Posted on

How Research in Space Helps Doctors Treat People on Earth

Medical research in space is leading to advances that could help patients on Earth.

Several technologies developed for space exploration have afterward contributed to medical products. Infrared thermometers, for example, stem from infrared sensors created to remotely measure the temperature of distant stars and planets.

But increasingly, scientists aim to perform research in space specifically for human health. Interest in conducting medical research in space has grown as researchers recognise possibilities enabled by microgravity, in which objects appear to be weightless, aboard the International Space Station, or ISS, which orbits the Earth about 250 miles from its surface.

Removing gravity’s influence alters biological systems, enabling experiments that can’t be done on the ground. Researchers are sending materials into space to study treatments for cancer, heart disease, neurological disorders, blindness and other conditions.

Such investigations extend beyond civilian medicine. With preparations under way for long-term missions to the moon, and eventually to Mars, scientists are advancing technologies to help astronauts endure extended space travel and confront illnesses and medical emergencies.

Justifying the expense

Several factors complicate space-based research. The cost of transporting materials, for one, as well as preparations needed to convert experiments conducted on Earth into ones that can be run on the ISS, which is itself a complicated partnership of five space agencies from 15 countries. The station has been occupied continuously since November 2000.

Space studies’ potential to discover cures and create tools that make healthcare more accessible justify the expense and complexity, some scientists say.

“Everything we do onboard has potential applications for healthcare on Earth,” says Dr. Dave Williams, who conducted neuroscience research on space shuttle Columbia, and is now chief executive of Leap Biosystems, a developer of medical devices for virtual clinical care in space and on Earth.

Space travel itself, for example, is known to cause bone and muscle loss, immune suppression, central nervous system changes and other effects. Detrimental as these effects are, they are of particular interest to scientists.

For the most part, health concerns astronauts develop in space resolve when they return, says Dr. Christopher Austin, former director of the National Center for Advancing Translational Sciences and now CEO of biotechnology startup Vesalius Therapeutics. Studying how this reversal occurs could provide insight on turning back the clock on disorders of aging on Earth, he adds.

Exposure to microgravity seems to replicate the effects of ageing at the cellular level, says Michael Roberts, chief scientific officer of the U.S. National Laboratory on the ISS. As a result, investigators in months can glean insights from studies that might require years of research on Earth.

“What happens in space is akin to accelerated ageing,” says Arun Sharma, assistant professor at the Board of Governors Regenerative Medicine Institute at Cedars-Sinai Medical Center, who says his experience with space research includes sending stem-cell-derived heart cells to the ISS. “We can study these aging processes in a faster way in microgravity.”

Anticancer drug

Meantime, companies including drugmaker Merck and biotechnology concerns Axonis Therapeutics and LambdaVision aim to capitalize on microgravity to improve existing treatments or optimise experimental ones.

Merck has been conducting experiments aboard the ISS to determine whether it can come up with a crystalline form of an anticancer drug in its portfolio, Keytruda. The drug, which treats several cancers, generated $20.9 billion in sales in 2022. Patients receive it in 30-minute intravenous infusions. Its active ingredient, pembrolizumab, a large molecule known as a monoclonal antibody, isn’t highly soluble, so developing a high-concentration liquid formulation that can be given through a simple injection is difficult, says Paul Reichert, a Merck Research Laboratories scientist.

One solution is to produce it in crystallised form, a routine process for small-molecule drugs taken as pills. But making an optimal crystalline suspension is challenging for large-molecule, antibody drugs, Reichert says.

So Merck decided to attempt it in space. In 2017 it sent pembrolizumab to the ISS to see whether crystals would form better in space. Without gravity, molecules move more slowly and forces including convection currents are limited. Crystals produced on the ISS were smaller and more uniform than Earth counterparts, Reichert says.

On the ground, Merck identified techniques to mimic these effects and enable high-quality crystals. Now it is conducting long-term stability research to enable a Keytruda formulation that is injectable and, unlike today’s version, stable at room temperature. That would make it more accessible in areas with limited refrigeration.

Such studies will take years, but could lead to a lower-cost version of Keytruda that is easier to administer and cheaper to transport, Reichert says.

“That would be a game-changer for biologics drug delivery,” he adds.

Surprising results

Sometimes space research yields surprising results.

Biotech startup Angiex sought to better understand how an experimental cancer drug interacted with normal cells lining blood vessels, known as endothelial cells, says Paul Jaminet, co-founder, president and chief operating officer. The problem was these cells, when cultured on Earth, typically die quickly unless they are cultured with growth factors and changed to a proliferative state similar to that of endothelial cells in tumours. As a result, there is no good cell-culture model for the normal endothelial cells in which Angiex’s drugs are expected to have their toxicity, he says.

Angiex’s team hypothesised that culturing them in microgravity would be a solution, sending endothelial cells to the ISS in 2018. The cells did grow in space, but as they adapted to microgravity, they took on unusual characteristics that may not have a counterpart on Earth, Jaminet says.

The findings may advance understanding of how microgravity affects astronauts, he says. “In science, unexpected results are very precious,” he adds.

But since it appears the cells cultured in microgravity don’t resemble normal endothelial cells, and acquired a novel pathological state not previously seen, it isn’t yet clear if these cells are useful for drug-development purposes. Further work, he says, will be needed to understand this novel state and see if it is useful for understanding diseases on Earth.

“When you put cells into a completely new system, you’re going to get intended results and unintended results,” says Dr. Serena Auñón-Chancellor, an astronaut who worked on the Angiex research on the ISS, and a clinical associate professor of medicine for the LSU Health Sciences Center in Baton Rouge.

Axonis in August had good luck with a project to coax two kinds of human brain cells, neurons and astrocytes, to unite into a three-dimensional model of the brain in microgravity. It used the model to test a gene therapy designed to restore neural connections damaged by neurodegenerative diseases or spinal-cord injury.

The experiment provided evidence that Axonis’s gene therapy travels to its intended target, neurons, and avoids astrocytes, says co-founder and Chief Scientific Officer Shane Hegarty. In labs on Earth, neurons and astrocytes would form a carpet-like, two-dimensional layer. This doesn’t fully represent the brain’s complexity and is less useful for advancing the gene therapy, Hegarty adds.

The implications of this research are that scientists could use patients’ own cells to create models of their disease in space to speed their search for treatments, he says.

“For any drug-development effort, you need a good model first,” Hegarty says.

Restoring sight

One long-term research program on the ISS is LambdaVision’s effort to restore vision to people blinded by diseases of the retina, the light-sensitive tissue at the back of the eye.

LambdaVision has flown eight payloads to the ISS since 2016, says Chief Scientific Officer Jordan Greco, adding that the company has found that its artificial retina seems to come together better in microgravity.

Microgravity enables more ordered and even packing of protein molecules onto the scaffold, CEO Nicole Wagner says. If its artificial retina, expected to enter clinical trials in about three years, earns regulatory approval, LambdaVision will manufacture it on the ISS or a commercial space station, she says.

Considering the demand for vision-restoration therapy, reimbursement from insurers should be sufficient to justify this expense, Wagner says. “With artificial retinas, there’s a clear unmet need,” she says.

To convert its lab process into one viable for the ISS, LambdaVision teamed with space-biotech company Space Tango to condense the process into a device that looks like a metal shoebox. The automated system contains proteins, polymers and solutions to assemble the artificial retina layers, and cameras that let researchers monitor and control the process from the ground, Wagner says.

Also using Space Tango is Encapsulate, a biotech with grant funding to launch into space biochips containing micro tumours made from patient cancer cells. The chips could predict an individual’s response to drugs, helping oncologists tailor treatment, Encapsulate co-founder and CEO Armin Rad says.

When adapting scientists’ projects for space “we have to take the human out of it and stuff it all into a box,” Space Tango Chief Strategy Officer Alain Berinstain says. Biotechs also express interest in the automated system for ground use, which was unexpected, he says. “It’s turned into a new business opportunity for us,” he adds.

The National Aeronautics and Space Administration plans a crewed mission to the lunar surface in 2025 and eventually a mission to Mars. Astronauts will require medications for the trip, and they can’t pack every drug they might need, says Phil Williams, a professor of biophysics in the School of Pharmacy at the University of Nottingham.

Medications degrade faster in space because of high radiation levels, says Williams, who is working with NASA researcher Lynn Rothschild on an astropharmacy, a briefcase-like system enabling astronauts to produce medications on demand.

In one version under study, cellular machinery that certain microbes use to make proteins would be combined with genetic sequences that code for specific biological medicines, Williams says. This could be paired with a production system to express the therapeutic protein and DNA-synthesis technology, he adds.

The notion of an astropharmacy extends to other extreme environments. If the technology proves effective in space it could also be used in hard-to-reach locations on Earth, he says.

“If we can make the drug for the astronaut, then we can make it for anybody,” Williams says.

Posted on

America’s Billionaires Love Japanese Stocks. Why Don’t the Japanese?

TOKYO—Japan’s government is on a mission to make buying stocks hot again.

Many of America’s biggest investors are bullish on Japan. Warren Buffett shared that he increased his investments in Japanese companies during an April visit to the country. Ken Griffin is preparing to reopen an office in Tokyo for his hedge fund, Citadel, and investment banks Goldman Sachs and Morgan Stanley have issued optimistic outlooks for Japan’s stock market.

Japan’s problem is this: There are few signs its estimated 125 million residents share in the excitement.

Burned by dismal returns since the bursting of Japan’s asset bubble in the late 1980s and early 1990s, generations of families here have stashed most of their money in low-yielding savings accounts rather than trying to increase their wealth through the stock market.

Japanese households put an average of just 11% of their savings into stocks and 54% in cash and bank deposits, according to Bank of Japan data released last month. That trails well behind the U.S., where households have about 39% of their money tied up in the market and only 13% in cash and bank deposits, according to Federal Reserve data.

Haruyo Arai, a 62-year-old office worker, began investing in the stock market just last month.

“I was brought up by parents who would say, ‘Don’t dabble in stocks,’ ” she said.

Japanese Prime Minister Fumio Kishida has pledged to double households’ asset incomes, in part by encouraging people to invest in risky assets like stocks. The government is raising caps for Japan’s tax-exempt investment system for small investors, the Nippon Individual Savings Account, with changes set to take effect in January. The Tokyo Stock Exchange has been urging companies to boost their valuations and increase shareholder returns.

Arai cited the upcoming expansion to NISA, along with a desire to save more money for the future, as some of the reasons she decided to begin taking investing more seriously. She has been taking weekend classes at Tokyo-based Financial Academy to learn more about stocks and waking up early every morning to watch a TV news program focused on the economy.

Some believe investors like Arai will prove to be the exception, not the rule. Stocks here haven’t hit a record in decades. There isn’t much buzz among ordinary people about investing in Japanese markets.

“I’ve got the impression that Japanese people don’t really think positively about the desire to make money,” said Takashi Kawaguchi, a 48-year-old office worker who, like Arai, has been learning about investing at Financial Academy.

While the 2023 rally has helped lift Japanese stock indexes to 33-year highs, long-term returns pale in comparison to what an investor would have gotten by investing in U.S. stocks. The Nikkei closed at 32,402 on Friday, still 17% below its record hit in 1989. The S&P 500 has grown more than twelvefold over that time. That has made many investors here turn to foreign markets instead of focusing their bets within Japan.

“The Nikkei might hit 40,000, god knows when,” said Heihachiro “Hutch” Okamoto, foreign equity consultant at retail brokerage Monex. “But most of our investors prefer U.S. stocks.”

To Okamoto’s point, the most popular names traded on Monex daily aren’t Japanese stock indexes like the Topix or Nikkei, brand-name companies like Sony or even the “sogo shosha”—the trading houses that Buffett has invested in. Instead, they are all American names: companies like Nvidia, Tesla, Apple and Amazon.com, as well as funds tracking the S&P 500 and the Nasdaq-100.

And that is just among those interested in investing in the first place. While in past years, everyday investors in Japan made a name for themselves with their forays into the foreign exchange market, the overall trading culture here has been one of hesitation.

“Most people here think investing is very risky,” said Hidekazu Ishida, a special adviser at FinCity.Tokyo, which works with the government and the financial industry to try to boost investment in Tokyo. Being into finance comes off as “kakkowarui,” he added, referencing a word for uncool.

Even some heads of companies are lukewarm about the idea of encouraging more individual investors to buy Japanese stocks.

“I’m neutral about that,” said Takeshi Niinami, chief executive officer of whisky and beverage giant Suntory, when asked if he thought it would be a good idea for more Japanese people to invest in the market. Stock investing is risky, he said. And many Japanese people remain wary of participating in the market, because of the severity of prior downturns.

“I think perhaps increasing interest rates is better for people,” he said.

—Chieko Tsuneoka and Alastair Gale contributed to this article

Posted on

Smart Saunas Are Picking Up Steam Around the U.S.

Skiing and saunas go together for Colorado’s Brian and Tucker Humphrey.

The Boulder-based private-equity manager and his wife, a retired banker, first got into the sauna habit in 2017, when they joined her family in setting up a sauna-equipped ski property in the Rocky Mountain resort of Crested Butte. Later, when they built a primary home on a 3/4-acre lot back in Boulder, the couple included a larger, more upscale, high-tech sauna.

The two, working with Studio B, an architecture practice with offices in Boulder and Aspen, spent about $20,000 to create a glass-front sauna cabin. It had an app-ready heater from Finland’s Harvia and a digital control panel. Their architect, Mike Piché, placed the sauna cabin in a separate building, reachable from their new 7,000-square-foot home via a covered section of patio. The Humphreys moved into the finished home in late 2021.

“I like the clean look,” says Tucker Humphrey about the way the cabin fits in with the property’s Nordic feel. More important, she says the digital option is easier to use than the manual version she and her family have in Crested Butte.

Colorado’s Brian and Tucker Humphrey included a digitally controlled heater in their new sauna, inside the wellness building at right. PHOTO: JIMENA PECK FOR THE WALL STREET JOURNAL
Studio B architect Mike Piché extended the Nordic style of the Humphreys’ new 7,000-square-foot Boulder home to their sauna area. PHOTO: JIMENA PECK FOR THE WALL STREET JOURNAL

Until the past few years, home sauna heaters were little more than variations on mid-20th-century electrical appliances. Sauna enthusiasts used manual controls to turn them on, then had to wait around until the sauna was the correct temperature.

Today, smart controls offer users remote on-and-off options and precise temperature measures, and can even track usage over time. In the wake of such technological advances, the U.S. is emerging as the world’s breakout home-sauna market.

Estonia’s Huum, the sauna maker that pioneered smart-control heaters a decade ago, now counts the U.S. as its top-selling market. Finland’s Harvia, which helped launch the first modern home-sauna heater in the 1950s, also places the U.S. among its leading markets. It introduced its smart saunas in 2021.

Saunum, another breakout Estonian brand, began to distribute in the U.S. this year. Its digitally controlled sauna heaters offer the added advantage of more efficiently circulating heat to prevent cooler pockets of air from forming near the bottom of sauna cabins.

Don Genders, founder and CEO of Design for Leisure, a U.K.-based wellness company with a strong presence in the U.S., says home-sauna sales in the States reached $100 million in 2022 and are expected to grow as people focus more on their well-being.

Back in the sauna homelands of Finland and Estonia, smart controls are catching on in the cities, where users have indoor saunas. But vacation homeowners still tend to prefer wood-burning stoves in separate structures when in rustic settings.

In the U.S., smart controls are making saunas particularly popular in ski resorts and mountain communities, says Wes McMahon, owner of Idaho’s Sun Valley Saunas, a local retailer specialising in online sales to Mountain West clientele.

“When you’re driving home, you can turn your sauna on with an app on your phone,” he says. This ability, he adds, has done away with hours spent starting the heater and then waiting for the temperature to rise.

Makers are also reimagining the design of sauna heaters, which hadn’t changed much in decades. Instead of grill-top boxes with some rocks to radiate heat, homeowners can now opt for something sculptural, like Huum’s rock-filled, wire-basket heater called Drop, or something futuristic, like the zigzagging spider legs of the Structure heater from EOS, a Germany-based luxury sauna maker. Or they can just go for something fun, like Huum’s toylike, rock-tower heater called Cliff.

Retired tech executive Alan Saldich, 59, and his wife, Nancy Saldich, 61, a professional gardener, had aesthetics in mind when they added a free-standing sauna to their 5-acre Idaho vacation property in late 2022. The couple, who divide their time between the San Francisco Bay Area and Sun Valley, worked on the sauna cabin themselves, careful to make it blend in with their four-bedroom log house and metal-roof guesthouse. They were mindful of the look of the heater that would go inside.

Alan Saldich says he likes his sculptural wire basket filled with smooth irregular rocks, compared with the plain rectangles of the typical heater. He chose a Huum Hive Mini for $1,410 and included a digital-control feature at a cost of about $875. The add-on smart features were a no-brainer, he says. The couple can turn on their sauna while skiing and save time on the once-mandatory heating-up phase.

Unusual sauna-heater design is a signature of EOS. The company is now distributing in the U.S., following its acquisition in 2020 by the Harvia Group, which is seen as the worldwide powerhouse in saunas. EOS offers spiky, sculptural heaters that can cost more than $10,000. Rainer Kunz, EOS’s chief executive, says the company is planning to add voice-control options to its digital package.

Finland and Estonia trace their Baltic sauna traditions back thousands of years, but it wasn’t until the 1920s that the dry-heat ritual really caught on elsewhere, says Lassi A. Liikkanen, a Helsinki author and sauna consultant. Liikkanen says the breakthrough came when Finnish champion runner Paavo Nurmi credited his gold medals at three consecutive Olympics to his sauna habit.

Some still stick with tradition. Jay Verkler, 59, a Silicon Valley executive who started his career at Oracle in the 1980s, built a simple $7,700 sauna with his five sons in 2020 for their family’s Sierra Nevada vacation home. Verkler and his wife, Tamiko Verkler, 57, have plenty of gadgets, especially in their automated primary home near Palo Alto, Calif. For their sauna, they opted for a basic Harvia wood-burning stove. The couple also keep alive one East European tradition: donning old-fashioned peaked hats during saunas to keep their heads cool.

The standard sauna session entails splashing water on hot sauna stones to create waves of heat. Fifteen or 20 minutes of sitting in temperatures of around 180 degrees is then followed by a rapid cool-down. The whole process is often repeated several times.

During Sun Valley’s long ski season, the Saldiches prefer to cool off by lying in the snow drifts on their property. Down in Boulder, the Humphreys tend to jump into their new outdoor pool.

Wyoming’s Zane Aukee, 33, an attorney based near the Jackson Hole ski area, designed his own sauna cabin. It matches the rustic home he and his wife, Alexandra Eastman, who works remotely with an opera company, bought in 2018. He estimates he spent about $12,000 on his new sauna package.

The free-standing, cedar-clad cabin has a low-tech look, reminiscent of the saunas still popular at Finnish summer houses. But Aukee, who is of Finnish descent, is all in on controlling his heater, installed earlier this year, with his smartphone. “I’m not a huge tech guy,” says Aukee, who uses his sauna up to five times a week. “But I love this combination of technology and sauna culture.”

Budgets for a luxury sauna system can reach six figures. Effe, an Italian company that sells designer sauna systems, offers an app-controlled BodyLove collection–combining a sauna, a steam room and a shower—that starts at $100,000. CEO Marco Borghetti says America is now the brand’s second market after Italy.

Klafs, the German luxury wellness company, is readying its American clientele for a soon-to-be-launched, limited-edition sauna system designed by Studio F.A. Porsche, affiliated with the carmaker. The Klafs S11 sauna, with atmospheric sound and lighting elements, and featuring a Japanese-paper backdrop, is set to have a starting price of $120,000.

Elsewhere on the luxury front, Sarah Broughton, an Aspen-based architect with an upscale residential practice, says her clients are placing more saunas in primary bathrooms, instead of in separate wellness areas. Her clients typically spend $10 million dollars or more on their Aspen homes, and about $20,000 on their bathroom saunas.

In New York’s Catskill Mountains, Brooklyn architect Chad Murphy and his wife, healthcare executive Kristin Ohnstad, both in their 40s, decided to include $15,000 for a ground-floor sauna in a $500,000 gut renovation. The couple paid $140,000 in May 2020 for a 5-acre property in Sullivan County, two hours north of New York City, that came with a derelict 1,800-square-foot home. The sauna is connected to the home’s new gym.

The snowy conditions of the area led to the decision to add the sauna. Murphy designed it himself after consulting online sources. Parents of a newborn, the couple opted for a conventional electric sauna heater, but they make use of contemporary technology with a digital baby monitor, allowing them to take a sauna while keeping an eye on their sleeping child.

Posted on

The Big Family Fight Is Over How to Work. ‘They Think I’m Insane.’

Hybrid work. Hustle culture. Work-life balance.

Tensions over how to work don’t just permeate offices these days. They’re on full display within families.

“They think I’m insane,” Lisa Olson, 53, said of her children when she tells them she skipped lunch during the workday.

Her 25-year-old daughter, Emily Olson, tends to fit her job in advertising around her life, sometimes taking a midday break but also logging on after-hours if there’s work to be done. She thinks her mom struggles to make time for herself.

Like with the Olsons, many of these debates break along generational lines. Many parents in their 50s and 60s built careers in pay-your-dues work environments where 40 hours was the minimum spent in an office each week. They had clear-cut templates for getting ahead.

Their children, in contrast, joined the labor force over the past decade, as the gig economy took off, a pandemic upended 22 million jobs and millions of people embraced working from home. Technologies such as AI are scrambling their careers even more.

These debates about work are often more pointed, and personal, at home than on the job. Parents and their adult children say these conversations are often meaningful in navigating today’s multigenerational workforce.

“These are people who’ve known you all your life—you hope they understand what really matters to you,” said Megan Gerhardt, a management professor at Miami University’s Farmer School of Business and the author of a book about intergenerational workforces.

Emily has worked mostly remotely since graduating from college in 2020. One benefit is that she can integrate errands into her workday. Her mother, who works in financial services, urges her to go into the office.

“When you’re remote, you hop on a Teams call, and you talk about the issue at hand—and you don’t necessarily have extra time in that meeting to chat,” Lisa said.

Emily said that when she does commute to work, she often interacts with co-workers virtually since not all of her team lives in Chicago, where she’s based.

As long as she does good work and is responsive, working set hours in a set place isn’t important to her, she said. When a call was unexpectedly rescheduled to a Friday afternoon, when work is usually winding down, she logged on from the hair salon while getting highlights.

“It doesn’t have to be a rigid workday,” said Emily, who often works more than 40 hours each week.

Lisa, on the other hand, said she spent much of her career leaving for work at 7 a.m., and returning at 7 p.m., five days a week. “In my world, work is a completely separate item from my personal life,” she said.

Kristin Ned, 48, has logged long hours over her career in human resources, ready to respond to emergencies. Her 28-year-old daughter, Maaliyah Papillion, gives priority to rest when she’s not on the clock.

“She and I are not on the same page when it comes to what it takes to get something done,” said Ned, who lives in Lake Charles, La. “I know not everything can happen between 8 a.m. and 5 p.m.”

Papillion started an executive-assistant job this summer in New Orleans. A priority was professional boundaries, especially since she was embarking on a master’s program and had less free time.

“If work is over, work is over,” she said.

One Sunday night, Papillion got a work call. “Can it wait until tomorrow?” she replied. Later, she consulted her mom.

No one wants to make a work call on a Sunday night, Ned said, so it must have been important. Papillion said she now sees that little gestures go a long way, especially when building professional relationships.

Ned said she’s also learned from Papillion’s approach to work, such as when Ned’s company held a back-to-school campaign allowing for more work flexibility as parents adjusted to new school drop-off routines.

“We tried to make it as easy as possible,” she said.

Kendrick Hering, 24, has been patching together temporary gigs in landscaping and fixing up rental properties while he tries to launch his own business as a digital artist. His dad, Doug Hering, wants him to apply for more steady work.

Kendrick lives at home in Colorado Springs, Colo., and pays rent to his parents. He has been applying for more full- and part-time work for months, but with no luck. He also doubts full-time work would come with the job security and benefits that would make all the hustling he’s doing now worth it.

“To actually even find out about a job that I’m probably, just statistically speaking, not going to get, I have to do an exorbitant amount of research,” Kendrick said.

Doug Hering, a 63-year-old financial planner, has recommended his son apply to several jobs each day. He also has suggested he make business cards and perhaps enlist a life or business coach.

“You can’t sit back and do some digital advertising and hope that the floodgates will open,” said Doug, who took Kendrick to a networking event this month.

Lisbeth Darsh, a 57-year-old marketer based in Seattle, said her kids often encourage her to vie for promotions, so that her pay and title reflect her expertise. Her son, Justas Rodarte, 26, said his mum’s skills in writing to engage an audience are hard to match and she is better than he is at social media.

“My son is good at reminding me that there’s great value in what I do, and I owe it to myself to get that value,” Darsh said.

She’s not alone in taking advice from younger generations. About three-quarters of nearly 7,000 workers surveyed worldwide this summer said 20-something co-workers had influenced their attitudes toward issues such as work-life boundaries, fair pay and self-advocacy, according to Edelman, the public-relations firm that conducted the survey.

In the past, employers haven’t fully recognised Darsh’s skills, her son said, but this summer she won a promotion to become a director.

Now, his mum has a position that “fits her skills really well,” said Rodarte, who is pursuing a Ph.D. in immunology. “It’s the sort of thing that I wish I’ll be able to achieve.”

Posted on

More loss, less profit for short term property holders

The number of Australian properties selling at a loss is on the increase, new data from CoreLogic has shown.

The CoreLogic Pain & Gain report for the June quarter revealed sales of properties sold within two years of purchase showed a significant rise in the number of those selling at a loss, up 9.7 percent compared with 2.7 percent a year ago.

CoreLogic Head of Research and report author Eliza Owen said the results reflect the turbulence of the past two years, with the market impacted by COVID and increases in the cash rate.

“Two years is a significant time period because we are two years on from the height of pandemic-related lockdowns, low interest rates, and have just passed the peak of transitions from low fixed rates to high variable rates,” Ms Owen said. 

“The portion of homes sold within just two years increased by one percentage point to 8.5 percent over the past year, however the portion of these short-term resales where the seller incurred a loss has increased more substantially, from just 2.7 percent a year ago to 9.7 percent in the June quarter. 

“This suggests more sellers are willing to incur a loss at the moment, which could in part be the result of high interest rates.” 

The losses were felt in far greater numbers by owner/occupiers, who made up 72.1 percent of short term resales, compared with 27.9 percent for investors. Vendors in regional areas were also more likely to be feeling the pain, an indication that the treechange love affair is over for some.

“Around one in 10 regional Australian property sales were held for only up to two years,” Ms Owen said. 

“A further breakdown of this data by SA4 regions shows some of the highest concentrations of short-term resales were in parts of regional Queensland, including Wide Bay (17.3 percent), the Gold Coast (15.2 percent) and the Darling Downs – Maranoa region (14.4 percent). This suggests that people might be selling up after trying to live, or invest, in more remote regional or lifestyle areas.” 

In good news for potential investors, Ms Owen said the outlook for home values this year was positive.

“The rate of profit-making sales tends to follow capital growth trends,” she said. “With home values continuing to rise through July and August, we estimate the level of profitability from resales will also move higher through the September quarter.” 

Posted on

The insurance product giving Australian property buyers surety

Following significant building industry reforms in NSW in recent years, the insurance industry has entered the apartment sector, offering insurance on quality building projects, for quality trustworthy producers.  As the NSW Government under the administration of the Office of NSW Building Commissioner leads building regulatory change, the need for commercial solutions supporting consumers and those trusted building practitioners could not be timelier.  Enter Latent Defects Insurance (LDI).  Here’s what you need to know about this game changing product.

For more stories like this, order the latest issue of Kanebridge Quarterly magazine here.

What is Latent Defects Insurance?

Latent Defects Insurance (LDI)is an insurance product available around the world for decades but only now available in Australia.  It provides insurance protection for structural defects and waterproofing defects in apartment buildings for a period of 10 years after completion of construction. This is a protection unavailable to consumers or industry previously, and it provides unequalled consumer confidence in the quality of building for purchasers while eliminating the destructive and growing litigation business model operating across the construction industry.

Why would an insurer offer this cover given the stories of poor building?

LDI changes the way building insurance is offered.  Rather than reliance on history and in house certification, LDI requires a developer and builder to employ an independent inspection service all the way through construction. This inspection service must be approved by the insurer and the scope of inspections agreed before construction commences.  The inspection program is detailed and includes design review, construction inspection, waterproofing inspection and testing among many aspects of assurance.  This gives the insurer, the construction participants, and consumers much greater surety of compliance with standards and codes, safety, and delivery, enabling an insurance security to be offered after completion of the building project.

Won’t this insurance only add to the already strained affordability pressures?

No.  In NSW, a developer is required to provide a 2 percent financial bond to NSW Fair Trading at completion securing the quality of building for a period of two years.  This cost, the 2 percent bond is charged to the construction cost and therefore onto the purchaser of units.  If that bond is returned to the developer at the end of two years, it is rarely if ever passed back to those purchasers.  LDI is an alternative to the Strata Bond, meaning that the developer has a choice of providing the two-year bond or a 10-year insurance policy.  The current experience for the cost of the LDI product is it is priced at approximately 1.5 percent.  This means LDI is in fact cheaper than the current bond and reduces the impost on purchasers.

How does this benefit consumers and the building industry?

Latent Defects is a 10-year insurance cover with cover at the building value or $50 million.  The strata bond is a two-year protection valued at 2 percent of the cost of building. The limitations on the value and time offered by the strata bond are and have been catastrophic for many consumers.  It also brings about significant litigation risk for developers, builders, and financiers.  Latent Defects Insurance is offered on a strict liability basis.  That means there is no need to find fault to enable a claim, eradicating the litigation business model that costs all participants tens and often hundreds of thousands of dollars and many years of time and frustration.

Why would a developer not elect to purchase Latent Defects Insurance?

The product is only new to Australia, being offered in the open market in the past 12-months.  Resilience Insurance is the first to offer this product.  The insurance is offered selectively to developers and builders with quality building histories meaning those with a history of association to consumer harms or poor quality outputs will either not be able to obtain the cover.  Other developers have relied on the return of the 2 percent bond in their own profitability models, taking that benefit to their business returns over tangible, transparent delivery and security in favour of their clients. 

How do you ensure your property is protected by Latent Defects Insurance

Prospective purchasers should be asking their developer in the sales display suite if their property will have Latent Defects Insurance.  There is already strong evidence and media reporting of consumers moving purchase decisions on this exact point.  Ask your developer and their agents if you are getting a property with  two years limited protection or 10 years full insurance protection.  For developers, the security provided means that the risk of litigation is eliminated.

CEO of Resilience Insurance, Corey Nugent

CEO of Resilience Insurance, Corey Nugent says:

Latent Defects Insurance is a vital protection for consumers and building practitioners changing the way building outputs are overseen and delivered.  Ensuring quality and backing that product with full insurance protection enables apartment buyers to have confidence in their investment, without the fear of catastrophic future exposures.

Supporting the significant and necessary regulatory reform in NSW, Resilience Insurance has been able to offer this product benefiting confidence, transparency and trust in quality building product.  Providing insurance protection for the benefit of apartment owners, removing the litigation risk for building industry participants and ensuring our apartment buildings are delivered to a quality benchmark are just some of the benefits of Latent Defects Insurance.

Posted on

Inside Apple’s Spectacular Failure to Build a Key Part for Its New iPhones

The new iPhone models unveiled last week are missing a proprietary silicon chip that Apple had spent several years and billions of dollars trying to develop in time for the rollout.

The 2018 marching orders from Apple Chief Executive Tim Cook to design and build a modem chip—a part that connects iPhones to wireless carriers—led to the hiring of thousands of engineers. The goal was to sever Apple’s grudging dependence on Qualcomm, a longtime chip supplier that dominates the modem market.

The obstacles to finishing the chip were largely of Apple’s own making, according to former company engineers and executives familiar with the project.

Apple had planned to have its modem chip ready to use in the new iPhone models. But tests late last year found the chip was too slow and prone to overheating. Its circuit board was so big it would take up half an iPhone, making it unusable.

Investors had counted on Apple saving money with an in-house chip to help compensate for weak demand in the larger smartphone market. Apple—which hasn’t publicly acknowledged its modem project, much less its shortcomings—is estimated to have paid more than $7.2 billion to Qualcomm last year for the chips.

Engineering teams working on Apple’s modem chip have been slowed by technical challenges, poor communication and managers split over the wisdom of trying to design the chips rather than buy them, these people said. Teams were siloed in separate groups across the U.S. and abroad without a global leader. Some managers discouraged the airing of bad news from engineers about delays or setbacks, leading to unrealistic goals and blown deadlines.

“Just because Apple builds the best silicon on the planet, it’s ridiculous to think that they could also build a modem,” said former Apple wireless director Jaydeep Ranade, who left the company in 2018, the year the project began.

There were two reasons for the push, said former Apple executives and engineers familiar with the matter: Apple believed it could replicate the success of the microprocessor chips it designed for iPhones. Adoption of those chips fattened profit margins and improved performance for billions of devices. Second, Apple wanted to sever ties with Qualcomm, which it had accused in a 2017 lawsuit of overcharging for its patent royalties.

The companies settled the suit in 2019, and Apple, facing the expiration of its previous Qualcomm agreement, announced a deal last week to continue buying the company’s modem chips through 2026. Apple isn’t expected to produce a comparable chip until late 2025, people familiar with the matter said. There could be further delays, these people said, but the company believes it will eventually succeed.

Apple found that designing a microprocessor, essentially a tiny computer to run software, was easy by comparison. Modem chips, which transmit and receive wireless data, must comply with strict connectivity standards to serve wireless carriers around the world.

“These delays indicate Apple didn’t anticipate the complexity of the effort,” said Serge Willenegger, a former longtime Qualcomm executive who left the company in 2018 and doesn’t know the current state of the Apple chip. “Cellular is a monster.”

Apple’s push to build more of the various semiconductors used in its products stretches back more than a decade. In 2010, the company began using its own processing chips in iPhones and iPads. The chips helped Apple outperform many of its Android rivals, which relied on chips from Qualcomm, Taiwan-based MediaTek and other makers.

The company in 2020 began replacing processor chips from Intel, used for years in Mac computers, with a proprietary chip that allowed its laptops to run faster and generate less heat, improvements that helped boost flagging Mac sales. The Apple chip also saved the company an estimated $75 to $150 on every computer.

Credit for the success of Apple processor chips brought praise and increased authority to Johny Srouji, the company’s chip leader. “After shipping the first iPhone, we decided that the best way to deliver the best experience to our customers is to own and develop and design our silicon in-house,” Srouji said this year at Technion-Israel Institute of Technology, his alma mater.

Split screen

Apple code-named its modem chip project Sinope, after the nymph in Greek mythology who outsmarted Zeus. It began taking shape in 2018, following the directive of Cook, Srouji, and others for Apple to build its own wireless components, said Chris Deaver, a former Apple human-resources executive and co-founder of BraveCore consultants.

By then, Apple’s relationship with Qualcomm had turned ugly. The companies bickered and swapped accusations of lying, theft and monopolistic practices.

Rubén Caballero, Apple’s longtime head of wireless, supported the Intel chip partnership at the time, while Srouji, senior vice president of hardware technologies, backed the pursuit of a company-built chip, said people involved in the project. Caballero left Apple in 2019.

Many members of Caballero’s team who were versed in wireless chip design were placed under Srouji. Other employees engaged in complementary wireless work, such as antenna design, were split off into the hardware engineering group. One of the top project managers on Srouji’s team had no background in wireless technology, said people who worked on the project.

Apple, which had been poaching engineering talent from Qualcomm for years, stepped up those efforts in March 2019. The company announced a new engineering hub in San Diego, Qualcomm’s hometown, and planned to add around 1,200 local jobs. That summer, Apple announced the acquisition of Intel’s wireless team and a portfolio of wireless patents.

Srouji flew to Munich to greet Apple’s newly acquired Intel wireless employees in December 2019. He told a gathering that the modem-chip project would be a game changer for Apple, the next step in the company’s evolution, said people who watched the meeting. He said the chip would distinguish Apple devices, as Apple’s processors had done.

As Apple filled the project’s ranks with Intel engineers and others hired from Qualcomm, company executives set a goal to have the modem chip ready for fall 2023. It soon became apparent to many of the wireless experts on the project that meeting the goal was impossible.

Apple found that employing the brute force of thousands of engineers, a strategy successful for designing the computer brain of its smartphones and laptops, wasn’t enough to quickly produce a superior modem chip.

Tall order

Modem chips are trickier to make than processing chips because they must work seamlessly with 5G wireless networks, as well as the 2G, 3G and 4G networks used in countries around the world, each with its own technological quirks. Apple microprocessors run software programs designed solely for its iPhones and laptops.

Apple executives who didn’t have experience with wireless chips set tight timelines that weren’t realistic, former project engineers said. Teams had to build prototype versions of the chips and certify they would work with the many wireless carriers worldwide, a time-consuming job.

Executives better understood the challenge after Apple tested its prototypes late last year. The results weren’t good, according to people familiar with the tests. The chips were essentially three years behind Qualcomm’s best modem chip. Using them threatened to make iPhone wireless speeds slower than its competitors.

The company scratched plans to use the chips in Apple’s 2023 models, and the planned rollout was moved to 2024. Eventually, Apple executives realized the company wouldn’t meet that goal either. Apple instead opened negotiations with Qualcomm to continue supplying the modem chips. Apple’s licensing deal with Qualcomm expires in April 2025, though it can be extended for another two years.

Apple has the cash and the desire to keep pursuing its modem chip, according to people involved with the project.

“Apple isn’t going to give up,” said Edward Snyder, a managing director of Charter Equity Research and a wireless industry expert. “They hate Qualcomm’s living guts.”

Posted on

Higher Interest Rates Not Just for Longer, but Maybe Forever

On Wednesday, Federal Reserve officials surprised markets by signalling interest rates won’t fall as much as previously planned.

The tweak might be more important than it looks. In their projections and commentary, some officials hint that rates might be higher not just for longer, but forever. In more technical terms, the so-called neutral rate, which keeps inflation and unemployment stable over time, has risen.

This matters to any investor, business or household whose plans depend on interest rates over a decade or longer. It could explain why long-term Treasury yields have risen sharply in the past few months, and why stocks are struggling.

The neutral rate isn’t literally forever, but that captures the general idea. In the long run neutral is a function of very slow moving forces: demographics, the global demand for capital, the level of government debt and investors’ assessments of inflation and growth risks.

The neutral rate can’t be observed, only inferred by how the economy responds to particular levels of interest rates. If current rates aren’t slowing demand or inflation, then neutral must be higher and monetary policy isn’t tight.

Indeed, on Wednesday, Fed Chair Jerome Powell allowed that one reason the economy and labor market remain resilient despite rates between 5.25% and 5.5% is that neutral has risen, though he added: “We don’t know that.”

Before the 2007-09 recession and financial crisis, economists thought the neutral rate was around 4% to 4.5%. After subtracting 2% inflation, the real neutral rate was 2% to 2.5%. In the subsequent decade, the Fed kept interest rates near zero, yet growth remained sluggish and inflation below 2%. Estimates of neutral began to drop. Fed officials’ median estimate of the longer-run fed-funds rate—their proxy for neutral—fell from 4% in 2013 to 2.5% in 2019, or 0.5% in real terms.

As of Wednesday, the median estimate was still 2.5%. But five of 18 Fed officials put it at 3% or higher, compared with just three officials in June and two last December.

In 2026, officials project the economy growing at its long-term rate of 1.8%, unemployment at its long-run natural level of 4%, and inflation at its 2% target. Those conditions would normally be consistent with interest rates at neutral. As it happens, officials think the fed-funds rate will end the year at 2.9%—another hint they think neutral has risen.

There are plenty of reasons for a higher neutral. After the global financial crisis, businesses, households and banks were paying down debt instead of borrowing, reducing demand for savings while holding down growth and inflation. As the crisis faded, so did the downward pressure on interest rates.

Another is government red ink: Federal debt held by the public now stands at 95% of gross domestic product, up from 80% at the start of 2020, and federal deficits are now 6% of GDP and projected to keep rising, from under 5% before the pandemic. To get investors to hold so much more debt probably requires paying them more. The Fed bought bonds after the financial crisis and again during the pandemic to push down long-term interest rates. It is now shedding those bondholdings.

Inflation should not, by itself, affect the real neutral rate. However, before the pandemic the Fed’s principal concern was that inflation would persist below 2%, a situation that makes it difficult to stimulate spending and can lead to deflation, and that is why it kept rates near zero from 2008 to 2015. In the future it will worry more that inflation persists above 2%, and err on the side of higher rates with little appetite for returning to zero.

Other factors are still pressing down on neutral, such as an aging world population, which reduces demand for homes and capital goods to equip workers.

So neutral has probably risen since 2019, but not to its pre-2008 level. Indeed, futures markets peg rates a decade from now at around 3.75%.

Of course, this is all just a forecast. If inflation comes down painlessly in the next year, if growth slows abruptly, or if Treasury yields drop, then estimates of neutral will also come down. For now, the evidence suggests the public should get used to higher rates as far as the eye can see.

Posted on

The Sustainable Living issue

The spring issue of Kanebridge Quarterly magazine is a deep dive into all things sustainable, starting with our cover story on the future look, feel and function of our cities. We showcase the most incredible developments in the country, from luxury high rise on the Gold Coast to a carbon zero development in Sydney.

For investors, we investigate how to build wealth through sustainable companies, as well as understanding the value of supporting B Corp certified businesses. Plus, we look at what it takes to join the one percent of Australia’s wealthiest individuals.

Then, we’re off exploring the world of sustainable travel, the life changing benefits of EVs, as well as touring some of Australia’s most beautiful, thoughtfully designed homes.

Plus:

  • Akira Isogawa – the legendary fashion designer on the circular economy, fashion waste and finding a purpose in life
  • Spotlight on Geelong – the sleep satellite city sets its sights on a bright future
  • David Chandler’s legacy – how the Building Commissioner is bringing confidence back to buyers
  • Going troppo – the cost of maintenance for investment properties in the tropics
  • Back to the bush – tour this quietly stunning architect designed bushfire resistant home

You really don’t want to miss it.

Read now 

Posted on

Big weekend as property auction numbers surge

The residential real estate market experienced the busiest week of the year to date over the weekend as listings across the capitals surged, CoreLogic data shows.

The number of auctions listed last weekend were up 17.8 percent on last weekend, with 2,725 homes ready to go under the hammer. It’s more than double the number of properties listed this time last year when a number of events, including the passing of Queen Elizabeth II and the AFL Grand Final impacted listings.

Sydney lead the number of properties set to go to market, with 1,094 homes scheduled for auction, a 18 percent increase on last week. Melbourne followed close behind, with 1,083 properties listed. While figures in other capitals such as Brisbane (238 homes) and Adelaide (182) were more modest, they also represented the greatest auction activity in those cities this year.

In signs buyer confidence is delicately balanced, the clearance rate dipped slightly last weekend, down 1.4 percent to 64.4 percent, the lowest combined capital clearance rate since Easter.

Posted on

Apple Watch Series 9 Review: Why the Watch Isn’t as Useful as It Could Be

If you asked me, “Should I upgrade my Apple Watch to the Series 9 this year?” I’d probably say no.

It’s a fine watch. It’s just not much better than the Series 8, which you can get cheaper, even refurbished right from Apple.

I have been testing the $399-and-up Series 9 for nearly a week. Available on Sept. 22, it includes a few upgrades, including a one-handed, double-tap gesture and a brighter screen. Apple says one version of it—the aluminum case with Sport Loop band—is carbon neutral.

Many things, though, remain unchanged from last year’s, including the health sensors and design. I’m most grumpy about the battery life. Back in 2015, Apple promised 18 hours. Today, Apple promises…18 hours. Eight years and a dozen models later, we still need to charge these watches daily.

The Apple Watch is the bestselling smartwatch in the world, but battery life is where competitors such as Garmin still have an edge. It’s what holds the Apple Watch back from true all-day/all-night/all-weekend usefulness.

Double tap and new features

The improvements to the Series 9 are internal, enabling new features that are nice-to-haves. There are no game-changers.

Double tap: The new watch senses when you pinch your thumb and index finger twice, in quick succession. The gesture triggers an action that varies depending on what you’re doing. If you’re playing a song, you can double-tap to pause or skip. For incoming texts, it starts a reply with voice dictation. For calls, it picks up the phone. For timers, it dismisses the alert.

Double tap will come in an update rolling out next month. It’s useful for one-handed operation, while you’re holding on to a subway pole or cup of coffee. It also works while you’re wearing gloves.

A similar accessibility feature called AssistiveTouch is available on Series 4 models and newer. You can even double-pinch to dismiss notifications. In my tests, AssistiveTouch wasn’t always as responsive as double-tapping on the Series 9, but if you already have an Apple Watch, it’s worth enabling.

Offline Siri: Apple’s voice assistant can now process some queries faster and more accurately, because it doesn’t need to send the request to the server over Wi-Fi or cellular. You can set timers—even multiple timers in the WatchOS 10—almost instantaneously.

Brighter screen: The display goes up to 2,000 nits, up from 1,000 nits last year. If you don’t speak nits, that translates to a screen that’s easier to see outdoors on a sunny day. Its dimmest setting is also lower, way down to one nit. The Apple Watch adjusts screen brightness automatically based on ambient light, so the brighter screen isn’t noticeable in most settings.

Precision iPhone finding: I use my Apple Watch’s Find My iPhone ping basically every day, so I thought I’d like precision finding. When you’re within about 30 feet of the iPhone, you can see its distance and direction—similar to an AirTag. It’s nice for those who might be unable to hear the audible ping triggered by older models, but that never failed me. And this trick only works with an iPhone 15 model.

Stalled battery life

In its quest to make the smartwatch a jack-of-all-trades wearable with a high-resolution, multitouch screen, Apple has sacrificed battery life. The new S9 processor is 25% more power efficient than last year’s model. But over the years, the company has added more sensors, brighter screens and other energy-sucking elements.

During the watch’s recent unveiling, Deidre Caldbeck, the director of Apple Watch product marketing, highlighted the company priority: “This powerful custom silicon is what allows us to maintain all-day 18-hour battery life while adding new features and systemwide improvements.”

Garmin wearables, meanwhile, have lower-resolution displays that can last days. Some models have solar panels embedded in their watch faces, and can last weeks. It’s something I’m painfully reminded of every time I forget my Apple Watch charger on a weekend trip. Cue the gloating by my Garmin-wearing husband, who never brings his charger.

Apple often touts the watch’s health-tracking capabilities in marketing materials. For this to work, though, it has to be on your wrist—even at night, while you sleep. That’s tough when it needs to be charged once a day.

Charging wouldn’t be as problematic if the Apple Watch didn’t need its own proprietary puck to power up. (Garmin’s new Vivomove Trend is one of the first to work with standard Qi wireless charging.)

I’m not saying Apple Watches are useless without default multi day battery life. I wear mine so often that I have a squircle-shaped tan on my wrist. But a battery-life quantum leap is needed.

That could be coming next year. The Apple Watch was announced 10 years ago next fall, and that anniversary could mean a big redesign. According to a Bloomberg report, a new band system could make room in the watch’s case for more sensors—or, I hope, a bigger battery—and a switch to a more energy-efficient microLED display could lead to power gains.

How to get longer battery life

If you want the longest battery life right now, there’s the $799 Apple Watch Ultra. It lasts a day and a half by default. But even the new, modestly upgraded model is a bulky chunkster, especially on smaller wrists. Anyone else looking for a big Apple Watch change should wait until 2024.

Meanwhile, you can temporarily double the battery life by taking away power-draining features.

• Enable low-power mode: You can quickly enable low-power mode for set periods. Press the side button to open the Control Center, then tap on the battery percentage and scroll down.

Just beware: It does disable some of the lifesaving heart-rate notifications and the power-hungry always-on display. When double tap is available, low-power mode will also disable that gesture.

• Reduce workout sensor readings: Go to Settings > Workout, then tap Fewer GPS and Heart Rate Readings to enable. When in low-power mode, the watch won’t capture GPS or heart-rate data as frequently during outdoor workouts, further extending battery life.

You can also disable some functions. I managed to squeeze 48 hours out of the Series 9 by turning off the most battery-intensive ones, but it’s a trade-off:

• Double tap: When the feature rolls out to Series 9 models next month, you can turn it off. Go to Settings > Gestures > Double Tap to disable.

• Always-on display: Go to Settings > Display & Brightness. Tap Always On to disable.

• Background app refresh: Go to Settings > General. Scroll down to Background App Refresh to disable entirely or turn off for certain apps.

• Reduce display brightness: In Settings > Display & Brightness, you can adjust the default setting.

Posted on

Bentley’s 2023 Continental GTC Speed: A Cheetah in a Lion Suit

To most driving enthusiasts, there is nothing as pleasurable as a warm day tooling round country roads in a ragtop. The smell of freshly mown lawns wafts in your nostrils; the sun’s rays bathe the atmosphere in warm tones. It doesn’t get much better.

Well, actually it does. Make the car a Bentley Continental GT. Glutton for more fun? Make that Bentley a convertible, or GTC Speed. Recently, Penta had the opportunity to wend our way around Sullivan County, New York, and put a GTC Speed through its paces.

The Drive

Given its weight, at roughly 4,800 pounds, it is no surprise that it offers a solid feel and holds the road without much effort. The GTC Speed feels a bit like a land yacht, but in a good sense. That is, when you climb aboard you know right away that you’re in for a treat and that the ride could take you anywhere. And like the U.S. Navy, the GTC Speed (standard MSRP US$317,000) projects power.

The car we drove was priced at US$379,00 because it was ladled with cushy options like a custom-made sound system, so that you can share your musical faves with your neighbours; 22-inch wheels for better grip and handling; and a high-gloss fibre finish, among many other accoutrements. A king’s ransom? Yes. However, the Bentley is often measured against the Ferrari Roma or the Mercedes Benz S65 AMG. That’s rarefied competitive air. The engineers in Crewe, England, pride themselves on making sure this GTC is capable of taking you on a long drive comfortably at 90 mph as well as on a quick run to the local grocery store. Think of a cheetah in a lion’s suit, and you get the picture.

It tops out at 208 mph, in case you need a latte really quickly. We took it to 161 mph in sport mode for a few moments and enjoyed a marvellous and mischievous thrill ride, and no smokies with radar guns. For obvious reasons, what interstate we managed this is a top business secret. [But don’t try this at home!] And if you love big engines, note that next year’s models will be the last with such W-12 muscle, part of a greener Bentley, as Penta has previously reported.

The Specs

The vast hood hides a 6.0-litre, twin-turbocharged W12 engine, a monster that delivers bold power as well more graceful manoeuvring than otherwise might be expected from such a heavy car. The horsepower is rated at 650 and the car obtains gas mileage of 15 city and 22 highway. Bentley says it will do 0 to 60 mph in 3.6 seconds. Other Bentley Continental GTs are available with a V8 engine, for those more concerned about the environment.

The Bentley GTC Speed offers four driving modes: Comfort mode is a likeable combination of a speedy roadster that will take you to 100 mph, before you even notice. Call it relaxed cruising.

Move to Sport mode and the GTC does its unique version of a squat thrust, and off you go. Sport mode optimises the engine, transmission, and suspension to boost dynamic ability, and when engaged, it should be immediately felt by the driver. And the engine, normally quiescent, begins to roar through the two exhausts in the rear. The other modes are Bentley, a combo of sport and comfort, and Custom. The chassis system features rear-wheel steering, which improves cornering at speed.

The color of the model we drove is called Kingfisher.
Vito Racanelli

From the front, back, or side it’s a handsome car, and certainly gets its share of acknowledging looks from pedestrians. The Bentley GTC driver quickly learns to recognise the envy of onlookers and other drivers. The colour of the model we drove is called Kingfisher. We plebs would say it was a sweet shade of light blue. OK, Kingfisher, if you must. The GT hardtop is just US$259,000 before options but we recommend the GTC Speed convertible, unless you live way up North. The Bentley line up consists of a range of GT and GTC models that can be customised for engine size and hp; convertibles and hardtops; and colours, etc., among other accoutrements.

The Cabin

In a few words, luxurious and spacious for the front two passengers, but little room for others in the back seat. It’s a GT 2+2, typical in that the back seats are negligible for humans. As we tested a convertible, we shoehorned a 6-footer into the back seat with the top down, but the advantage of being able to lick your knees was somehow lost on our uncomfortable passenger. Best to keep the backseats to dogs or children.

What’s Not to Like

Penta has noted in other expensive luxury sports competitors to Bentley: the invasion of plastic in the cabin. Yes, it lightens the car’s weight, improves performance, yadda, yadda, yadda. But even a little is a lot for cars at this price level. This Bentley does have plastic here and there in the cabin. Not a lot, but really, one might expect control knobs made of gold in this price range. And the gasoline tank dial could be bigger and better placed, but you get used to it. Maybe you don’t want to see, or care, for that matter.

At the end of a long summer’s day driving the GTC Speed, you feel as if you are in a fast and mobile Four Season’s Suite.

Posted on

The Yuan and Yen Need the Fed’s Help. They Might Not Get It.

All eyes are on the Federal Reserve meeting this week. Central bankers at Asia’s two largest economies will be paying extra attention.

The Chinese yuan and Japanese yen are both hovering at their lowest levels against the dollar in more than a decade. The yuan has lost 13% versus the dollar since the beginning of 2022 while the yen has dropped 22%.

Both countries are grappling with weakening currencies—but their economies are in quite different situations. China must ward off deflation as its real estate implosion continues to weigh on industry and consumer sentiment. Japan, on the other hand, is contending with its highest inflation in decades.

Yet there are some important similarities too. Both countries’ central banks have pursued relatively loose monetary policies as growth challenges have mounted—in contrast with most other developed economies, which have been raising rates rapidly. China has been cutting interest rates and the amount of cash banks must hold in reserve to juice up its economy. Japan is hesitant to give up its longstanding policy of targeting ultra low interest rates in fear that the country could eventually slip back into deflation or near-deflation, too—a problem it wrestled with for years in the wake of its own burst asset bubble in the 1990s.

Widening interest rate differentials with the U.S. have put both currencies under pressure. Yields on Japan’s 10-year government bonds are 3.6 percentage points lower than on U.S. equivalents. The difference between Chinese and U.S. bonds is 1.7 points.

Both currencies have nonetheless staged a modest rebound from their lows lately. The People’s Bank of China warned speculators not to bet against the yuan earlier this month. Around the same time, Bank of Japan Gov. Kazuo Ueda told domestic media that an end to the BOJ’s negative rate policy could be in the cards if its 2% inflation target is sustained.

The risk of capital outflows probably makes China uneasy. It saw net outflows pick up to $42 billion in August, the fastest pace since 2016, according to Goldman Sachs. Given the country’s semi-closed capital account, there are many tools it can employ to slow the pace of depreciation. Borrowing costs for the offshore yuan have gone up, which could deter some short-term speculators.

Yet ultimately, economic fundamentals—and monetary policy—will still drive the yuan’s trend. While the Fed looks likely to pause its rate increases, a stronger-than-expected economy could keep U.S. rates higher for longer. To stabilise its economy, China will likely need more monetary and fiscal stimulus than has been unveiled so far—meaning an even higher interest rate differential and probably, higher imports once fiscal stimulus starts to kick in. Both of those will tend to weigh on the currency, especially if U.S. rates stay parked at their current high level in 2024.

In Japan, meanwhile, the central bank looks likely to tighten eventually as it becomes more confident that inflation—at a low level—has become more baked into households’ expectations. Japan’s core inflation, which excludes fresh food, has stayed above the central bank’s 2% target for more than a year already. Japan’s 10-year government bond yields rose to their highest level since 2014 recently.

China and Japan’s plunging currencies may chart different paths going forward—especially since the yen is already down so far against the dollar over the past two years. But they could both use an assist from the Fed, which may not be forthcoming for quite a while.

Posted on

The Latest EVs Are Taking to the Water

The electric boat market, until now confined to specialty builders, is going mainstream. Just as some central cities in Europe and the U.S. are being closed to internal-combustion cars, so are some lakes and rivers requiring electric power—both for the quiet and the absence of pollution.

At the Consumer Electronics Show in January, Brunswick Corp.’s Mercury Marine division introduced the Avator 7.5e electric outboard motor (US$3,250) for small boats, with 750 watts of power—the equivalent of a conventional 3.5-horsepower unit. Brunswick’s 13-foot Veer X13 boat (US$11,995) will pair with the 7.5e.

The 7.5e electric motor provides quiet and non-polluting cruising.
Mercury Marine photo

And at a New York boat show event Sept. 19 at Chelsea Piers, on Manhattan’s far West Side, the company showed off two larger variations, the 20e (US$8,792) and 35e (US$9,192), with 2,200 and 3,700 watts of power, respectively. The larger of the two offers the power equivalent of a 10-horsepower Mercury outboard.

“Electrification is going to be an important part of the future for marine,” says Dave Foulkes, CEO of Brunswick. “But I think we’ll need a portfolio of solutions, including alternative fuels. E-fuel (gasoline made from sustainably produced hydrogen and captured carbon dioxide) is certainly fascinating.”

Mercury Marine has so far sold 2,000 of its 7.5e electric outboards internationally, Foulkes says. “The 7.5e has only been on the market since April, so we think that volume is high in the marine space. We’re seeing lots of interest at regulated lakes in Europe and other locations.”

The motors are connected to the company’s lithium-ion batteries, made by the Mastervolt division. The 7.5e comes with a basic one-kilowatt-hour battery pack. On the 20e, which has a larger 2.3-kilowatt-hour pack, up to four units can be put together for a half-day of cruising. The 35e comes with a 5.4-kilowatt-hour battery.

Perissa Bailey, vice president and general manager at Mercury Marine, says that Austria, Sweden, and the Netherlands are three countries with major buy-in for the electric outboards. The interest in the U.S. is growing a bit more slowly. “But a segment of the population is looking for more sustainable solutions, and they’re going electric in other parts of their lives,” Bailey says. “Rather than have those early adopters leave our brand we’re coming up with alternatives for them.” Bailey says that two new Avator products will be announced shortly, and that there’s interest in higher-horsepower electric marine motors.

Brunswick is also offering a Navico Fathom e-power battery pack that can replace the polluting generators on larger boats and, through a recent acquisition, the Fliteboard electrically powered eFoil surfboard. The US$13,195 Ultra L model, with a 14-pound lithium battery, can fly above the water at speeds of up to 28 miles per hour. There is 45 minutes of cruising and a one-hour recharge time.

The Avator 7.5e will power small boats, like these Quicksilver inflatables and 13-foot Veer X13 at Chelsea Piers.
Brunswick Corporation photo

The development of electric boats paralleled that of cars, and both had initial heydays around the turn of the 20th century. Wealthy people bought electric launches that were elaborately furnished with velvet cushions and stained-glass windows. The boats were for slow cruising on relatively still bodies of water, such as lakes.

At the Chicago World’s Fair in 1893, 55 electric launches built by a company called Elco gave a million rides. Elco launched the Wenona in 1899; it was a 32-foot launch with five-horsepower power that quietly glided at seven miles per hour and could last eight hours on a charge. Wenona is still running on Lake George, and Elco is still in business making electric boat motors. The largest of its units produces the equivalent of 14 horsepower.

Battery advances have made larger electric boats practical. Norway’s MV Ampere ferry, with a one-megawatt battery, can carry 120 cars. Launched in 2022, the MS Medstraum is a zero-emission fast ferry that plies Norwegian waters. It reduces emissions by the equivalent of 30 operating diesel buses in a year.

With their large surface area, passenger boats can also host solar panels that increase electric cruising range. PlanetSolar, a catamaran yacht, circumnavigated the planet in 2012.

All this makes it seem that electric power for boats is imminent, but Tom Hesselink, executive director of the Electric Boat Association of America and a 30-year builder of EV craft in North Carolina, says that the industry is “very transitional right now. How fast it will transition is questionable. I don’t expect to see big changes in the U.S. industry anytime soon, though it’s moving much more rapidly in Europe—where there’s more environmental awareness.”

Hesselink adds that “there’s still a big power-to-weight advantage for gasoline. The motors are fine, but it’s the batteries that are the issue.” Foulkes echoes that sentiment. “Electric power is still not a solution for larger mainstream recreational boats,” he says.

Posted on

Is China’s Economic Predicament as Bad as Japan’s? It Could Be Worse

HONG KONG—Starting in the 1990s Japan became synonymous with economic stagnation, as a boom gave way to lethargic growth, declining population and deflation.

Many economists say China today looks similar. The reality: In many ways its problems are more intractable than Japan’s. China’s public debt levels are higher by some measures than Japan’s were and its demographics are worse. The geopolitical tensions that China is dealing with go beyond the trade frictions Japan once faced with the U.S.

Another headwind: China’s government, which has been cracking down on the private sector in recent years, seems ideologically less inclined than Tokyo was then to support growth.

None of this means China is sure to repeat the years of economic stagnation that Japan is only now showing signs of exiting. It has some advantages that Japan didn’t. Its economic growth in coming years is likely to be well above Japan’s in the 1990s.

Even so, economists say the parallels are a warning for Communist Party leaders in Beijing: If they don’t act more forcefully, the country could get stuck in a protracted period of economic sluggishness similar to Japan’s. Despite piecemeal steps in recent weeks, including modest interest-rate cuts, Beijing has held back on major stimulus to revive growth.

“China’s policy responses so far could put it on track for ‘Japanification,’” said Johanna Chua, chief Asia economist at Citigroup. She believes China’s overall growth prospects could be slowing more sharply than Japan’s.

China today and Japan 30 years ago share many similarities, including high debt levels, an aging population and signs of deflation.

During a long postwar economic expansion, Japan became an export powerhouse that American politicians and corporate executives worried would be unstoppable. Then in the early 1990s, real estate and stock market bubbles burst and the economy hit the skids.

Policy makers cut interest rates to virtually zero, but growth failed to rebound as consumers and companies focused on repaying debt to repair their balance sheets instead of borrowing to finance new spending and investment.

Richard Koo, an economist at the research arm of Japanese investment bank Nomura Securities, famously coined the term “balance sheet recession” to describe the phenomenon.

China, too, has seen a property bubble pop after years of extraordinary economic growth. Chinese consumers are now paying off mortgages early, despite government efforts to get them to borrow and spend more.

Private firms are also reluctant to invest despite lower interest rates, stirring anxiety among economists that monetary easing might be losing its potency in China.

By some measures, China’s asset bubbles aren’t as big. Morgan Stanley estimates that China’s ratio of property value to gross domestic product peaked at 260% in 2020, up from 170% of GDP in 2014; home prices have only fallen slightly since the peak, according to official data. China’s equity markets hit a recent peak of 80% of GDP in 2021 and now sit at 67% of GDP.

In Japan, land values as a percentage of GDP reached 560% of GDP in 1990 before falling back to 394% by 1994, Morgan Stanley estimates. The Tokyo Stock Exchange’s market capitalisation rose to 142% of GDP in 1989 from 34% in 1982.

Also in China’s favour, its urbanisation rate is lower, standing at 65% in 2022, versus Japan’s, which was at 77% in 1988. That could give China more potential to raise productivity and growth as people move to cities and take on nonagricultural jobs.

China’s tighter control over its capital markets means the risk of a sharp appreciation of its currency, which would harm exports, is low. Japan had to deal with a sharp increase in its currency several times in recent decades, which at times added to its economic struggles.

“We believe worries on China being trapped in a balance sheet recession are overdone,” economists from Bank of America recently wrote.

Yet in other ways, China’s problems will be harder to tackle than Japan’s.

Its population is ageing faster; it began to decline in 2022. In Japan, that didn’t happen until 2008, nearly two decades after its bubble burst.

Worse, China appears to be entering a period of weaker long-term growth rates before reaching rich-world status, i.e. it is getting old before it gets rich: China’s per capita income was $12,850 in 2022, much lower than Japan in 1991 at $29,080, World Bank data shows.

Then there is the problem of debt. Once off-balance-sheet borrowing by local governments is factored in, total public debt in China reached 95% of GDP in 2022, compared with 62% of GDP in Japan in 1991, according to J.P. Morgan. That limits authorities’ ability to pursue fiscal stimulus.

External pressures also appear to be tougher for China. Japan faced a lot of heat from its trading partners, but as a military ally of the U.S., it never risked a “new Cold War”—as some analysts now describe the U.S.-China relationship. Efforts by the U.S. and its allies to block China’s access to advanced technologies and reduce reliance on Chinese supply chains have sparked a plunge in foreign direct investment into China this year, which could significantly slow growth in the long run.

Many analysts worry Beijing is underestimating the risk of long-term stagnation—and doing too little to avoid it. Moderate cuts to key interest rates, lowering down payment ratios for apartments and recent vocal support for the private sector have done little to revive sentiment so far. Economists including Xiaoqin Pi from Bank of America argue that more coordinated easing in fiscal, monetary and property policies will be needed to put China’s growth back on track.

But President Xi Jinping is ideologically opposed to increasing government support for households and consumers, which he derides as “welfarism.”