| | | | | | | | | | | Axios Markets | | By Felix Salmon · Jul 23, 2022 | | I hope you managed to stay cool this week; I didn't. - This week's newsletter covers international cooperation, intergenerational wage compression, adaptive reuse, share-volume mysteries, and more. All in 1,227 words, a 4.5-minute read.
| | | | | | 1 big thing: Multilateralism's stress tests |  | | | Illustration: Aïda Amer/Axios | | | | The heat waves in Europe and the U.S. this week are a stark reminder that international cooperation has never been more important — or more uncertain. Why it matters: Even as the number of summit-level gatherings continues to rise steadily, it's becoming increasingly difficult to envisage a world where China and the U.S. can align where necessary — or even, for that matter, a world where the White House can align with a majority of the Senate. The big picture: While global warming constitutes the existential threat, there are more immediate projects in the realm of finance that are severely testing the degree to which the international community can effectively coordinate. - A slow-brewing sovereign debt crisis requires creditor countries to coordinate their response not only in Ukraine (that's the easy one) but also in debtor nations from Sri Lanka to Ghana. The much-vaunted G20 / Paris Club Common Framework, designed precisely for such debt workouts, seems to be going nowhere.
- Treasury Secretary Janet Yellen has launched an ambitious attempt to form an oil buyers' cartel; this week she tried to persuade officials from India, Australia, Saudi Arabia, Turkey, and other countries to agree to a price cap for Russian oil. So far, it's unclear how much progress is being made.
- The minimum corporate tax rate, announced with great fanfare more than a year ago, is now looking decidedly moribund, scuppered by a rogue Democratic senator.
What we're watching: Both public and private sector creditors seem willing to grant Ukraine the forbearance it needs on its debt servicing. But that's partly because Ukraine's debts to China are relatively small — and because of Ukraine's geopolitical importance. In less strategically important countries, especially ones where China is a significant creditor, debt workouts are likely to be much more fraught. - Meanwhile, within Europe, countries that are reliant on Russian natural gas are asking the rest of the bloc to show some solidarity by cutting gas consumption by 15%. The answer? No.
Flashback: Even Russia's invasion of Ukraine didn't manage to unite the broader international community. Putin's aggression hasn't been condemned by either China or India. The bottom line: As relations between the U.S. and China continue to be strained, the chances that they'll be able to agree or cooperate on just about anything are dimming fast. |     | | | | | | 2. Wage inflation's winners |  Data: Federal Reserve Bank of Atlanta, Bureau of Labor Statistics; Note: Wage growth is the 12-month moving average of the median 12-month change in hourly wages. Price growth is the 12-month moving average of the 12-month change in the Consumer Price Index; Chart: Simran Parwani/Axios Inflation creates winners and losers, writes Axios' Emily Peck, and right now young Americans can declare victory. Amid all the rumbling about wage growth failing to keep up with resurgent inflation, they've been more than holding their own. The big picture: Wages grew 12% for the youngest workers in June, more than twice the rate for those between 24 and 54, according to data from the Atlanta Fed's wage growth tracker. - "I have two girls in their early 20s, over the last two years they've seen their wages more than double. I hope they don't think this is normal," Crit Thomas, Global Market Strategist for Touchstone Investments, said in an email. He's over 55 and very much not keeping up with inflation, he added.
- Younger Americans are outperforming the olds even in absolute dollar terms. A 3.7% raise on the over-55 median weekly wage of $1,240 is $46; a 12.5% increase on the under-24 median wage of $707 is $88.
Zoom out: It is normal for younger workers, who are just starting out and earning less, to see faster wage growth than their older, more experienced peers. But the spread has never been this wide (as the chart shows). - It helps that in this jobs recovery, the biggest gains are happening at the bottom — with hourly, low-wage, and less-educated workers getting wage increases that have mostly kept up with inflation.
- Inflation is running at 7.2% if you calculate it the same way the Atlanta Fed calculates wage inflation — well behind the rate of wage growth for under-24s, and only 1.6 points behind the rate of wage growth for workers aged 25-54.
The bottom line: These aren't the groups who are likely to fare well in a downturn. They're doing fine amid inflation; a recession would be much worse for them. | | | | | | | | 3. New art in old buildings | | A partially-melted wax sculpture by Swiss artist Urs Fischer, displayed at the Bourse de Commerce - Pinault Collection in Paris. Photo: Christophe Archambault//AFP via Getty Images Where should cities build museums and other cultural centers, if they're already full of buildings? Increasingly, the answer is: Don't build a museum from scratch. Instead, take the hermit-crab approach, and adopt an existing building's shell. Why it matters: Adaptive reuse projects, as they're known, are generally much more environmentally friendly than new builds. They also preserve much-loved older buildings. Driving the news: AEA Consulting's 2021 Cultural Infrastructure Index breaks out adaptive reuse projects for the first time. - Just in the past year, per AEA, 22 adaptive reuse projects were completed and a further 18 were announced.
- The GES-2 House of Culture in Moscow, designed by starchitect Renzo Piano, was bankrolled by Russian gas magnate Leonid Mikhelson to the tune of $379 million. The converted power station features two bright-blue chimneys that are a functional part of an environmentally-friendly HVAC system.
- The Museum of London is in the midst of moving to new digs in the former Smithfield Market, in a project estimated to cost more than $400 million.
The big picture: Many of the most beloved museums in the world, from the Musée D'Orsay in Paris to Tate Modern in London, are housed in structures built in an era when labor and construction costs were much lower than they are today, enabling hugely ambitious architecture. - Even the Louvre is an example of early adaptive reuse: It's basically a palace commissioned in 1546 by King François I of France.
By the numbers: The 22 adaptive reuse projects completed in 2021 collectively cost more than $1 billion, per AEA. There are probably some financial savings involved in reusing existing buildings, but they're not huge. The bottom line: Working within unexpected constraints tends to unleash creativity. Olafur Eliasson's iconic Tate Modern installation The Weather Project, for instance, could never have happened in a more traditional gallery. | | | | | | | | A message from Axios | | The forces shaping the fintech industry | | |  | | | | The Axios Pro: Fintech Deals reporters help you understand what matters, what to watch and what's coming across the media industry this year. Read the report. | | | | | | 4. Lies, damn lies, and volume statistics |  Data: FactSet; Chart: Axios Visuals A stock market mystery has been solved by a group of researchers from Berkeley, Columbia, and Cornell Universities, as the WSJ first reported. The intrigue: In mid-January 2021, the number of Berkshire Hathaway A shares traded every day averaged about 200 — in line with recent trends, or perhaps going down a little. Then by late February the number rose to over 2,000; by early March it was over 3,000. No one knew why. What they found: Traders on Robinhood, Cash App, and other platforms were buying fractional shares of the stock — and those platforms, in turn, started reporting such purchases using what the authors call a "rounding up" rule, in line with oversight group FINRA's requirements that trades be reported as though they were for a whole share. Why it matters: This means that reported volume figures, especially in stocks with high nominal share prices, can't be trusted. 💭 My thought bubble: I remain unclear why we needed a 53-page investigative SSRN paper to find this out. | | | | |  | | | | If you like this newsletter, your friends may, too! Refer your friends and get free Axios swag when they sign up. | | | | | | | | 5. Building of the week: Bombas Gens, Valencia |  | | | | The Bombas Gens arts center in Valencia, Spain, brings the public through a historically important Art Deco facade and into a set of beautifully preserved 1930s warehouses. - The 80,000 square foot museum, designed by Spanish architect Ramón Esteve, also includes a restaurant and a daycare center.
| | | | | | | | A message from Axios | | The forces shaping the fintech industry | | | | | | | | The Axios Pro: Fintech Deals reporters help you understand what matters, what to watch and what's coming across the media industry this year. Read the report. | | |  | | Why stop here? Let's go Pro. | | | | | | Axios thanks our partners for supporting our newsletters. If you're interested in advertising, learn more here.
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