishida, facing an election expected this year amid sagging approval and scandals, has any reason to talk with Kim. A breakthrough on the emotional issue of abductees — even simply obtaining proof of life or death — could goose his numbers.Hard Numbers: Meloni suffers Sardinian blow, Russia jails another critic, Japan’s baby bust continues, Big Oil pumps Big Money
0.4: The rugged island of Sardinia has dealt rightwing Italian PM Giorgia Meloni the first serious electoral blow she’s suffered since taking office in 2022. In local presidential elections (Sardinia has special autonomy from Rome, and its own president) a candidate from the left-leaning anti-establishment 5-Star Movement beat the Meloni-backed candidate by a mere 0.4 points. Alessandra Todde will now become not only Sardinia’s first female leader, but the first 5-Star member to head any of Italy’s 20 regions.
30: It must be election season in Putin’s Russia! Leading human rights activist Oleg Orlov was sentenced to 30 months in prison on charges that he had “repeatedly discredited” the Russian army by criticizing the invasion of Ukraine. During the sham proceedings, Orlov – whose Memorial human rights group shared a 2022 Nobel Peace Prize – sat quietly reading Kafka’s The Trial. In his statement to the court he said he regretted nothing, and asked the presiding judges “Aren’t you afraid?”
758,631: Last year only 753,631 babies were born in Japan, a fall of more than 5% from 2022, reaching a record low for the eighth straight year. The Japanese government is struggling to turn around a slow motion demographic crisis that could see the world’s fourth largest economy lose a third of its population in the coming decades, strangling the economy and straining social safety nets.
313 billion: It’s no secret that Big Oil isn’t a Big Fan of Joe Biden, whose climate agenda has antagonized the fossil fuel sector. But the industry can complain all the way to the bank these days: top US producers are on track for net income of $313 billion since Biden took office, triple what they made during the same period of the preceding Trump administration, which was overtly friendlier to the sector. The lesson? Presidents matter a lot less than pandemics and wars when it comes to energy sector profits.Hard Numbers: Japanese women go to naked party, Australian fires rage, French farmers fume, and Zambian creditors get paid.
1250:Washoi! Women crashed the party at Japan's 1250-year-old Naked Festival, a traditionally all-male event designed to drive out evil spirits. While they didn’t actually bare all, the first-ever female participants successfully trampled gender norms while ensuring that the festival continues as Japan’s population ages.
2000: Wildfires have forced more than 2,000 people to flee towns in western Australia. Prime Minister Anthony Albanese pledged all necessary assistance to combat the blazes, which are being exacerbated by an El Niño weather pattern known to fuel fires, cyclones and droughts.
1 : Angry French farmers delayed the opening of a major Paris farm fair by one hour, protesting costs, bureaucracy, and environmental regulations. Amid calls for his resignation, President Emmanuel Macron promised to meet with union representatives and stakeholders. European governments are concerned that the farm lobby could feed gains by the far right in European Parliament elections this June.
13 billion: Zambia’s 13bn mountain of debt is a little lighter today, thanks to deals struck with creditors China and India. It’s welcome news as the African nation contends with past defaults, depreciation of the kwacha, a revival of inflation, and a drought that was “one of the worst in living memory.” Zambia now plans to resume talks with private creditors and is back on track for a 1.3 billion bailout by the IMF.Nvidia rally lifts markets – and struggling political leaders
Where is GZERO’s signature political angle on this story? The first stock market to surge on this news was the Japanese Nikkei index, which climbed 2.2% higher to break its all-time highs set in late 1989 (!).
OK, “Japan is back” enthusiasm is limited by news this week that its economy fell into fourth place behind Germany with a disappointing Q4 from last year. There’s also the reality that topping this previous high reminds Japan and the world just how tough the past third of a century has been for its economy.
Still, good news is good news, and Fumio Kishida’s deeply unpopular government can use all the good news it can get.
This is also a welcome development for the US economy at a time when President Joe Biden badly needs it. On Thursday, US stocks posted their best day of the year so far, with the NASDAQ closing up nearly 3%.
Hard Numbers: Landslide tragedy in Afghanistan, Credit card mega deal, Debt default in Niger, Gun violence in New Guinea, EU takes on TikTok, Chinese New Year blowout, Japan crazy for food carts
25: Twenty-five people have died and twenty homes were destroyed in a landslide triggered by heavy rain and snow in eastern Afghanistan's Nuristan province. Harsh winter weather, difficult terrain, and a lack of resources are hampering rescue efforts for those still trapped.
35,300,000,000: Capital One will merge with credit card network Discover in an all-stock deal valued at $35.3 billion dollars, expected to close in late 2024 or early 2025. The merger would render the combined firm the largest US credit card company by loan volume, but consumer advocates say the deal raises antitrust concerns.
519,000,000: The West African nation of Niger has defaulted on another debt payment, bringing its total debt default to $519 million since a military coup last July, according to the West African monetary union debt management agency UMOA Titres. Niger’s recent missed payment of $22 million is but the latest challenge faced by the Sahel nation, including suspended international aid, closed borders, and a possible currency change.
26: Twenty-six people were killed in a tribal ambush in a community dispute in Papua New Guinea's Highlands region. The area has traditionally struggled with violence, but a recent influx of illegal firearms have made clashes more deadly.
6: The EU could take a big bite out of ByteDance, parent company of social media giant TikTok. The company could be subject to a fine of 6% of its global turnover if found to have violated EU online content rules, particularly regarding the protection of minors and advertising transparency.
474,000,000: Now that’s a holiday! During China’s eight-day Lunar New Year celebrations, Chinese travelers were on the move, taking 474 million domestic trips, up 19% from 2019, and splashing out spending of 632.7 billion yuan (US$87.9 billion), up 7.7% from pre-pandemic levels.
100,000: Japan's latest craze? Snagging a bullet train food cart for your kitchen or canteen. After Central Japan Railway decided to discontinue the use of its 50 iconic snack-mobiles, it was swamped with nearly 2,000 bids at $100,000 yen (US$666) a pop, proving that the race for train memorabilia is just as fast-paced as the shinkansen line itself.
Hard Numbers: Crisis deepens in Sudan, Infernos rage in Chile, Moon is shrinking, Japan welcomes digital nomads, NJ scores World Cup final, Swift's lucky numbers
8,000,000: The United Nations reported this week that 10 months of violent conflict in Sudan have displaced nearly 8 million people and caused at least 12,000 deaths. The war between the rebel Rapid Support Forces and the Sudanese Army has left nearly half of Sudan's population in need of aid and the International Criminal Court investigating allegations of war crimes.
112: At least 112 people are dead and 190 missing in wildfires consuming the central regions of Chile, including the historic port city of Valparaiso. Arson is suspected to have ignited the blaze that burned over 106,255 acres during the intense heatwave sweeping South America.
150: Over millions of years, the moon has shrunk by 150 feet in diameter – and now, scientists are growing concerned. The shrinking, caused by the cooling of the moon's molten core, has led to the formation of thrust faults and “moonquakes” that could pose risks to future lunar missions, notably at its south pole.
10,000,000: If you’ve got a yen to work in Japan, this is your lucky day. To boost tourism, the country will be offering a “specified activities” visa to digital nomads from 49 countries and territories, including the self-employed. This will allow them to work remotely and stay for up to six months as long as they earn an annual income of 10 million yen, or $68,300. The program is expected to start in late March.
39: FIFA World Cup released the schedule and locations of games for the 2026 tournament, which will be played in Mexico, the US, and Canada. At 39 days, it will be the longest World Cup in history, culminating with a final to be played in “New York/New Jersey” (which means MetLife stadium in … New Jersey). Among other curiosities, close observers noted that there’s a chance of a knockout round match between the US and England on July 4 in Philadelphia. Get your 1776 on …
4: Last night, Taylor Swift became the first artist to win four Grammy awards for album of the year with "Midnights." The pop star, who now has 14 statues on the mantle, thanked her fans by announcing that her new album, “The Tortured Poets Department,” will drop on April 19. And for those wondering where she will be on Feb. 11, the Embassy of Japan in Washington, DC, tweeted on Friday that the singing superstar can “comfortably” get from her concert in Tokyo on Saturday to Las Vegas on Sunday in time to see her “guy on the Chiefs” play in the Super Bowl.