Bad news carries (market) | FinancialTimes

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This is an audio transcription of the FT press briefing podcast episode: Bad news carries (market)

Joanna S Kao
Hello from the Financial Times. Today is Tuesday, June 14, and it’s your FT News Briefing.

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US stocks fall back into a bear market. The crypto meltdown is entering a new phase. The FT’s Katie Martin explains what this means for the wider ecosystem.

Katie Martin
It seems that with the price of crypto, many organizations where you trade this stuff, many exchanges, just can’t cope.

Joanna S Kao
The UK wants to tear up its 2020 Brexit trade deal with Northern Ireland and the EU is not happy. I’m Joanna Kao, for Marc Filippino, and here’s the news you need to start your day.

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US stocks fell into a bear market yesterday. By the end of trading, the benchmark S&P 500 was more than 20% below its recent high in January. Investors were rattled by a surprisingly strong US inflation report released on Friday. Analysts then updated their forecasts on whether the Fed would raise interest rates to keep up with inflation. This is the second time Wall Street has entered a bear market in the past month. In May, it just briefly hit the threshold and rebounded in the same day.

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The crypto market also had a bad day yesterday. First, Celsius, a major crypto player that allows users to lend their tokens for high returns, blocked its customers from withdrawing money from its platform. He said this was due to the extreme market conditions. Then, Binance, the world’s largest crypto exchange, also suspended customer bitcoin withdrawals. These moves fueled a broad sell-off in the digital asset market. Our Markets Editor, Katie Martin, joins me to discuss what’s going on. Hi Katie.

Katie Martin
Hi, how are you doing?

Joanna S Kao
I’m doing well. So what are the underlying causes of this crypto meltdown?

Katie Martin
Yeah, it’s a meltdown. And what’s interesting right now is that he’s entered a new phase. So the price of crypto assets for which we can use bitcoin as our kind of benchmark, it’s been struggling since late last year as some of the speculative scum in the markets has sort of blown away. But this year, he’s really built a head of steam. And what we saw last month was that there was a couple of coins, a token, a stablecoin, that basically went off the rails and actually, you know, people lost a lot of money on it. So, we stopped thinking, OK, which coins and tokens have problems here? And now what we see is, OK, what organizations that facilitate trade here, what pieces of the market infrastructure are struggling? And that’s what we’re seeing today because it seems like with the price of crypto crashing a lot of organizations where you trade this stuff a lot of exchanges just can’t cope . They are perfectly capable of getting your money back. Turns out they’re not able to spit your money out if you want to.

Joanna S Kao
So now that it’s moved on to this part of the crypto meltdown, who’s hurt and could it get worse?

Katie Martin
So who’s been burned by the latest moves is basically anyone who’s bought bitcoin in the past two years because we’re now below that price. So you are underwater and with the stopping of withdrawals, it is quite possible that you will not be able to withdraw your money even if you want to. There are a lot of people who are going to be underwater and it is very difficult for them. There will be plenty of crypto-billionaire types out there who will lose a billion or two here or there but may still live to fight another day. But there are a lot of people who can’t afford to lose that money, who will lose that money. And I don’t know where it ends. And I’ve learned through, you know, my own trial and error, never to declare bitcoin dead because this thing has incredible staying power. Just when you think he can’t get up anymore, he gets up again. But it’s a very, very difficult time for crypto fans.

Joanna S Kao
Katie Martin is our Markets Writer. Thank you Katie.

Katie Martin
No problem.

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Joanna S Kao
British Prime Minister Boris Johnson wants to tear up the 2020 Brexit deal and make changes to controversial rules over trade with Northern Ireland. His administration released a bill yesterday. Among the changes, the bill would aim to reduce friction at ports. It would also give ministers the highly controversial power to tear up other parts of the Brexit deal. Johnson said the proposal would help ease political tensions in Northern Ireland. But critics say tearing up the Brexit deal just two years after it was signed would hurt the UK’s standing in the world. And the EU is furious. Brussels almost immediately threatened legal action after the legislation was published.

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The pandemic has caused many companies to shift to a hybrid working model. This is also true for businesses in Japan. Hundreds of companies have moved over the past year from Tokyo to the countryside, but it’s unclear whether this shift in workplace culture can last. Our Tokyo reporter, Eri Sugiura, recently visited a company that moved its new headquarters to Awaji Island in western Japan. She joins us now to tell us more about the Pasona Group, which is one of the largest recruitment companies in the country. Hi, Eri. How are you?

Eri Sugiura
Very well thank you.

Joanna S Kao
Can you describe how living on Awaji Island differs from living in Tokyo? What about the workers who settled there?

Eri Sugiura
Thus, life in Awaji is much more relaxed and calm. When I visited the island and spoke with some Pasona employees, they told me that now they can spend a lot more time with their family and children and spend a lot less time commuting and driving only 10 or 15 minutes to the seaside. So it’s very different from when they lived in Tokyo.

Joanna S Kao
So what prompted Pasona to establish a separate base on the island?

Eri Sugiura
In fact, the CEO of Pasona, Mr. Nambu, told me that he always wanted to move from Tokyo because of the risk of earthquakes and other natural disasters. But before the pandemic, this option seemed quite unrealistic. But after the pandemic, people started working from home, and where you work doesn’t matter anymore. And he also told me that young people’s values ​​have changed from being Tokyo-centric to wanting an environment surrounded by seas and mountains. So he thought it was the right time for him to make the move.

Joanna S Kao
So there is the risk management side of this decision. Is there also an economic reason?

Eri Sugiura
Yes. The government therefore gives subsidies to companies that have relocated from Tokyo, because the government has long thought that concentrating everything in the capital was a big risk for Japan as a whole. It’s a thing. And for CEOs, they want to cut costs as much as possible. So some analysts have told me that CEOs will be more selective about which functions they want to keep in Tokyo and which functions they can move in order to reduce costs.

Joanna S Kao
Do you think this trend will continue?

Eri Sugiura
So it really depends on Japan’s ability to maintain this new kind of labor standard that happened after the pandemic. Before the pandemic, Japan was recognized as one of the countries where efficiency was very low and staying late in the office was a habit. Thus, once the pandemic is over, employees could return to the office and stay in the capital again.

Joanna S Kao
They call it presenteeism, don’t they?

Eri Sugiura
Yes exactly.

Joanna S Kao
Eri Sugiura is the FT reporter in Tokyo.

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You can read more about all these stories on FT.com. This has been your daily FT News briefing. Be sure to check back tomorrow for the latest trade news.

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This transcript was generated automatically. If by any chance there is an error, please send the details for a correction to: [email protected]. We will do our best to make the change as soon as possible.

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