Bad news bears (market) | financial times

This is an audio transcript of the FT news roundup podcast episode: Bad news bears (market)

joanna s kao
Good morning from the Financial Times. Today is Tuesday June 14th and this is your FT news roundup.

[MUSIC PLAYING]

US stocks fall again in a bear market. The crypto crash is entering a new phase. FT’s Katie Martin explains what it means for the broader ecosystem.

Katie Martin
It seems that with the price of cryptocurrencies going down, a lot of the organizations that you trade this stuff at, a lot of the exchanges, just can’t cope.

joanna s kao
The UK wants to rip up its 2020 Brexit trade deal with Northern Ireland and the EU is not happy. I’m Joanna Kao, replacing Marc Filippino, and this is the news you need to start your day.

[MUSIC PLAYING]

US stocks fell yesterday in a bear market. At the end of trading, the benchmark S&P 500 index was more than 20 percent down from its recent high in January. Investors were unnerved by an unexpectedly high US inflation report released on Friday. Analysts then upgraded their forecasts for how much the Fed will raise interest rates to tackle inflation. This is the second time Wall Street has entered a bear market in the last month. In May, it briefly reached the threshold and recovered on the same day.

[MUSIC PLAYING]

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, prevented its customers from withdrawing money from its platform. He said this was due to extreme market conditions. Then Binance, the world’s largest cryptocurrency exchange, also suspended customer bitcoin withdrawals. The moves fueled a broad sell-off across the digital asset market. Our markets editor, Katie Martin, joins me to talk about what’s going on. Hello, Katy.

Katie Martin
Hi how are you?

joanna s kao
I am doing it right. So what are the underlying causes of this crypto crash?

Katie Martin
Yes, it is a collapse. And what’s interesting right now is that it’s entered a new phase. So the price of crypto assets for which we can use bitcoin as our kind of benchmark, has been going bad since the end of last year because some of the speculative froth in the markets just kind of fizzled out. But this year has really built up a head of steam. And what we saw last month was that there was a couple of coins, a token, a stablecoin, that basically crashed and sure enough, you know, people lost a lot of money on them. So we went from thinking, OK, what coins and tokens are in trouble here? And now what we’re looking at is, OK, what organizations are facilitating trade here, what parts of the market infrastructure are in trouble? And that’s what we’re seeing today because it seems like with the price of cryptocurrencies going down, a lot of the organizations that you trade this stuff at, a lot of the exchanges just can’t cope. They are perfectly capable of taking your money. It turns out that they are not so capable of spitting out your money again if you want to.

joanna s kao
So now that this part of the crypto crash has been switched to, who is getting hurt and could it get any worse?

Katie Martin
So whoever has been burned on the latest moves is basically anyone who has bought bitcoin in the last two years because we are now below that price. So you are underwater and with the stops at the withdrawals, it is very 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 that is very difficult for them. There will be many types of crypto billionaires 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 this money, who are going to lose this money. And I don’t know where this ends. And I’ve learned, you know, my own trial and error, to never declare the death of bitcoin because this thing has incredible staying power. Just when you think it can’t possibly get up again, it gets up again. But this is a very, very challenging period for crypto fans.

joanna s kao
Katie Martin is our markets editor. Thanks, Katy.

Katie Martin
No problem.

[MUSIC PLAYING]

joanna s kao
UK Prime Minister Boris Johnson wants to rip up the 2020 Brexit deal and make changes to controversial rules on trade with Northern Ireland. His administration published the proposed legislation yesterday. Among the changes, the bill would aim to reduce friction at ports. It would also give ministers the highly controversial power to rip up other parts of the Brexit deal. Johnson said the proposal would help ease political tension in Northern Ireland. But critics say ripping up the Brexit deal just two years after it was signed would undermine the UK’s standing in the world. And the EU is furious. Brussels almost immediately threatened legal action after the legislation was published.

[MUSIC PLAYING]

The pandemic has caused many companies to switch to a hybrid working model. This is also true for companies in Japan. Hundreds of companies have moved from Tokyo to the countryside in the past year, but it is 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. He now joins us to tell us more about Grupo Pasona, which is one of the largest recruitment companies in the country. Hello Eri. How are you?

eri sugiura
Very well thanks.

joanna s kao
Can you describe how life on Awaji Island differs from life in Tokyo? What is it like for workers who have moved there?

eri sugiura
So 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 much more time with their family and children and spend much less time traveling and driving just 10 or 15 minutes by the sea. So that’s very different from the time when they lived in Tokyo.

joanna s kao
So what was it that made Pasona decide to establish a separate base on the island?

eri sugiura
In fact, Pasona’s CEO, Mr. Nambu, told me that he always wanted to move out of Tokyo due to the risks of earthquakes and other natural disasters. But before the pandemic, that option seemed pretty unrealistic. But after the pandemic, people started working from home, and in fact, the workplace doesn’t matter anymore. And he also told me that the values ​​of young people have changed from being focused on Tokyo to wanting an environment surrounded by seas and mountains. He then thought it was a good time for him to actually make the move.

joanna s kao
So, there is the risk management side of this decision. Is there an economic reason too?

eri sugiura
Yes. So the government gives subsidies to companies that moved out of Tokyo, because the government has long thought that having everything concentrated in the capital is a big risk for Japan in general. that’s one thing. And for CEOs, they want to save costs as much as possible. So some analysts told me that CEOs will be more selective about which functions they want to keep in Tokyo and which functions can be moved in order to reduce cost.

joanna s kao
Do you think this trend will continue?

eri sugiura
So it really depends on how long Japan can maintain this new type of work standard that came about after the pandemic. Before the pandemic, Japan was recognized as one of the countries where efficiency was very low and staying late at the office was a custom. So once the pandemic is over, employees could go back to the office and stay in the capital again.

joanna s kao
They call this presenteeism, right?

eri sugiura
Yes, exactly.

joanna s kao
Eri Sugiura is the FT’s Tokyo reporter.

[MUSIC PLAYING]

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

[MUSIC PLAYING]

This transcript has been automatically generated. If by any chance there is an error, please send the details for correction to: typo@ft.com. We will do our best to make the modification as soon as possible.

Leave a Comment