4 August 1901 — 125 Years Ago Today

On this day in 1901, Louis Armstrong was born in New Orleans, though for most of his life he told the world he was born on the Fourth of July. A man who remade music might be forgiven for improving his own origin story.

Currencies — The Yen Becomes America’s Problem

Washington joins the defence of the yen

The Japanese yen has become the clearest gauge of the strain running through the whole system — and last week it pulled in the United States. On Friday, for the first time since 1998, Washington helped Tokyo buy yen in a rare coordinated intervention, after the currency slid this summer to a 40-year low. America’s motive was not charity. Japan is the largest foreign owner of US government debt, and a Japan forced to defend the yen alone might have had to sell those Treasuries in size — pushing up American bond yields that are already at their highest since 2007. The weak yen, in other words, had become a threat to America’s own bond market, so America helped fix it. The Bank of Japan has raised its rate to 1%, the highest since 1995, and still the currency leaks. The causes lie deeper: an energy bill inflated by the oil war, a government under Sanae Takaichi promising to spend, and the yawning gap with better-paid dollars. Japan is learning that a currency cannot be defended for long against its own fundamentals — and that its weakness has become everyone’s problem.

Equities & Oil — The Relief Rally

Records, as oil tumbles

Markets greeted the mere possibility of peace with open arms. After the president said talks with Iran would begin — a claim Tehran flatly denied — crude oil fell more than 5% and American shares climbed to fresh records, the Dow closing up more than 600 points. The logic is plain: no single event would do more for the world economy than a reopening of the Strait of Hormuz, through which a fifth of the world’s oil moves. The caution is plainer still. The market has bought a peace that only one of the two sides admits is being negotiated. It is pricing the relief before the deal — a habit that works until, one day, it does not.

Russia — The War Reaches The Balance Sheet

Ukraine burns the ‘Russian Amazon’

Ukraine has spent the past fortnight setting fire to Russia’s biggest retailer. Drones have hit at least eight warehouses of Wildberries, the country’s dominant online marketplace, destroying more than a tenth of its storage and an estimated $2bn of goods; Kyiv says the sites also supplied the Russian war effort. The more interesting damage is financial. Wildberries is not only a shop but a lender, with its own bank and tens of thousands of merchants who borrowed against the very stock now in ashes. Eleven days before the first strike, the company quietly rewrote its terms to classify drone raids as “force majeure,” freeing itself from compensating sellers; it now pays a goodwill 10 to 15% and no more. The state is stepping in to let banks grant those sellers a year’s payment holiday and, tellingly, to restructure the loans without setting aside reserves against them. Translation: a large hole has opened in the balance sheets, and Moscow’s answer is to agree not to look at it. A warehouse fire is visible; the debt it leaves behind is not.

This Week  ·  Gaza

A deal to end the war, and the war that will not pause for it

Days after President Trump announced a framework to disarm Hamas and rebuild Gaza, Israeli warplanes struck the territory’s north, centre and south, inflicting the heaviest single-day toll in weeks. The two facts sit badly together: a peace being drafted in Washington, a war continuing on the ground. This is the pattern of the whole conflict, in which announcements outrun events, and each side keeps fighting to improve the terms of a deal neither yet trusts. A ceasefire on paper does nothing for the people beneath the bombs until someone stops dropping them. The distance between the document and the ground is measured, as ever, in the dead.

Today  ·  Michigan

A state votes on its future, days after its water was hacked

Michigan holds a primary today, and the contest to watch is the Democratic one, for an open Senate seat and the governor’s office that Gretchen Whitmer must vacate. It is a small early test of a large question: whether the party out of power in Washington drifts back towards its established centre or its restless insurgent wing. There is a grim irony of timing in a state voting on who should govern it in the same week that someone, still unidentified, reached into its water supply. The ballot decides who holds the office. It decides very little about who can quietly switch off the lights, or the taps. That is the newer kind of power, and it is on no ballot.

The Consensus

The yen is Japan’s problem — a weak currency in a distant, peculiar economy, of little concern to anyone else.

The Clarmond View

The yen is a preview. Japan is simply the first rich democracy to reach the wall the others are driving towards: a mountain of public debt, an ageing population, an energy bill it cannot control, and now a world in which money is no longer free. For thirty years Japan borrowed enormously and paid almost nothing to do it, because interest rates sat at zero. That era is ending everywhere at once. As American and European yields climb to levels unseen in a generation, every heavily indebted government — which is most of them — edges towards the same slow vice Japan is caught in now, where the cost of the debt rises faster than the economy that must service it. Tokyo is spending its reserves to hold back the tide, and the tide is winning. Watch it closely: it is the shape of a problem coming to a currency, and a budget, a good deal nearer to you.

The poison that turns out to be a medicine

Scientists have worked out how two of the garden’s most notorious poisons, wolfsbane and larkspur, build their lethal chemistry, tracing the six enzymes the plants use to assemble it. The point is not the poison but the promise: the same complex compounds may hold real medical potential once understood. It is an old truth of pharmacology that the line between a cure and a killing is mostly a matter of dose. The plants that have quietly poisoned the careless for centuries may yet, decoded, help heal them.

Count Binface takes his manifesto to Clacton

As a by-election looms in Clacton — a contest suddenly worth watching — Count Binface, the intergalactic space warrior and one of the finest flowers of British satire, has published his manifesto, and beneath the joke runs a sly seriousness. His pledges include spending more time in Clacton-on-Sea than in Washington DC; banning any MP who resigns mid-term from standing in the very by-election he triggers; refusing all £5m gifts from crypto billionaires; and, for the whole nation, abolishing auto-renewal on online subscriptions at once. The barbs have their obvious targets. But the laughs land because the grievances are real: when a candidate in a bin-lid helmet has thought harder about your subscription traps than the people who write the laws, the comedy is doing serious work. His full manifesto is here.