Former hedge fund star says this is what will trigger the next bear market.

Much of Wall Street expects easing inflation, but an overshoot could dash hopes of a May rate cut, curtailing the S&P 500’s
SPX
waltz with 5,000, warn some.

Read: Arm’s frenzied stock rally continues as AI chase trumps valuation.

What might take this market down eventually? Our call of the day from former hedge-fund manager Russell Clark points to Japan, an island nation whose central bank is one of the last holdouts of loose monetary policy.

Note, Clark bailed on his perma bear RC Global Fund back in 2021 after wrongly betting against stocks for much of a decade. But he’s got a whole theory on why Japan matters so much.

In his substack post, Clark argues that the real bear-market trigger will come when the Bank of Japan ends quantitative easing. For starters, he argues we’re in a “pro-labor world” where a few things should be playing out: higher wages and lower jobless levels and interest rates higher than expected. Lining up with his expectations, real assets started to surge in late 2023 when the Fed started to go dovish, and the yield curve began to steepen.

From that point, not everything has been matching up so easily. He thought higher short-term rates would siphon off money from speculative assets, but then money flowed into cryptos like Tether and the Nasdaq recovered completely from a 2022 rout.

“I have been toying with the idea that semiconductors are a the new oil – and hence have become a strategic asset. This explains the surge in the Nasdaq and the Nikkei to a degree, but does not really explain tether or bitcoin very well,” he said.

So back to Japan and his not so popular explanation for why financial/speculative assets continue to trade so well.

“The Fed had high interest rates all through the 1990s, and dot-com bubble developed anyway. But during that time, the Bank of Japan only finally raised interest rates in 1999 and then the bubble burst,” he said.

He notes that when Japan began to tighten rates in late 2006, “everything started to unwind,” adding that the BOJ’s brief attempts [to] raise rates in 1996 could be blamed for the Asian Financial Crisis.

In Clark’s view, markets seem to have moved more with the Japan’s bank balance sheet than the Fed’s. The BOJ “invented” quantitative easing in the early 2000s, and the subprime crisis started not long after it removed that liquidity from the market in 2006, he notes.

“For really old investors, loose Japanese monetary policy also explained the bubble economy of the 1980s. BOJ Balance Sheet and S&P 500 have decent correlation in my book,” he said, offering the below chart:


Capital Flows and Asset Markets, Russell Clark.

Clark says that also helps explains why higher bond yields haven’t really hurt assets. “As JGB 10 yields have risen, the BOJ has committed to unlimited purchases to keep it below 1%,” he notes.

The two big takeaways here? “BOJ is the only central bank that matters…and that we need to get bearish the U.S. when the BOJ raises interest rates. Given the moves in bond markets and food inflation, this is a matter of time,” said Clark who says in light of his plans for a new fund, “a bear market would be extremely useful for me.” He’s watching the BOJ closely.

The markets

Pre-data, stock futures
ES00,
-0.41%

NQ00,
-0.80%

are down, while Treasury yields
BX:TMUBMUSD10Y

BX:TMUBMUSD02Y
hold steady. Oil
CL.1,
+0.79%

and gold
GC00,
+0.46%

are both higher. The Nikkei 225 index
JP:NIK
tapped 38,000 for the first time since 1990.

Key asset performance

Last

5d

1m

YTD

1y

S&P 500

5,021.84

1.60%

4.98%

5.28%

21.38%

Nasdaq Composite

15,942.55

2.21%

6.48%

6.20%

34.06%

10 year Treasury

4.181

7.83

11.45

30.03

42.81

Gold

2,038.10

-0.17%

-0.75%

-1.63%

9.33%

Oil

77.14

5.96%

6.02%

8.15%

-2.55%

Data: MarketWatch. Treasury yields change expressed in basis points

The buzz

Due at 8:30 a.m., January headline consumer prices are expected to dip to 2.9% for January, down from 3.4% in December and the lowest since March 2021. Monthly inflation is seen at 0.3%.

Biogen
BIIB,
+1.56%

stock is down on disappointing results and a slow launch for its Alzheimer’s treatment. A miss is also hitting Krispy Kreme
DNUT,
+1.99%
,
Coca-Cola
KO,
+0.24%

is up on a revenue rise, with Hasbro
HAS,
+1.38%
,
Molson Coors
TAP,
+3.12%

and Marriott
MAR,
+0.74%

still to come, followed by Airbnb
ABNB,
+4.20%
,
Akamai
AKAM,
-0.13%

and MGM Resorts
MGM,
+0.60%

after the close. Hasbro stock is plunging on an earnings miss.

JetBlue
JBLU,
+2.19%

is surging after billionaire activist investor Carl Icahn disclosed a near 10% stake and said his firm is discussing possible board representation.

Tripadvisor stock
TRIP,
+3.04%

is up 10% after the travel-services platform said it was considering a possible sale.

In a first, Russia put Estonia’s prime minister on a “wanted” list. Meanwhile, the U.S. Senate approved aid for Ukraine, Israel and Taiwan.

Best of the web

Why chocolate lovers will pay more this Valentine’s Day than they have in years

A startup wants to harvest lithium from America’s biggest saltwater lake.

Online gambling transactions hit nearly 15,000 per second during the Super Bowl.

The chart

Deutsche Bank has taken a deep dive into the might of the Magnificent Seven, and why they will continue to matter for investors. One reason? Nearly 40% of the world still doesn’t have internet access as the bank’s chart shows:

Top tickers

These were the top-searched tickers on MarketWatch as of 6 a.m.

Ticker

Security name

TSLA,
-2.81%
Tesla

NVDA,
+0.16%
Nvidia

ARM,
+29.30%
Arm Holdings

PLTR,
+2.75%
Palantir Technologies

NIO,
+2.53%
Nio

AMC,
+4.11%
AMC Entertainment

AAPL,
-0.90%
Apple

AMZN,
-1.21%
Amazon.com

MARA,
+14.19%
Marathon Digital

TSM,
-1.99%
NIO

Random reads

Everyone wants this freak “It bag.”

Dumped over a text? Get your free dumplings.

Messi the dog steals Oscars’ limelight.

Love and millions of flowers stop in Miami.

Need to Know starts early and is updated until the opening bell, but sign up here to get it delivered once to your email box. The emailed version will be sent out at about 7:30 a.m. Eastern.

Check out On Watch by MarketWatch, a weekly podcast about the financial news we’re all watching – and how that’s affecting the economy and your wallet.

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#hedge #fund #star #trigger #bear #market

My brothers are co-owners on $1.9 million of our mother’s bank and brokerage accounts. She now has Alzheimer’s. How can I rectify this?

I have three adult siblings living in different states, and we are disputing the circumstances surrounding the joint accounts shared with our 85-year-old mother, who has early stage Alzheimer’s. Our mom has a net worth of around $2 million, which is spread across several different bank and brokerage accounts. Late in life, she added a different sibling as a co-owner on each of her accounts to help manage her money.  

My brother “Joe” is listed as the sole co-owner on the bulk of our mother’s brokerage accounts, totaling $1.3 million, while my brother “Andy” is the sole co-owner of a $600,000 bank account and I am the sole co-owner of a $100,000 brokerage account. I think our mom simply forgot to add my sister, “Sue,” as a co-owner on any account. Her intention has always been for the four of us to equally inherit her assets.

I suggested to my three siblings that we should change all the accounts to sole ownership under our mother’s name with four equal beneficiaries. I thought this could avoid many possible complications with gift taxes and distribution at the time of our mother’s death, since as it stands, each co-owner would have to divide the money from their co-ownership account and send it to the other siblings.

Sue is named as power of attorney and could manage our mother’s individual accounts as needed. However, Joe is adamant that the current setup of co-ownership of accounts is the best way to help our mother, especially to protect her against financial fraud in case she needs to move to a nursing home. He insists there will be no gift taxes with the eventual distribution and that this setup is straightforward and easy to co-manage.

This situation is causing a lot of stress and distrust among my siblings, which I hate. I suggested we change things in order to make our mother’s financial situation as simple as possible, especially at the time of death, and not because I don’t trust Joe. Right now, no one is touching our mother’s accounts, and I am paying most of her expenses, as she lives with me.

Please advise.

Frustrated Sibling

Also read: My wife and I sold our home to her son at a $100,000 discount. He’s now selling at a $250,000 profit. Do I ask for a cut?

“Sue, as power of attorney, should be able to withdraw money from your mother’s other accounts and/or set up a bank account with those funds in your mom’s name,” the Moneyist writes.


MarketWatch illustration

Dear Frustrated,

Your brothers have every reason to act like white truffle butter wouldn’t melt in their mouths.

Between them, they have sewn up your mother’s largest bank accounts, and you are very likely dependent on the kindness of these brothers to either add you to the accounts as co-owners or distribute the funds between all four siblings after your mother passes away. 

I would not hold my breath for Joe or Andy to do either of these things. They can just as easily resist with politeness and smiles as with anger and resentment. I’m sorry to say that the most damaging actions — for you and your sister— have already been taken. 

We may never know the conversations that took place when your brothers were added as co-owners. But there is a very important difference between a “co-owner” and a “co-signer” on an account. The latter can withdraw money but does not own the money in the account.

If your mother was not of sound mind or her mental capacity was diminished when your brothers were added to these accounts, or if she had intended to add them as co-signers, there may be a case where you can contest your brothers’ ownership of these accounts.

The legal framework around such cases vary depending on the state, but it’s usually up to the estate of the original owner of the account to prove that there was elder abuse and/or undue influence taking place. As always, you should consult an attorney who specializes in elder law.

Limitations to power-of-attorney duties 

Sue, as power of attorney, should be able to withdraw money from your mother’s other accounts and/or set up a bank account with those funds in your mom’s name. She should preserve these funds for additional medical bills and long-term care as her condition progresses.

But the bottom line is that without the cooperation of your two brothers after your mother dies, failing any legal case to reverse matters, you will remain with the sole ownership of the $100,000 brokerage account, and the four of you will inherit whatever else is left in the estate. 

It’s virtually impossible to say without more information, but Sue, as power of attorney, is unlikely to have the ability to change the ownership of these accounts unless that is specified in the terms of her POA contract. That would also depend on the laws of your state.

“The power of attorney permits the agent to access their parent’s bank accounts, make deposits and write checks,” Jupiter, Fla.-based Welch Law says in this POA overview. “However, it doesn’t create any ownership interest in the bank accounts. It allows access and signing authority.”

The law firm continues: “If the person’s parent wants to add them to the account, they become a joint owner of the account. When this happens, the person has the same authority as the parent, accessing the account and making deposits and withdrawals.”

But those with power of attorney cannot self-deal when it comes to their parent’s finances. “As a POA, they are a fiduciary, which means they have a legally enforceable responsibility to put their parent’s benefits above their own,” Welch Law adds.

You should not have to pay for your mother’s care out of your own bank account. Your sister, as power of attorney, should be managing that. Talk to your siblings about your mother’s Alzheimer’s and how the four of you plan to manage her care in the months and years ahead.

Will your brothers fulfill their promise and make you and your sister whole? Only time will tell.

You can email The Moneyist with any financial and ethical questions at [email protected], and follow Quentin Fottrell on X, the platform formerly known as Twitter.

Check out the Moneyist private Facebook group, where we look for answers to life’s thorniest money issues. Post your questions, tell me what you want to know more about, or weigh in on the latest Moneyist columns.

The Moneyist regrets he cannot reply to questions individually.

Previous columns by Quentin Fottrell:

‘I don’t like the idea of dying alone’: I’m 54, twice divorced and have $2.3 million. My girlfriend wants to get married. How do I protect myself?

‘If I say the sky is blue, she’ll tell me it’s green’: My daughter, 19, will inherit $800,000. How can she invest in her future?

‘They have no running water’: Our neighbors constantly hit us up for money. My husband gave them $400. Is it selfish to say no?



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#brothers #coowners #million #mothers #bank #brokerage #accounts #Alzheimers #rectify

My Tinder match asked if I ‘rent or own’ my apartment. Is it gauche to ask financial questions before a first date?

I met a guy on Tinder
MTCH,
+0.75%

and had an introductory telephone conversation, which I always think is a good idea before making the effort to meet in person. During our 15-minute telephone conversation, he told me about his divorce, his job and his hobbies. He described himself as easygoing and outdoorsy, and someone who likes to socialize and play sports. 

He talked a lot about his children, for five minutes or longer. He said he owned a small house. He asked what I did for a living, when my last relationship was, what neighborhood I lived in and — this stuck in my craw — whether I rented or owned my apartment and if it was a studio, one- or two-bedroom apartment. I felt uncomfortable, but I answered.

I live in New York City, and I happen to own my apartment, but I felt like he was sizing me up and trying to get a picture of my finances before he decided to meet me. He also asked how long I’ve been in my apartment, probably to assess how much equity I had in it. I replied, “a while,” as I already felt like he was getting too into my finances for a first conversation.

Once he was satisfied with my answers to these questions, he suggested we meet. I am busy this weekend, so he suggested driving into the city during the week. Based on his job and profession, I can reasonably estimate that I earn about twice his salary, though this does not mean anything to me, and I could care less. But given his money-related questions, I find that ironic.

I asked some friends. Some did a spit take, while others felt such questions were fair game. What do you think?

Irritated Even Before Our First Date

Related: I want my father to quitclaim his home so I can refinance it — and take out a $200,000 annuity for my sister and me. Is this wise?

“Based on his questions, it’s important to him that you have the same level of financial security that he does. If it were not an issue for him, he would not have asked.”


MarketWatch illustration

Dear Irritated,

He is not your real-estate agent or financial adviser, so I agree that it’s strange for a virtual stranger to quiz you on your living arrangements.

Based on his questions, it’s important to him that you have the same level of financial security that he does. If it were not an issue for him, he would not have asked. It’s as simple as that. Similarly, if he were wealthy beyond his wildest dreams, he may care less than someone who has climbed partly up the property ladder. But do I think it’s a bit much to ask in a first conversation? Yes.

Don’t give the Greek chorus too much importance. Whether or not other people are comfortable with such questions in a first call is immaterial; if you are not comfortable, you have your answer. You, after all, are the person who will have to date him, and expect him to show a semblance of emotional intelligence and sensitivity. It’s imperative to be able to read the room.

Let there be no mistake: If he is asking a question about your real-estate holdings or finances, he’s interested in them as a way of assessing (or judging) your suitability as a partner. Maybe he romanticizes his relationship prospects based on first impressions, and wonders whether he could combine assets and live in splendor. But words and questions have meaning.

Social acceptability vs. social mobility 

In America, it may be seen as more acceptable than in some European countries to ask what you do for a living, and even whether you rent or own in a big city like New York. The U.S. is a country of immigrants, and has more immigrants than any other population in the world, according to the Pew Research Center

The idea is to strive, work hard, and do better than the previous generation, although a majority of Americans reportedly doubt the attainability of generation-to-generation upward mobility, and millions of people are reassessing their relationship to work-life balance in the wake of the pandemic.

Wealth and looks play a role in whether someone swipes left or right, but the former appears to become more important when a connection is made with a partner who is deemed attractive. “When long-term interest is considered, the physical attractiveness of the model appeared to serve as an initial hurdle that had to be cleared prior to any other factors being considered by the participants,” according to this 2020 study.

People do swipe right based on economic factors. It would be foolhardy or idealistic to suggest that they don’t. If, however, a man poses in sunglasses with two thumbs up next to a Lamborghini, listing bitcoin
BTCUSD,
+1.57%

trading as one of his pastimes, chances are he doesn’t own that Lamborghini and, in my estimation, may have “Tinder Swindler”-level intentions.

And if a potential partner is both attractive and wealthy? That seems to be an appealing combination. Female online daters are 10 times more likely to click on profiles with men who have higher incomes, at least according to this study published in the Journal of Economic Behavior and Organization, while male online daters are equally likely to click on women’s profiles, regardless of income. 

I don’t put too much stock in studies that say men are looking for attractive partners, while women are more interested in men who look wealthy. You could probably do an analysis of any online dating site and gather a sample that would give you conclusions that say pretty much anything you want them to say. It all depends on the individual: Someone who knows the exact size of their backyard and strives to keep up with the Joneses is more likely to ask whether you rent or own.

In other words, this fellow who grilled you over your own socioeconomic circumstances may still be a perfect match — for someone else.

You can email The Moneyist with any financial and ethical questions at [email protected], and follow Quentin Fottrell on X, the platform formerly known as Twitter.

Check out the Moneyist private Facebook group, where we look for answers to life’s thorniest money issues. Post your questions, tell me what you want to know more about, or weigh in on the latest Moneyist columns.

The Moneyist regrets he cannot reply to questions individually.

Previous columns by Quentin Fottrell:

I want my son to inherit my $1.2 million house. Should I leave it to my second husband in my will? He promised to pass it on.

My adult sons live rent-free in my house, while I pay for 50% of utilities in my second husband’s condo

My brother lives in our parents’ home, which we’ll inherit 50/50. I want to keep it in the family for my children. How do I protect my interests?



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#Tinder #match #asked #rent #apartment #gauche #financial #questions #date

Ukraine lets slip the cats of war

Wars are fought by soldiers using bullets, shells and missiles, but also with ideas and propaganda — which explains why cats have become the latest battlefront in Ukraine.

Ukraine’s social media are full of felines, showing how they help soldiers as emotional support animals, attract donations to the military with their fluffy cuteness, and also fight invaders — in this case mice.

Russia is fighting back by humanizing its invading soldiers — often used in “meat wave” attacks against Ukrainian positions and accused of atrocities against civilians — by showing them with their own cats.

Cats usually arrive at Ukrainian army positions from nearby villages or towns destroyed by war. Abandoned by their owners, the pets seek human protection from the constant shelling, drone strikes and minefields.

“When this scared little creature comes to you, seeking protection, how could you say no? We are strong, so we protect weaker beings, who got into the same awful circumstances as we did, just because Russians showed up on our land,” explained Oleksandr Yabchanka, a Ukrainian army combat medic.

Cats and other animals bring comfort to Ukrainian soldiers. “Some adopt them and take them home, others prefer to keep them in the trenches and even pass them on to other units during rotation,” said Oleksandr Shtupun, a Ukrainian army spokesperson.  

The adopted felines also fight their own battles against the mice that infest the trenches and chew Starlink satellite comms cables and car wiring, destroy food supplies and military gear, and even nip the fingers of sleeping soldiers.

“If cats live in our trenches, mice will almost always stay away,” Yabchanka said.

Syrsky the cat

Ukrainian Army Land Forces Commander Oleksandr Syrsky is known as one of the country’s most effective combat leaders; he is less famous for having a feline namesake with a lethal reputation. Roman Sinicyn, a Ukrainian army officer and the human of Syrsky the Cat, claims the naming was coincidental.

“He got the name because he likes cheese [syr in Ukrainian]. Of course, a cat with the same name as our general has already become a military joke,” Sinicyn said.

Even General Syrsky found it funny … to Sinicyn’s infinite relief. The officer met Syrsky the cat on a combat mission in a frontline village where, for a month, soldiers had been living in an abandoned house infested with mice.

“Most of the locals evacuated, so the cats took over. We caught Syrsky and food-persuaded him to stay with us. He helped to solve our mouse problem,” Sinicyn said.

Roman Sinicyn, a Ukrainian army officer and the human of Syrsky the Cat | Roman Sinicyn

“The mice run over you while you sleep, they get into your stuff. They chew everything. We had to throw out two boxes of our packed rations because of mice,” Sinicyn explained.

Once Syrsky was installed, the soldiers would listen to his nightly patrols against rodents. 

“I took him home when we left that position. Now he lives with my family in Kyiv, but he continues to help the army. We used his social media popularity to collect €147,000 for Mini Shark UAV complexes for adjusting artillery,” Sinicyn said.

Shaybyk the lover

Oleksandr Liashuk, from the Odesa region in southwest Ukraine, gave a purr-out to Shaybyk — one of four stray kittens living with his unit on the southern front in 2022.

“Shaybyk had the biggest charisma. It was getting cold, so I took him with me one night into my sleeping bag. And that’s when I fell in love with that cat,” said Liashuk, 26. “He’s not just my best friend, he’s my son.”

Since then, Shaybyk has moved to different positions with Liashuk, with the pair becoming a viral sensation for their joint patrol videos.

Shaybyk has moved to different positions with Liashuk, with the pair becoming a viral sensation for their joint patrol videos | Oleksandr Liashuk

Liashuk describes his cat as the perfect hunter. “Once we were at the position in the forest and he caught 11 mice in one day. Sometimes [he] brings mice to my sleeping bag,” he boasted.

Despite their bond, Shaybyk remains a free cat, but he has always returned to Liashuk. In June he disappeared for 18 long days until he was found by Ukrainian soldiers at a position several kilometers away, chilling with the local felines. “He just needed some love. I call it a vacation,” Liashuk said.

Shaybyk and Liashuk also collect donations for the Ukrainian army, with Shaybyk receiving a special award in September for helping to raise money to buy seven cars and other supplies.

Karolina the mother

Yabchanka says he was never a cat person.

That changed two years ago, the day he met Karolina — a sassy stray who showed up at his unit’s position in the village of Serebrianka, Donetsk region.

“One day Karolina jumped on our sleeping spot, even though she was not allowed to. We started swearing. In response, she started giving birth. That is how we got ourselves a family of six cats,” Yabchanka said.

During a rotation, Karolina and her kittens moved with Yabchanka’s unit until they grew old enough to be adopted | Oleksandr Yabchanka

During a rotation, Karolina and her kittens moved with Yabchanka’s unit until they grew old enough to be adopted.

“We quickly found them their homes. But Karolina and her white kitten Honor stayed with me. I took them to Lviv, my home town. My mother was so happy she got two frontline cats,” Yabchanka laughed.  

A year later a small dog, Shabrys, whom Yabchanka picked up near Kupiansk in Kharkiv region, joined the Lviv cat gang.

“Now we’re never bored at home,” he said, showing dog-cat fight videos. “You can’t abandon poor creatures who chose you as their last hope.”

Herych the high-bred

Unlike frontline strays, Herald, known as Herych, is a cat aristocrat. As soon as Russia invaded, Herych, a Scottish Fold, joined his human, Kyrylo Liukov, a military coordinator for the Serhiy Prytula Volunteer Foundation, which delivers supplies to frontline units.

Herych, who lives with Liukov in Kramatorsk, a city in Donetsk region, traveled to the front more than 20 times.

Unlike other frontline animals, Herych remains calm during Russian shelling | Kyrylo Liukov

“Every time he was the star of a show, with so many fighters running to us to pet him and take a picture with him,” Liukov said. “Herych was patient — though a little shocked.”

Unlike other frontline animals, Herych remains calm during Russian shelling. “At most he just turns his head to the sound and that’s all,” Liukov said.

Like Syrsky, Herych uses his online popularity to help Ukraine’s army, fronting a campaign that raised several million hryvnias (a million hryvnia is about €25,000) to purchase cars for the military.

The enemy’s cats

Russian propaganda has jumped on the story of Ukraine’s “mobilizing cats” as a sign of its desperation.

Meanwhile, regional outlets have published scores of similar stories about cats on the Russian side of the frontline, presumably in order to humanize the military in the wake of ongoing independent reports about Russian war crimes in Bucha and other places in Ukraine.

Late last year, the regional department of the Emergency Situations Ministry in western Russia’s Oryol, about 300 km from the Ukraine border, reported sending a cat named Marusya to the front to help fight mice.

“She will help boost soldiers’ morale and protect their sleep, defend food supplies,” the ministry said in a statement. “We’re sure that Marusya will do well and will soon return home!”

The Russian stories, however, tend to feature cats taken in by Russian soldiers after they were allegedly abandoned by their Ukrainian owners. 

“It’s hard to imagine life without him,” the local VN.ru outlet based in Siberia’s Novosibirsk wrote of a black cat nicknamed Copter. “Together with the soldiers he discusses tactical plans, samples dishes and stands guard.” 

Moscow tabloid Moskovsky Komsomolets ran a story about a cat named Bullet who protected the commander of a motorized rifle unit by climbing onto his head to warn him of mines and enemy fire.  

Another outlet in Samara published a video of a soldier stroking a cat described as the unit’s “therapist.”

“Their purring has a soothing effect and makes you feel at home,” the soldier said. 

It wouldn’t be the first time Russia has weaponized cats for propaganda. 

Following the 2014 annexation of Crimea and the construction of a bridge across the Kerch Strait separating the peninsula from the Russian mainland, a ginger-and-white cat called Mostik — Russian for “Little Bridge” — won nationwide fame as the bridge’s mascot.

He was even given an Instagram account, lending a cuddly veneer to what the West had condemned as a flagrant violation of international law.  

CORRECTION: This article has been updated to correct the name of Shabyk’s human; it is Oleksandr Liashuk.



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#Ukraine #lets #slip #cats #war

Elon Musk: Diversity-based hiring is antisemitic

KRAKÓW, Poland — Elon Musk has upped his war on woke by saying that diverse hiring policies are “fundamentally antisemitic” and discriminatory, shortly after a private visit to the Auschwitz-Birkenau Nazi concentration camp.

The controversial tech billionaire was speaking at a European Jewish Association (EJA) conference in the Polish city of Kraków, amid rising criticism that his social media platform — X, formerly Twitter — has allowed rampant hate speech to spread. Musk himself sparked outrage in November when he publicly agreed with an antisemitic tweet claiming that Jewish communities have been “pushing the exact kind of dialectical hatred against whites that they claim to want people to stop using against them.”

While his trip to Poland allowed him to push back at the charges of antisemitism, he also seized the opportunity to turn his fire against one of his favorite bugbears: “Diversity, equity and inclusion” policies.

“Always be wary of any name that sounds like it could come out of a George Orwell book. That’s never a good sign,” Musk told American right-wing commentator Ben Shapiro, who joined him onstage. “Sure, diversity, equity and inclusion all sound like nice words, but what it really means is discrimination on the basis of race, sex, sexual orientation and it’s against merit and thus I think it’s fundamentally antisemitic.”

Musk, who confirmed that he does indeed write all of his own posts on X, has been vocal about his feelings toward diversity, equity and inclusion, including by claiming, without evidence, that diverse hiring initiatives at Boeing and United Airlines have made air travel less safe.

His comments feed into a broader debate on inclusive hiring policies, most especially on U.S. college campuses. The resignation of Harvard President Claudine Gay over a plagiarism scandal was seized upon by Republicans, who claim top schools are examples of American institutions in the throes of a leftist political transformation. Critics argue this radical leftist culture on campuses is stoking antisemitism, and top university leaders hit heavy flak last month for their poor handling of a congressional hearing on the bullying of Jews.

On Monday, Shapiro went easy on Musk, steering the conversation towards meritocracy rather than Musk’s increasingly controversial social media outbursts and allowing the Tesla boss to continue his attacks on a subject he has made a great deal of mileage out of.

“I think we need return to … a focus on merit and it doesn’t matter whether you’re man, woman, what race you are, what beliefs you have, what matters is how good you are at your job or what are your skills,” Musk said.

In defense of X

At the EJA conference — a daylong summit on the rise of antisemitism in the aftermath of the October 7 attack on Israel by Hamas — Musk also defended X against accusations of antisemitism and hate speech, saying freedom of speech must be protected even when controversial. According to the billionaire, who cited audits without offering further details, X has “the least amount of antisemitism” among all social media platforms, adding that TikTok has “five times the amount of antisemitism” that X has.

“Relentless pursuit of the truth is the goal with X,” Musk said. “And allowing people to say what they want to say even if it’s controversial, provided it does not break the law, is the right thing to do.”

Musk has faced widespread criticism over the rise of disinformation and hate content since he bought the social media platform for $44 billion in 2022, criticism that intensified in the weeks following the escalation of the Israel-Hamas war last October.

The reported spread of fake and misleading content on the conflict led the EU to launch an investigation into X. And things got worse for Musk after progressive watchdog group Media Matters published a report alleging that X had run ads for major companies next to neo-Nazi posts.

The Media Matters report and Musk’s endorsement of an antisemitic post sparked a backlash from several public figures and culminated in an advertiser exodus, as multiple companies pulled their ads from the site, including giants such as Apple, IBM, Disney and Coca-Cola. According to a New York Times report, this could result in a loss of up to $75 million for X.

Musk has since apologized for the antisemitic post — admitting he should not have replied to it — and then traveled to Israel to meet with President Isaac Herzog and Prime Minister Benjamin Netanyahu, in what could be seen as an apology tour.

Speaking about his visit to Israel, Musk said indoctrinated Hamas fighters have to be “killed or imprisoned” to prevent them from killing more Israelis. And the next step is fighting further indoctrination in Gaza, he added.

“The indoctrination of hate into kids in Gaza has to stop,” Musk said. “I understand the need to invade Gaza, and unfortunately some innocent people will die, there’s no way around it, but the most important thing to ensure is that afterwards the indoctrination … stops.”

According to Gaza’s Health Ministry, Israeli airstrikes and ground attacks have killed over 25,000 Palestinians and wounded more than 60,000 since the attack by Hamas on October 7, in which Israeli officials say the militant group killed over 1,200 nationals and foreigners and took 240 hostages.

Musk said the West has shifted to a mentality that equates smaller, weaker groups with goodness.

“We need to stop the principle that the normally weaker party is always right, this is simply not true,” Musk said. “If you are oppressed or the weaker party it doesn’t mean you’re right.”

Musk — who joked multiple times that he considers himself “Jew by aspiration” and “by association” — was supposed to visit the Auschwitz-Birkenau Nazi concentration camp on Tuesday alongside other speakers and political leaders from the EJA conference, but he instead took a private tour of the site with his young son.

The Auschwitz Museum itself was among one of the entities that had called out Musk for failing to contain antisemitic content.



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Universal banks on ‘Migration’ to expand its animation lead over Disney

Universal and Illuminations latest animated film centers on a family of ducks who decides to leave the safety of a New England pond for an adventurous trip to Jamaica. However, their well-laid plans quickly go awry when they get lost and wind up in New York City.

Universal

Disney dropped the animation crown. Universal has picked it up.

And, with “Migration” opening Friday, the studio is looking to strengthen its grip.

“Migration,” a comic tale about a family of New England ducks that leave their pond for Jamaica, but end up in New York City, is expected to tally $25 million during its domestic debut. Universal has more conservative expectations, forecasting between $10 million and $15 million in ticket sales for the film’s opening.

While that pales in comparison to the $100 million-plus debuts of Illumination/Universal’s “The Super Mario Bros. Movie” and the latest “Minions” film, it’s comparable to the studio and DreamWorks Animation’s “Puss in Boots: The Last Wish,” which ran in theaters for several months, securing nearly $500 million globally.

“‘Migration,’ with solid word-of-mouth and strong reviews, will have to be judged more on its long-term results than the opening weekend splash,” said Paul Dergarabedian, senior media analyst at Comscore.

Disney’s most recent animated film “Wish” failed to connect with audiences. After generating $31.6 million domestically over the five-day Thanksgiving holiday, the film has grossed a total of $55.2 million in the U.S. and Canada. Globally, the film has reached $127.1 million. The film had a budget of $200 million, not including marketing costs.

For comparison, “Trolls Band Together,” which was released the week before Thanksgiving, secured $30 million for its three-day debut and nearly $180 million worldwide. The film had a budget of $95 million, not including marketing costs.

Representatives from Disney did not immediately respond to CNBC’s request for comment.

How Disney lost the crown

Ariana DeBose stars as Asha in Disney’s new animated film “Wish.”

Disney

Disney established its animated feature empire in the early 20th century with 1937’s “Snow White and the Seven Dwarfs” and continued to dominate, more or less, into the 1980s and 1990s with “The Little Mermaid” and “Beauty and the Beast.”

Later, it acquired Pixar, which together with Walt Disney Animation, generated billions in box-office receipts for the company.

“The world of feature animation has been dominated for decades by Disney and for good reason,” said Dergarabedian. “They set the gold standard.”

Then came the Covid pandemic. While theaters closed, Disney sought to pad its fledgling streaming service Disney+ with content, stretching its creative teams thin, and sending theatrical movies during the pandemic straight to digital.

The decision trained parents to seek out new Disney titles on streaming, not theaters, even when Disney opted to return its films to the big screen. Compounding Disney’s woes was a general sense from audiences that the company’s content had grown overly existential and too concerned with social issues beyond the reach of children.

As a result, no Disney animated feature from Pixar or Walt Disney Animation has generated more than $480 million at the global box office since 2019.

“I think what’s changed is that Disney doesn’t get the benefit of the doubt,” said Josh Brown, CEO at Ritholtz Wealth Management and a CNBC contributor. “And people will not go to a movie just because it’s the latest Disney movie in the way that previous generations did.”

Universal appeal

But as moviegoers have returned to cinemas in the wake of the pandemic, more are gravitating toward Universal’s fare.

“Simply put, Illumination Animation’s only agenda is entertainment,” said Jeff Bock, senior box-office analyst at Exhibitor Relations. “Their animated films are sweet and simple and family audiences appreciate that. Disney sometimes attempts to pack too much into their animated features, and lately have been losing sight of the simplicity of the genre.”

Not to mention, Universal has been revisiting tried and true fan-favorite stories and characters. In fact, Illumination hasn’t released a nonfranchise film since 2016, and only three of the last 10 DreamWorks features have been original stories.

For comparison, of the last eight films released by a Disney animation studio, seven have been original films with just 2022’s “Lightyear,” a “Toy Story” spinoff, tied to an existing franchise. Previously, Disney has thrived bringing new animated material to audiences, but in the post-pandemic world, it has struggled.

It is the exact opposite strategy of Disney’s live-action theatrical releases, which have relied heavily on established franchises. Think “Indiana Jones and the Dial of Destiny,” “The Little Mermaid,” Marvel franchise films and “Haunted Mansion.”

Iger has said that Disney will continue to make sequels, without apology, but admitted that the company needs to be more selective in which franchises it revisits.

“I think there has to be a reason to make them, you have to have a good story,” Iger said during The New York Times’ DealBook Summit in late November.

“Minions: The Rise of Gru” is the sequel to the 2015 film, “Minions,” and spin-off/prequel to the main “Despicable Me” film series.

Universal

In animation, returning to popular characters and worlds is an easy way to capture the attention of parents and kids.

“Because they have seen these characters and related stories before, they have high confidence that they will be high quality, entertaining and ‘brand safe’ for their kids,” said Peter Csathy, founder and chair of advisory firm Creative Media. “And they may even anticipate franchise animated films as much as their kids.”

In developing consistent franchise content like Minions and Trolls, Universal is now able to introduce a new film like “Migration” with a sense of clout. Parents who see that the film is from the same studio that brought other fan favorites to the big screen are then more likely to come out to see it.

It’s what Pixar was able to do so well for nearly three decades.

“With ‘Minions,’ ‘Secret Life of Pets’ and ‘Sing,’ I think Illumination is a brand people are aware of by now,” said Bock. “And that awareness will boost ‘Migration’s’ flight pattern, likely extending its box-office run. That’s key. The long play.”

So far, “Migration” has generally favorable reviews from critics. If audiences respond well, and spread the word, the film could see a solid run, adding to the prestige of Universal’s animation brand.

“The kids animation market opportunity will never grow old, so those playing at the top of the game – as is Illumination – hold the promise and possibility of becoming the next go-to brand for quality animation after Pixar,” said Csathy.

Next year, Disney and Pixar are set to release “Inside Out 2” in June, while Universal and Illumination’s “Despicable Me 4” is scheduled to hit theaters weeks later in July.

Disclosure: NBCUniversal is the parent company of Universal Pictures and CNBC.

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Hasbro laying off 1,100 workers as weak toy sales persist into holiday season

Hasbro is laying off about 1,100 employees as the toy maker struggles with soft sales that have carried into the holiday shopping season, according to a company memo obtained by CNBC.

Hasbro had about 6,300 employees as of earlier this year, according to a company fact sheet.

Shares of the company fell more than 2% Tuesday. Rival Mattel’s stock also slipped.

“We anticipated the first three quarters to be challenging, particularly in Toys, where the market is coming off historic, pandemic-driven highs,” CEO Chris Cocks said in the memo. “While we have made some important progress across our organization, the headwinds we saw through the first nine months of the year have continued into Holiday and are likely to persist into 2024.

Hasbro, which already laid off hundreds of employees earlier this year, had warned in October that trouble was on the horizon. In the company’s most recent quarterly earnings report, Hasbro slashed its already-soft full-year outlook, projecting a 13% to 15% revenue decline for the year.

Popular toy brand sales had dropped significantly, Hasbro also said in the October quarterly report. Popular brands like My Little Pony, Nerf and Transformer had fallen 18% at the time, due to “softer category trends.”

Hasbro’s stock was down nearly 20% through Monday’s close.

Hasbro competitor Mattel had also warned of soft sales. Yet Mattel’s stock is up about 6% through Monday, powered a great deal by the box office success of the film “Barbie.” That’s still behind the 17% gain posted by the S&P 500 so far this year, though.

Retailers overall could be in for a tepid holiday season, and toys saw lower discounts for consumers when compared to discounts a year ago.

Read the full memo from CEO Chris Cocks:

Team,   

A year ago, we laid out our strategy to focus on building fewer, bigger, better brands and began the process of transforming Hasbro. Since then, we’ve had some important wins, like retooling our supply chain, improving our inventory position, lowering costs, and reinvesting over $200M back into the business while growing share across many of our categories. But the market headwinds we anticipated have proven to be stronger and more persistent than planned. While we’re confident in the future of Hasbro, the current environment demands that we do more, even if these choices are some of the hardest we have to make.   

Today we’re announcing additional headcount reductions as part of our previously communicated strategic transformation, affecting approximately 1,100 colleagues globally in addition to the roughly 800 reductions already taken.  

Our leadership team came to this difficult decision after much deliberation. We recognize this is heavy news that affects the livelihoods of our friends and colleagues. Our focus is communicating with each of you transparently and supporting you through this period of change. I want to start by addressing why we are doing this now, and what’s next. 

Why now? 

We entered 2023 expecting a year of change including significant updates to our leadership team, structure, and scope of operations. We anticipated the first three quarters to be challenging, particularly in Toys, where the market is coming off historic, pandemic-driven highs. While we have made some important progress across our organization, the headwinds we saw through the first nine months of the year have continued into Holiday and are likely to persist into 2024.  

To position Hasbro for growth, we must first make sure our foundation is solid and profitable. To do that, we need to modernize our organization and get even leaner. While we see workforce reductions as a last resort, given the state of our business, it’s a lever we must pull to keep Hasbro healthy. 

What happens next? 

While we’re making changes across the entire organization, some functional areas will be affected more than others. Many of those whose roles are affected have been or will be informed in the next 24 hours, although the timings will vary by country, in line with local rules and subject to employee consultations where required. This includes team members who have raised their hands to step down from their roles at the end of the year as part of our Voluntary Early Retirement Program (VRP) in the U.S. We’re immensely grateful to these colleagues for their many years of dedication, and we wish them all the best.   

The majority of the notifications will happen over the next six months, with the balance occurring over the next year as we tackle the remaining work on our organizational model. This includes standardizing processes within Finance, HR, IT and Consumer Care as part of our Global Business Enablement project, but it also means doing more work across the entire business to minimize management layers and create a nimbler organization. 

What else are we doing? 

I know this news is especially difficult during the holiday season. We value each of our team members – they aren’t just employees, they’re friends and colleagues. We decided to communicate now so people have time to plan and process the changes. For those employees affected we are offering comprehensive packages including job placement support to assist in their transition.  

We’ve also done what we can to minimize the scale of impact, like launching the VRP and exploring options to reduce our global real estate footprint. On that note, our Providence, Rhode Island office is currently not being used to its full capacity and we’ve decided to exit the space at the end of the lease term in January 2025. Over the next year, we’ll welcome teams from our Providence office to our headquarters down the road in Pawtucket, Rhode Island. It’s an opportunity to reshape how we work and ensure our workspace is vibrant and productive, while reflecting our more flexible in-person cadence since the pandemic.   

Looking ahead 

As Gina often says, cost-cutting is not a strategy. We know this, and that’s why we’ll continue to grow and invest in several areas in 2024.  

As we uncover more cost savings, we’ll invest in new systems, insights and analytics, product development and digital – all while strengthening our leading franchises and ensuring our brands have the essential marketing they need to thrive well into the future.  

We’ll also tap into unlocked potential across our business, like our new supply chain efficiency, our direct-to-consumer capabilities, and key partnerships to maximize licensing opportunities, scale entertainment, and free up our own content dollars to drive new brand development. 

I know there is no sugar-coating how hard this is, particularly for the employees directly affected. We’re grateful to them for their contributions, and we wish them all the best. In the coming weeks, let’s support each other, and lean in to drive through these necessary changes, so we can return our business to growth and carry out Hasbro’s mission.  

Thanks,    

Chris  

–CNBC’s Claudia Johnson contributed to this report.

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How to get tech right in Europe?

As our societies navigate challenging times and undergo widespread digital transformation, fostering growth in our homegrown tech businesses has never been more critical to achieving the wider goals of the European project.

Via EUTA. Kristin Skogen Lund, president, European Tech Alliance; CEO, Schibsted

The European Tech Alliance (EUTA) represents leading tech companies born and bred in Europe. We believe that with the right conditions, EU tech companies can enhance Europe’s resilience, boost our technological autonomy, protect and empower consumers, and promote European values such as transparency, the rule of law and innovation to the rest of the world.

The European Commission’s ambitious targets for 2030 in the Digital Decade program represent a vision for a sustainable and more prosperous digital future. However, more is needed if we are to achieve our goals.

Europe must boost its tech competitiveness over the next five years. To unlock European tech leadership both at home and beyond, we need to have an ambitious EU tech strategy to overcome growth obstacles, to make a political commitment to clear, targeted and risk-based rules, and to pursue consistent enforcement to match the globalized market we are in.

An EU strategy for European tech

We need a strategy for European tech that empowers digital companies to grow and use new innovation tools to deliver the best services and products, including personalized experiences, to their users. European tech companies are valuable assets for Europe. They deserve to be nurtured and supported.

Europe must boost its tech competitiveness over the next five years.

In practice, this could take on several forms. For instance, we need to unlock the power of data as a key lever for innovation while respecting consumer privacy. Privacy-enhancing technologies and pseudonymization should be further promoted by lawmakers and regulators to empower European companies to use data, grow and remain competitive.

A European strategy for talent to enhance European companies’ attractiveness could also be pursued. Developers should be pushing the limits of innovation, using their imaginations to improve the services and products from European companies, rather than focusing their unique talents on compliance tasks.

Lastly, EU tech companies should have a seat at the table when proposed rules affect their ability to invest in Europe and to provide good services, products and experiences. Bringing in expertise from the ground up would facilitate the growth of European champions at global, national and regional level.

Smart rules for a stronger Europe

The digital world is a fully-regulated sector with a wide range of new and updated rules. It is essential to give these rules time to play out before assessing their efficiency and impact on EU tech companies.

For instance, the EU’s consumer protection framework was recently updated with the ‘Omnibus Directive’. These new rules started applying from May 2022 onward only, yet they were up for another partial revision less than a year later. Businesses need time to put rules into practice, and lawmakers need time to analyze their effects in the real world, before amending the rulebook once again.

European, national and regional measures should complement each other, not clash or duplicate efforts. The ink of the Digital Services Act (DSA) was not even dry when some EU countries added extra layers of regulation at national level, such as the French law for online influencers and the proposed bill to secure and regulate the digital space. There must be a strong focus on avoiding national fragmentation where EU laws exist. Otherwise we are moving further away from a truly single market that is the cornerstone of European competitiveness.      

Where EU rules are needed, lawmakers should focus on concrete problems and be mindful of different tech business models, for example, retailers vs. marketplaces; new vs. second-hand goods, streaming vs. social media. Rules should address problems with specific business models instead of a one-size-fits-all approach or dictating specific product designs. Any proposed solution should also be proportionate to the problem identified.

Better enforcement for fairer competition

One of the big problems we face in Europe is ensuring a level playing field for all businesses, to achieve fair competition. The EU has enshrined these values in the Digital Markets Act (DMA). We must not lose sight of this ambition as we turn to the all-important task of enforcement of the DMA.

European, national and regional measures should complement each other, not clash or duplicate efforts.

Better cooperation should be encouraged between regulatory authorities at national level (for example, consumer, competition and data protection) but also among European countries and with the EU to ensure coherent application.

Now that the European Commission takes on the new role of rule enforcer, it’s of paramount importance to place a strong focus on independence, separate from political interests. This will ensure a robust and impartial enforcement mechanism that upholds the integrity of the regulatory framework.

What’s next?

European tech companies in the EUTA believe the EU can take two crucial steps for our competitiveness, so we can continue to invest in Europe’s technological innovation and European consumers.

First, the EU digital single market is incomplete, we need to avoid 27 different interpretations of the same EU rules. A strong harmonization push is needed for EU companies to grow faster across the Continent.

Second, we look toward the EU, national governments and authorities to bring economic competitiveness and innovation to the core of regulation, and then to enforce these rules fairly and equally.

EUTA members are companies born and bred in Europe. The EU is a crucial market and we are deeply committed to European citizens and European values. With our EUTA manifesto, we propose a vision so Europe can succeed, and our own European champions can grow and become global leaders.



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‘A cold cell for being a journalist’: Husband of US-Russian national Alsu Kurmasheva calls for her release

Alsu Kurmasheva is a dual US-Russian citizen and journalist who has been detained by Russia since October 18, charged with failing to register as a “foreign agent” despite having travelled to Russia for a family emergency. She faces up to five years in prison if convicted. Her husband has called for the State Department to designate her as “wrongfully detained”. “She is a US citizen and has the same rights as any US citizen,” he says.

Alsu Kurmasheva’s arrest is the most egregious instance to date of the abusive use of Russia’s foreign agents’ legislation against independent press,” the Committee to Protect Journalists (CPJ) said in an October statement on her case.

Russia’s expanded law on foreign agents, which now vaguely defines them as anyone “under foreign influence”, has come under fire from human rights groups and media organisations since it entered into force on December 1, 2022. The law’s previous iteration required prosecutors to prove a “foreign agent” had received financial or other material assistance from abroad; the new measures give authorities much greater latitude.

Kurmasheva, an editor with the Tatar-Bashkir Service of US-funded broadcaster Radio Free Europe/Radio Liberty (RFE/RL) – sister station to Voice of America – lives in Prague with her husband and two teenage daughters. She traveled to Kazan, the capital of Russia’s Tatarstan, on May 20 to visit her ailing mother. She was awaiting her flight home at Kazan airport on June 2 when her name was called out over the loudspeaker. Authorities briefly took her into custody and confiscated both her US and Russian passports, preventing her from leaving the country.  

“At that point she wasn’t a suspect, but they took both passports and her phone,” said her husband, Pavel Butorin. “It wasn’t until a couple of days later that she was charged with not registering her US passport,” which is now a criminal offense in Russia. 

Kurmasheva completed the necessary paperwork but was made to remain in Kazan for the next four months, when she was eventually fined 10,000 rubles (about $105) on October 11 for failing to register her passport initially. She was still awaiting the return of her travel documents on October 18 when “big men in black” came to her door and took her away, Butorin said. 

She has been in detention ever since. 

No official word from Russia

Kurmasheva was formally charged on October 26 with the much more serious offence of failing to register as a foreign agent under the expanded law. If convicted, she faces up to five years in prison. 

A Russian court ordered late last month that Kurmasheva remain in detention until December 5. 

“This offense that she has been charged with is not a violent crime,” Butorin said. “But the judge denied the request for house arrest pending trial.” 

The decision to charge her under the foreign agent statute is all the more surprising because she was travelling not as a journalist but on a family-related matter, he said. 

“She was there in her personal capacity on what was supposed to be a short trip, two weeks at the most, to help her mom.”

He suspects there is a “clear connection” between Kurmasheva’s detention and her role as a journalist, notably since Russia has designated the Tatar-Bashkir Service for which she works as a “foreign agent” media organisation. Much of her career, however, has focused on advancing Tatar language and culture

“She’s not an agent of any government, certainly not an agent of the US government,” Butorin said. “She’s a journalist. And we want her released as soon as possible.”

Butorin, who also works in media, is director of Current Time, RFE/RL’s 24-hour Russian-language TV and digital news platform. 

He said he hopes the State Department will see fit to designate Kurmasheva as a “wrongfully detained person”, which would allow her case to be transferred to the Special Presidential Envoy for Hostage Affairs (SPEHA), unlocking both US resources and expertise. SPEHA was involved in the release of both Basketball star Brittney Griner and Marine veteran Trevor Reed from Russian detention last year.

A State Department spokesperson said it is “closely following” Kurmasheva’s detention and is continuing to push for consular access, but that “Russian authorities have not yet responded to our requests”.

Moreover, the State Department said it has “not yet been officially notified by the Russian Government of her detention”.

Asked whether Kurmasheva’s dual nationality was complicating her case, the spokesperson noted only that Russia is among the nations that may refuse to acknowledge the US citizenship of a dual national.

“Many countries do not recognize dual nationality” even if they do not expressly prohibit it, the spokesperson said in an email.

As a result, some “do not grant access to … US nationals in detention if they are also nationals of the country where they are detained”. 

Calls to #FreeAlsu have been making the rounds on social media. © Courtesy RFE/RL

Cold and overcrowded

Since Russia’s law on foreign agents first came into effect in 2012, Moscow has used it to punish government critics including civil society groups, rights NGOs, media outlets and activists. Russia has also been accused of detaining Americans simply to use them as bargaining chips in exchange for Russians held by the United States: Griner’s freedom was traded for that of notorious arms dealer Viktor Bout.

Kurmasheva has been granted access to a lawyer but not visits or phone calls with her family, although her husband said she has been allowed to exchange (censored) letters with them over the prison’s official online system, “a paid system that takes only Russian cards”.

Only some of the conditions of her detention are known. Her prison is likely overcrowded and is certainly cold, Butorin said, noting that it is currently near 0°C (32°F) in Kazan and that Kurmasheva is not allowed to receive extra blankets from family or friends. 

“We’ve been without Alsu for close to six months now,” he said. “It’s a very unsettling situation.” 

As “free-thinking, independent girls”, his daughters are also struggling with the harsh reality of their mother’s plight. 

“It’s hard for them to comprehend that their mother is being held in a cold Russian prison cell just for being a journalist.”

Nevertheless, they are looking to the future.

“We have Taylor Swift tickets for the Eras Tour, and we have a ticket with Alsu’s name on it,” Butorin said. “I want us to go together as a family.” 

Alsu Kurmasheva has been held in Russian detention since October 18, 2023.
Alsu Kurmasheva has been held in Russian detention since October 18, 2023. © Pavel Butorin courtesy RFE/RL

Harassment of US citizens

“This appears to be another case of the Russian government harassing US citizens,” State Department spokesman Matt Miller said in October of Kurmasheva’s detention.   

Numerous US lawmakers, the UN human rights office, the Organisation for Security and Cooperation in Europe and the president of the European Parliament are among the international bodies demanding she be freed. 

Butorin said he would like to see Muslim nations joining these calls, given that Kurmasheva is a proud Tatar, part of a predominantly Muslim, Turkic-speaking minority in Russia.  

“I would very much like to see more involvement notably from Turkey, given Alsu’s Turkic origins, as well as the involvement of other Muslim nations in lobbying for her release,” he said. 

Media organisations have also joined the calls for her freedom. “We urge the U.S. government to immediately designate Alsu Kurmasheva’s imprisonment as an unlawful and wrongful detention. The Biden administration is taking too long to make this important designation,” the National Press Club said in a statement last week. 

Kurmasheva is the second US journalist currently being held by Russia, after Wall Street Journal reporter Evan Gershkovich was detained on espionage charges in March – the first time Russia had accused a US journalist of spying since the Cold War.

The State Department classified Gershkovich as “wrongfully detained” in April. 

 




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What’s Warner Bros. Discovery’s next move? David Zaslav and John Malone offer clues

David Zaslav, CEO and president of Warner Bros. Discovery (L), and John Malone, chairman of Liberty Media, Liberty Global, and Qurate Retail Group.

CNBC | Reuters

Warner Bros. Discovery‘s next step to gain scale may be looking at distressed assets.

Chief Executive David Zaslav and board member John Malone both made comments this week suggesting the company is paying down debt and building up free cash flow to set up acquisitions in the next two years of media businesses suffering from diminished valuations.

The targets could be companies flirting with or filing for bankruptcy, Malone said in an exclusive interview with CNBC on Thursday. While U.S. regulators may frown at large media companies coming together because of overlaps with studio, cable or broadcasting assets, they’ll be much more forgiving if the companies are struggling to survive, Malone told David Faber.

“I think we’re going to see very serious distress in our industry,” Malone said. “There is an exemption to the antitrust laws on a failing business. At some point of distress, right, then some of the restrictions, they look the other way.”

Media company valuations have been plummeting amid streaming video losses, traditional TV subscriber defections, and a down advertising market. This has affected Warner Bros. Discovery as much as its peers. The company’s market valuation recently fell below $23 billion, its lowest point since WarnerMedia and Discovery merged last year. The company ended the third quarter with about $43 billion in net debt.

Warner Bros. Discovery is trying to position itself to be an acquirer, rather than a distressed asset, itself, by paying down debt and increasing cash flow, Zaslav said during his company’s earnings conference call this week. Warner Bros. Discovery has paid down $12 billion and expects to generate at least $5 billion in free cash flow this year, the company said.

“We’re surrounded by a lot of companies that are – don’t have the geographic diversity that we have, aren’t generating real free cash flow, have debt that are presenting issues,” Zaslav said Thursday. “We’re de-levering at a time when our peers are levering up, at a time when our peers are unstable, and there is a lot of excess competitive – excess players in the market. So, this will give us a chance not only to fight to grow in the next year, but to have the kind of balance sheet and the kind of stability … that we could be really opportunistic over the next 12 to 24 months.”

Still, Warner Bros. Discovery also acknowledged it will miss its own year-end leverage target of 2.5 to 3 times adjusted earnings as the TV ad market struggles and linear TV subscription revenue declines.

Buying from distress

Malone has some experience with profiting from times of distress.

His Liberty Media acquired a 40% stake in Sirius XM over several years more than a decade ago, saving it from bankruptcy. Since then, the equity value of the satellite radio company has bounced back from nearly zero to about $5 per share. Sirius XM currently has a market capitalization of about $18 billion.

“It made us a lot of money with Sirius,” Malone told Faber.

While Malone didn’t name a specific company as a target for Warner Bros. Discovery, he discussed Paramount Global as an example of a company whose prospects seem shaky. Paramount Global’s market valuation has slumped below $8 billion while carrying about $16 billion in debt.

Malone noted that Paramount’s debt was recently downgraded. “I think that they’re running probably negative free cash flow,” he said.

Paramount Global’s third-quarter cash flow was $377 million, and the company has forecast a return to positive free cash flow in 2024.

While Paramount Global shares have fallen precipitously since Viacom and CBS merged in 2019, there are signs the company is shoring up its balance sheet. CEO Bob Bakish said earlier this month Paramount Global’s streaming losses will be lower in 2023 than 2022, and the company expects further improvement to losses in 2024. The company closed a sale for book publisher Simon & Schuster for $1.6 billion and will use the proceeds to pay down debt.

Paramount Global’s fate

Shari Redstone, chair of Paramount Global, attends the Allen & Co. Media and Technology Conference in Sun Valley, Idaho, on Tuesday, July 11, 2023.

David A. Grogan | CNBC

Paramount Global is one of the few assets that logically fits Malone’s vision of a media asset that would have regulatory issues as an acquisition with potential distress concerns. Comcast‘s NBCUniversal, another potential merger partner, will lose more than $2 billion this year on its streaming service, Peacock, but the media giant is shielded by its parent company, the largest U.S. broadband provider.

“Warner Bros. [Discovery] now is making money. Not a lot, but they’re making money,” Malone said. “Peacock is losing a lot of money. Paramount is losing a ton of money that they can’t afford. At least [Comcast CEO] Brian [Roberts] can afford to lose the money.”

Paramount Global’s controlling shareholder Shari Redstone is open to a transformative transaction, CNBC reported last month. Puck’s Dylan Byers recently reported that industry insiders have speculated Warner Bros. Discovery might pursue an acquisition of Paramount Global after the 2024 U.S. presidential election.

A combination of NBCUniversal and Paramount Global also has strategic logic, but the combination of two national broadcast networks — Comcast’s NBC and Paramount Global’s CBS — would present a significant regulatory hurdle. Warner Bros. Discovery doesn’t own a broadcast network, making an acquisition of CBS easier.

Spokespeople for Paramount Global and Warner Bros. Discovery declined to comment.

While Malone said all legacy media companies should be talking to each other about merger synergies, he acknowledged valuations may have to fall farther to get regulators on board with further consolidation. Malone predicted that could happen in the same timeline Zaslav gave — within the next two years.

“Eventually maybe there’ll be regulatory relief,” Malone said. “Out of distress usually comes the reduction in competition, increased pricing power, and the opportunity to buy assets at a deep discount.”

Disclosure: Comcast owns NBCUniversal, the parent company of CNBC.

Tune in: CNBC’s full interview with John Malone will air 8 p.m. ET Thursday.

Liberty Media's John Malone on interest rates, media outlook and the streaming landscape

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