‘Ticking time bomb’

President Joe Biden blasted China’s economic problems as a “ticking time bomb,” saying during a political fundraiser that the Asian nation was in “trouble” because its growth has slowed and it had the “highest unemployment rate going.” He also blasted Chinese leader Xi Jinping’s signature Belt and Road Initiative as the “debt and noose,” because of the high levels of lending to developing economies associated with the global investment program. “So they got some problems,” Biden said. “That’s not good because when bad folks have problems, they do bad things.” Biden’s comments, which included exaggerations about the extent of China’s woes, are some of his most direct criticisms yet about the US’s top geopolitical and economic rival. The Democrat has sought to walk a fine line between using trade curbs to deter China’s high-tech military advancement and achieving a diplomatic rapprochement with Chinese leaders that could pave the way for a potential meeting this year with Xi. Josef Gregory Mahoney, a politics and international relations professor at Shanghai’s East China Normal University, said Beijing was unlikely to be “baited” into responding to Biden’s latest barbs. “Beijing knows Biden will resort increasingly to anti-China dog whistle tactics to rally popular support at home,” Mahoney said. “But it’s also important to remember that Beijing heard a lot worse from Trump.” —David E. Rovella

FTX Co-Founder Sam Bankman-Fried was taken into custody after a federal judge revoked his bail less than two months before his scheduled fraud trial. US District Judge Lewis Kaplan issued the order at a hearing in Manhattan on Friday afternoon. Bankman-Fried was immediately placed in handcuffs as marshals escorted him out of the courtroom. His mother, who was also present, cried in the gallery.

Deep within the underbelly of the options world lies a threat to the stock-market calm. While benchmark indexes just had one of their smallest weekly changes of 2023, intraday moves tell a different story. Up-and-down swings in the S&P 500 are the widest since June and double what they were last month. Twice in the past six sessions the index’s futures erased a 0.9% gain, the first time that’s happened since February. While uncertainty about the economy and central bank policy was one instigator, something else may be contributing to the volatility.

Short-term Treasury yields advancing toward 5% may hog the spotlight, but there’s another drama unfolding in a lesser-known corner of the US government bond market. The yield on 30-year inflation-protected Treasuries is on the cusp of exceeding 2% for the first time in more than a decade. Whether it gets there and where it will stop if it does has bond investors on edge.

Meanwhile, Bill Gross says stock and bond bulls are wrong as both markets are “overvalued.” The former chief investment officer of Pacific Investment Management says the fair value of the 10-year Treasury yield is about 4.5%, compared with the current level of around 4.16%. Gross, who retired from asset management in 2019, said inflation may prove sticky at around 3%.

It’s unclear whether McDonald’s recent removal of the term “ESG” from some parts of its website had anything to do with the right’s assault on environmental, social and governance initiatives, but US corporationshave been facing intensifying political pressure from Republicans and Big Oil to jettison sustainable policies and investment strategies.

Alphabet is facing a new and, by most accounts, welcome problem—how to spend its rapidly expanding pile of cash. The Google owner generated nearly $29 billion in cash in the second quarter after firing thousands of people and efforts to stanch losses in its various moonshot projects. That left the parent company with cash and short-term marketable securities of about $118 billion, more than any other company in the Nasdaq 100 Stock Index aside from Apple’s total of about $167 billion. However, unlike Apple, which aims to give back most of its cash to shareholders via stock buybacks and dividends, Alphabet has a less clearly-defined capital return strategy—leaving its investors to seek more detail on its plans.

The auditor of billionaire Gautam Adani’s ports business is said to be planning to resign, a move that may heighten concerns about accounting quality at the Indian conglomerate targeted by short seller Hindenburg Research. Deloitte Haskins & Sells is said to have communicated to Adani Ports & Special Economic Zone its resignation plans. The Indian unit of the global accounting giant in May raised concerns over transactions between Adani Ports and three entities that Adani said were unrelated parties. The planned resignation puts a fresh spotlight on governance of Adani’s empire just days before the Securities and Exchange Board of India is due to submit the results of a probe into Hindenburg’s wide-ranging allegations of accounting fraud and market manipulation.

A movie about giant killer sharks is dominating box-office sales in China, thanks to a helping hand from the Chinese government. The film, Meg 2: The Trench, is a joint production between Warner Bros. Discovery Inc. and local partner China Media Capital. It generated $53.3 million in its debut last weekend in China, 77% more than it did in the US. The tally for Meg 2 in China already exceeds what Barbie and Tom Cruise’s new Mission Impossible earned in that country since they opened in mid-July.

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