topics

politics-policy

epstein-files

donald-trump

2026-midterm-elections

immigration

behind-the-curtain

race-and-equity

technology

privacy-tech-regulation

automation-and-ai

tiktok-news

big-tech

social-media

cybersecurity

economy

social-security

inflation

tariffs

federal-reserve

jobs

transportation

business

stock-market-news

retail-news

crypto

media

elon-musk

dealmaking

health

rfk-jr

drug-prices

axios-explains-abortion

public-health

world

israel

axios-explains-ukraine

iran

russia

china

energy-climate

nuclear-energy

climate-energy-policy

climate-change

extreme-weather

alternative-energy

electric-vehicles

science

emerging-tech

biomedicine

newsletters

pittsburgh

atlanta

san-diego

charlotte

boulder

washington-dc

kansas-city

dallas

denver

detroit

des-moines

austin

boston

chicago

cleveland

columbus

houston

indianapolis

miami

nashville

new-orleans

nw-arkansas

philadelphia

phoenix

portland

richmond

salt-lake-city

san-antonio

san-francisco

seattle

tampa-bay

twin-cities

raleigh

huntsville

colorado-springs

axios-local

axios-pro

axios-live

the-axios-show

National

Capital

Axios Capital

It's certainly a striking headline: "Markets Conclude the U.S. Is Riskier Than China." And the author should know whereof he speaks: Matthew Winkler, the editor-in-chief emeritus of Bloomberg News, literally wrote the book on how to report on markets. 

But Winkler is wrong. (And/or he has created "an unintentional Sokal Hoax for finance.") Contra Winkler's assertion, the U.S. Treasury does not have to "pay a premium over Chinese bonds to attract investors." To see that, just compare the two countries' bond yields. China sometimes borrows in dollars, so we can compare apples to apples. And the evidence is clear: At every maturity, China pays more than the U.S. does. 

A bond maturing in 2022 yields 3.1%, or 33bp over Treasuries.

A bond maturing in 2023 yields 3.3%, or 50bp over Treasuries.

A bond maturing in 2027 yields 3.5%, or 62bp over Treasuries.

A bond maturing in 2028 yields 3.6%, or 72bp over Treasuries.

A bond maturing in 2048 yields 4.1%, or 96bp over Treasuries.

Winkler is comparing domestic-currency interest rates; he concludes that there's a "dichotomy between the U.S and China in the credit markets." But in doing so he ignores the fact that he's comparing two entirely different currencies. He also makes two category errors.

These numbers aren't about credit. Countries that issue debt in their own currency, like China and the U.S., can always print money to repay that debt. Local-currency bond yields, by definition, are rates, not credit.

There is no correlation between interest rates and riskiness. Italy is a risky country, but the yield on its 1-year notes is only 0.3%. U.K. 1-year bonds, at the height of Brexit chaos, yield 0.8%. Meanwhile, the U.S., which remains the global hegemon and the safest haven in the world, has a 1-year risk-free rate of 2.7%. 

Be smart: Local government-bond interest rates are mostly a function of domestic monetary policy and inflation expectations; they tell you next to nothing about a country's creditworthiness. Neither do they indicate anything about endogenous economic risk. 

Go deeper: The market rally that could signal a coming recession

The U.S. is not a riskier bet than China

At every bond maturity, China pays more than the U.S. does.

Two suitcases overstuffed with cash bearing the Chinese and US flags.

Business

Bonds

World

Top stories & latest news on the Federal Reserve, real-time data, plus the biggest shifts happening in the U.S. and global economy.

Economy

After a record economic expansion, the coronavirus pandemic sent the U.S. economy into a recession as unemployment soared to staggering heights. The country now faces urgent questions about how much stimulus is needed for reeling consumers and businesses, and what a recovery might look like.

Economy & Business

United Technologies is breaking up. General Electric is a shadow of its former self. The great conglomerates of the past, names like ITT and Gulf + Western and Hanson Trust, are dim memories at best. 

The bottom line: Maybe the big cloud providers — Amazon, Microsoft, IBM, Oracle — are in some way the new conglomerates. They don't own the companies they power, but they deliver impressive and valuable synergies all the same. 

The big picture: One of the few conglomerates still alive is Berkshire Hathaway. And it won't long survive the death of its founder, Warren Buffett, who's 88 years old. The other claimants for conglomerate status are the private-equity shops, but they, much like Berkshire Hathaway, are ultimately built on financial engineering rather than genuine economies of scale. 

What they're saying: Edward Hadas reckons that conglomerates are far from dead. "Without the ability to bring disparate businesses and skills together, costs in most firms would be higher, revenues lower and many new and improved products would never have been created," he writes for Reuters. "Diversified enterprises, by one name or another, will play a big role in the business world for a long time."

Hadas doesn't mention the cloud; he should. The reason to build a conglomerate is to centralize certain skills and apply those skills across multiple business lines. You can do that the laborious way, via acquisition and regular senior-management retreats, or you can just move a large part of your business into a cloud that provides state-of-the-art services on demand.

Go deeper: The end of industrial conglomerates

The future of conglomerates is in the cloud

The big cloud providers — Amazon, Microsoft, IBM, Oracle — are the new conglomerates.

Illustration of measuring tape wrapped around a briefcase

Cloud computing

From the Valley to D.C., Big Tech players like Facebook, Google and Amazon are under more scrutiny than ever as new technology develops and privacy and antitrust concerns grow in lockstep with companies’ ambitions.

Technology

The amount of money fleeing into money-market mutual funds hit $81 billion last week, the largest such flow on record. Meanwhile, the flows out of equity mutual funds, at $46 billion, were almost double any other week on record. 

Data: Hedge Fund Research; Chart: Andrew Witherspoon/Axios

The big picture: What you're seeing is a risk-off flight to boring safe assets — which means that now is the worst time in years to try to open up a new hedge fund. Just 450 new hedge funds were opened in the first three quarters of this year, the lowest number in a decade.

The total number of hedge funds and fund of funds is now 9,760, per HFR — down from 10,142 in 2014. The sector isn't imploding, but it has long since stopped growing. 

It's also a bad time to be running an existing hedge fund. Jabre Capital Partners this week joined a long list of other high-profile fund managers — John Paulson, Richard Perry, Highfields, Eton Park, Leon Cooperman and many others — who have decided to return money to their investors rather than keep on struggling in a tough market.

Why it matters: Public equities have rarely seemed less attractive as an asset class, even as big private companies like Uber, Lyft and Slack are set to IPO. If you have a good idea for how to make money in this market, good luck trying to find anybody to bet on you.

Go deeper: A hedge fund titan's lesson from the financial crisis

Why it's the worst time in years to run a hedge fund

What we're seeing is a risk-off flight to boring safe assets.

Hedge funds

On Thursday, online brokerage firm Robinhood announced a new checking account paying 3% interest. It seemed too good to be true. It was. 

The big picture: Checking accounts are extraordinarily powerful things. They're one of the key mechanisms by which banks create money and help to keep the economy growing. They're also the key mechanism behind bank runs that can cause an economy to crash. That's why depositary institutions are the most regulated companies in the world. 

Deposits are a very low-cost unsecured loan from depositors to a bank. They're a stable and cheap source of funding, and non-banks tend to be very jealous of banks' deposit bases. As a result, the non-banks (including Robinhood) constantly try to invent products that look like bank deposits but aren't. When those products blow up (see the Reserve Fund breaking the buck in 2008), the consequences can be catastrophic. 

How it works: If you want to offer a real checking account, you need to submit to regulation not only by a bank regulator, but also by the FDIC, which provides the all-important deposit insurance. Those regulators insist that you have a minimum level of capital, and they ensure that your business model is sustainable. Getting a bank charter for a mobile-native app is extremely difficult: Only Varo Money is even close, and it has spent years getting to this point. 

Banks are the riskiest part of the financial system. Lenders can go bust no problem; their borrowers won't mind. Brokerages are basically safety deposit boxes for your securities. But if a bank fails, it takes your money with it.

Robinhood was trying to game the system. It was a brokerage trying to be a bank. It wanted to get the advantages of being a bank, like deposit insurance and maturity transformation, without the concomitant regulatory oversight. It even contracted with a genuine bank, Sutton Bank of Ohio, to provide things like routing numbers and Mastercard-branded debit cards. But Sutton Bank wouldn't get the money. That would stay at Robinhood.

Robinhood was less than clear about what it wanted to do with its depositors' money, but it seemingly felt happy investing it in bonds for its own account, just like MF Global. Lack of transparency seems to be an endemic problem at the company, which was last valued at $5.6 billion. 

The bottom line: Robinhood took down the checking.robinhood.com site on Friday evening and put up a blog post talking instead about a "cash management program" to be announced at an unspecified point in the future. The "do first, ask forgiveness later" approach, it turns out, doesn't work very well in financial services.

Robinhood's new checking account runs into legal trouble

Robinhood's too-good-to-be-true checking account

Robinhood's "do first, ask forgiveness later" approach doesn't work very well in financial services.

Robinhood

"Corporations are people," said Mitt Romney in 2011, famously, but if they are, they seem to have an impressive degree of impunity.

The big picture: Just like people, corporations display impressive instincts for self-enrichment and self-preservation, even when they're not-for-profits. They're not holding themselves to account, but — unlike real people — no one else seems to be holding them accountable either.

CBS had a "total failure" not only in its C-suite but also at the board level, according to documents obtained by the New York Times. While the sexual harassment by former CEO Les Moonves is on him, the broader culture of denial and multimillion-dollar payoffs and coverups was much more endemic. Yet the result of the board investigation into Moonves is likely to result in CBS keeping — for itself — the $120 million it would otherwise have had to pay him.

At Tesla, the CEO and controlling shareholder openly scoffs at his regulator, the SEC, and the settlement he signed with them. There's no sense that he or Tesla feel any sense of real accountability for his actions.

Multiple non-profits, including the Boy Scouts and USA Gymnastics as well as more than 20 Catholic dioceses and religious orders, have either filed for bankruptcy or are considering doing so in order to head off lawsuits alleging sexual abuse within their organizations. It's a move that wipes out non-existent equity (non-profits don't have equity) while also making it much harder for victims to receive justice.

Why it matters: The proximate cause for the rise of Trumpism was the financial crisis, where no senior bankers were prosecuted even as millions of Americans saw their livelihoods destroyed. That pattern continues to this day, with corporate entities receiving privileges that the 99% could never dream of.

Our thought bubble: Populism will remain a powerful and righteous force in American politics so long as that continues.

Penalties against misbehaving corporations have dropped under Trump

Sexual harassment remains rampant in tech

Pro Rata Podcast: Sexual harassment in Silicon Valley

The lack of corporate accountability

Corporate entities receive privileges that the 99% could never dream of.

Corporate accountability

Get a weekly look at the stories driving the business world

Sign up for Axios Edge

Elon Musk

Breaking climate science and policy coverage as extreme weather events reshape communities. Keep tabs on the race to a low carbon economy, which may be bumpy as governments, climate tech startups and major oil and gas companies race to find their niche amid the changing energy landscape.

Energy & Climate

Republicans and Democrats took to the Sunday morning talk shows to react to Friday's decision by a federal judge in Texas to throw out key provisions of the Affordable Care Act — a ruling that could make its way to the Supreme Court and ultimately impact millions of Americans.

Schumer MTP

What they're saying: Senate Minority Leader Chuck Schumer slammed the conservative judge's decision as "an awful, awful ruling" on NBC's "Meet the Press," claiming that in addition to eliminating protections for pre-existing conditions, it would have far-reaching impacts on funding for opioid treatment, drug prices and women's health issues. Schumer said Democrats would fight the ruling "tooth and nail," and that they would put a vote on the floor "urging an intervention in the case."

"A lot of this depends on congressional intent, and if a majority of the House and a majority of the Senate say that this case should be overturned, it will have a tremendous effect on the appeal. So our first stop is the courts."

Susan Collins

Sen. Susan Collins, who voted for the repeal of the ACA's individual mandate as part of the GOP's tax bill, said on CNN's "State of the Union" that she does not agree with President Trump that this is "a great ruling for our country."

Collins said she thinks the ruling will be overturned, but explained why she thinks the individual mandate is so unpopular: "80% of the people that paid the [individual mandate] penalty earned under $50,000 a year. ... It's telling that when the tax bill was on the floor, not a single Democratic senator offered an amendment to strike the repeal of the individual mandate."

Miller on ACA ruling

Senior White House adviser Stephen Miller said on CBS' "Face the Nation" that "we've always known that Obamacare is unconstitutional" and "never worked."

Miller said he believes that the Supreme Court will uphold the ruling, and that the "more important question" is whether Democrats will work with Republicans to come up with a replacement that protects pre-existing conditions and keeps prices low.

Klobuchar on ACA ruling

Sen. Amy Klobuchar called the ruling "absurd" on CBS' Face the Nation, specifically calling out the Trump administration for its efforts over the past two years to gut the ACA.

"You have an administration ... that basically is just standing while the house is burning down, and instead of going in there and putting out the fire, they're throwing lighter fuel on it. ... Justice Roberts and a conservative court has already ruled that the Affordable Care Act is constitutional, unlike what Mr. Miller said."

Roy Blunt MTP

Sen. Roy Blunt, appearing on "Meet the Press," was less enthusiastic about the ruling than some of his Republican colleagues: "I'm not in the job of questioning what state attorney generals want to do. ... When you challenge something like the Affordable Care Act, an attorney general in Texas doesn't have the obligation of coming up with what the alternatives are."

Pressed by Chuck Todd about Republicans' lack of a coherent solution for health care, Blunt said, "One thing I think that we would be able to unite on is that Medicare for All would wind up meaning Medicare for none."

Federal judge says ACA must be thrown out

Affordable Care Act may be headed back to Supreme Court

Why this ACA enrollment season has been the worst

What we're watching: Washington reacts to Texas' ACA ruling

Sen. Chuck Schumer said Democrats would bring a vote "urging an intervention in the case."

Health Care

Affordable Care Act

Politics

The U.S. health system faces critical questions about cost, access and equity. Technological advances and new discoveries about diseases like cancer and Alzheimer’s are transforming patient care and reshaping public health.

Health

"An explosive court ruling to wipe out Obamacare has revived the acrimonious health care battle in Washington and tossed a political bomb in President Trump’s lap as he gears up to run for re-election," Bloomberg's Sahil Kapur writes.

The big picture: "The case may not be resolved in the courts before 2020, legal experts said, which could make it a defining issue in the race for the White House and Congress...Democrats immediately jumped on the Friday night ruling to warn that health care coverage for millions of Americans was at stake."

The N.Y. Times reports that the Texas ruling "is so sweeping that many legal analysts believe it is likely to be overturned. The Supreme Court, in a 5-to-4 decision, has already upheld the Affordable Care Act’s legality."

But as Axios' David Nather pointed out yesterday: There’s no guarantee that a more conservative Supreme Court won’t just let the law die.

And The Times is right that the volatile debate will now be "center stage in a newly divided capital."

Be smart: Republicans now are going to debate whether they want to take a popular program away from voters — not where a party wants to be. 

Go deeper: Affordable Care Act may be headed back to Supreme Court

ACA ruling tosses "political bomb" into Trump's 2020 re-election bid

The GOP will be forced to debate whether it wants to take a popular program away from voters.

Axios

Sunday's top stories

The U.S. is not a riskier bet than China

The future of conglomerates is in the cloud

Why it's the worst time in years to run a hedge fund

Robinhood's too-good-to-be-true checking account

The lack of corporate accountability

What we're watching: Washington reacts to Texas' ACA ruling

ACA ruling tosses "political bomb" into Trump's 2020 re-election bid

Amazon rethinks bulky, hard-to-ship products with thin profit margins

Activist Democrats question whether Beto O'Rourke is one of them

Southern states won the most auto manufacturing jobs

A new era of hostility in the U.S.-China fight