China Is Running Out of U.S. Goods to Tariff, But It Has Other Trade War Weapons to Unleash

When President Donald Trump suddenly hiked tariffs on $200 billion worth of Chinese imports last week, China said it would respond with “necessary countermeasures.” But then it announced a tariff increase on just $60 billion of U.S. goods. China simply doesn’t import enough from the U.S. to match tariffs “tit-for-tat,” hence the $140 billion shortfall in its retaliation. However, China has other aces up its sleeve.

Let the renminbi slip

China’s softening economy coupled with the fallout of increased export tariffs will put downward pressure on its official currency, the renminbi, which is also referred to as the yuan. The central government has tended to prop up the renminbi in recent years to spur China’s transition to a consumption-led economy. However Chen Long, a China economist at consultancy Gavekal Dragonomics, argues it is now in Beijing’s best interest to let the renminbi slide.

“The renminbi exchange rate is one of the most powerful weapons Beijing has in the trade war with the U.S.,” Chen wrote in a report released Tuesday. Chen argues that a weaker yuan would support China’s exporters. While China’s importers would be worse off, the benefits outweigh the costs because China is a net exporter. But, more importantly, a depreciated renminbi could rattle global markets and, consequently, pressure Trump to switch tack.

An employee counts 100-yuan notes at a bank in Nantong in China’s eastern Jiangsu province on July 23, 2018. (AFP/Getty Images)

“If Beijing were not to stand in the way of a 3-5% depreciation in the renminbi, fears would grow that the stuttering Chinese economy was exporting deflation to the rest of world, and global markets–and the U.S. stock market in particular–would likely take fright,” Chen writes, arguing that a “sharp correction” in the U.S. markets could convince Trump that making a swift deal is in his best political interest.

Of all China’s possible means of putting pressure on the U.S., permitting the renminbi to devalue is almost certainly the easiest to implement. All Beijing has to do is wait.

Slow-walk approvals

At the same time, if China really wants to up the pressure, says Hannah Anderson, Global Market Strategist at J.P. Morgan Asset Management, “targeting the operations of U.S. businesses is a reasonable strategy,” she says. “In the U.S., lobbying groups and business organizations do carry a certain amount of influence.”

How would China do that?

Take a look at the tactics it’s employed in reprimanding Canada for Vancouver’s role in the arrest of Huawei Technology CFO Meng Wanzhou last year. Shipments of a major Canadian pork supplier were blocked at Chinese ports due to “labeling” issues, while two of Canada’s largest exporters of canola seed have had shipments blocked from China due to alleged pest infestation.

China’s Vice Premier Liu He gestures next to U.S. Treasury Secretary Steven Mnuchin and Yi Gang, governor of the People’s Bank of China, as U.S. Trade Representative Robert Lighthizer looks on. (NICOLAS ASFOURI/AFP/Getty Images)

Beijing could subject U.S. companies operating within China to administrative punishments, such as conducting arbitrary audits, enforcing stricter regulations, or slow-walking approvals of necessary permits and licenses. The approach is a nod to the advantage China has over the U.S. when it comes to China-based American businesses. “Operations of U.S. companies in China are a significant portion of the economic revenue that the U.S. as a whole derives from China, but the sales of companies operating abroad isn’t as significant a portion of China’s economic revenues from the U.S. Those mainly come from goods exports,” Anderson says.

Sell U.S. treasuries

Another card in China’s hand: the U.S.’s IOUs. Beijing holds roughly $1 trillion worth of U.S. treasury bonds, making China a major foreign creditor to the U.S. On Monday, the editor-in-chief of China’s staunchly nationalist, state-owned Global Times newspaper, Hu Xijin, tweeted that “many Chinese scholars are discussing the possibility of dumping U.S. Treasuries” as a strategic move in the trade war.

Dumping U.S. bonds could push U.S. interest rates up and disrupt the economy, but many analysts have dismissed the threat of this action. Former U.S. ambassador to China Max Baucus called such a move “too disruptive” while Scott Kennedy, Freeman Chair in China Studies at the Center for Strategic and International Studies (CSIS), tweeted that “China would just be shooting itself in the foot.” After all, a sell-off of government bonds could weaken the dollar, making U.S. multinationals more competitive.

One analyst Fortune spoke to labelled the hypothetical move as “simply nuts” because if China dumped U.S. bonds it would find itself with a devalued portfolio, fewer bonds to sell later, and a stockpile of U.S. dollars that it would struggle to spend.

Boycott U.S.A.

And Beijing is not above an out-and-out U.S. boycott. It has exacted economic revenge on foreign nations with such tactics before. In 2017, Beijing banned tour operators from selling group tours to South Korea after Seoul installed a U.S.-operated anti-missile system, which Beijing claimed threatened China’s national security. Chinese tourists’ visits to South Korea dropped 48%, and South Korea’s tourism industry lost an estimated $4.5 billion in revenue last year.

Beijing hasn’t banned U.S. package tours but, reportedly, Chinese sentiment is turning against the U.S. anyway. According to Ctrip International, China’s largest online travel agency, the U.S. was the ninth most popular destination for Chinese tourists during this year’s Labor Day holiday, down from fifth last year. “The U.S. really needs to be very careful if it wants to attract affluent travelers,” Ctrip CEO Jane Sun said.

Boycott policies are often stoked by nationalist propaganda and, since the new tranche of tariffs came into effect last Friday, China’s state media has upped its nationalist rhetoric. The Global Times has referred to the trade dispute as a “people’s war” and the People’s Daily posted a photo to its Weibo feed of a Chinese flag with the words, “Talk – fine! Fight – we’ll be there! Bully us – delusion!”

Nationalism is hard to control, however. In 2012, consumers boycotted Japanese products as Beijing and Tokyo contested ownership of the Diaoyu/Senkaku Islands in the East China Sea. Crazed patriots rioted in Beijing, attacking Japanese shops and causing millions of dollars in damage. Baucus, the former U.S. ambassador to China, has said American brands don’t need to worry “too much” about similar strikes.

“Some major brands are not perceived as American anymore; they’re perceived as international brands in China,” he said. More importantly, Baucus noted that state media has so far only criticized U.S. policy makers and kept U.S. businesses out of focus. “China is trying to limit nationalism–using the nationalism tool–but limiting it a little bit so that it doesn’t go too far because China wants to do business with the United States.”

What’s next?

After last week’s talks ended with no resolution, both sides said that negotiations would continue. However, relations have soured since then. This week Treasury Secretary Steven Mnuchin told Congress that talks would continue soon in Beijing, but China’s Foreign Ministry spokesman claims China is “not aware” of any such plans.

Meanwhile, the Trump Administration has ratcheted up pressure on Chinese telecom equipment giant Huawei–adding it to a list of “entities” prohibited from freely trading with U.S. companies–and Chinese importers cancelled a major order of U.S. pork, which hits the agricultural community that forms part of Trump’s political base.

President Xi Jinping and Trump are likely to meet at the G20 summit in Osaka at the end of June, but hopes that the two leaders will be able to hash out a deal are low. The trade war has been one of attrition and both sides are now too entrenched to simply dig their way out.

More must-read stories from Fortune:

–Questioning the role of French telecom execs in 35 employee suicides

–Tencent’s new video game: part propaganda, part peace offering

–Why the new U.S.-EU trade talks might go nowhere

–The Eastern European countries home to today’s most dynamic winemakers

–Catch up with Data Sheet, Fortune‘s daily digest on the business of tech

CBS Still Has Starz in Its Eyes

CBS’s seemingly inexorable march toward acquiring Viacom may take a detour.

The company recently talked to Lions Gate Entertainment about buying that company’s Starz cable network, according to people familiar with the matter, a deal that could happen alongside a potential purchase of Viacom. CBS made an informal bid of about $5 billion that was rebuffed, the Information reported, but the suitor remains interested.

Reuters reported that Lions Gate offered to sell Starz to CBS for $5.5 billion, suggesting that the two sides aren’t too far apart.

News of the talks sent shares of Lions Gate up 15% on Friday, marking their biggest single-day rally in 18 years.

Starz has become a key asset for the struggling Lions Gate studio, known for the John Wick and Hunger Games movies, and the company has been seeking ways to expand the network’s footprint. Lions Gate has held talks with potential partners about funding Starz’s international growth, Bloomberg reported last week.

A $5 billion offer would be bigger than Lions Gate’s entire market capitalization, though the studio’s enterprise value–a figure that includes debt–is $6.67 billion.

Earlier Approach

CBS was interested in buying Starz before it got acquired by Lions Gate for $4.4 billion in 2016. The network, which carries shows such as American Gods, attracts an audience that CBS doesn’t reach with its current lineup. In addition to its broadcast network, CBS owns the premium channel Showtime.

The company is weighing its next moves after the ouster of longtime Chief Executive Officer Les Moonves last year. He was fired in September after a dozen women accused him of sexual misconduct, setting off a shake-up that included a board overhaul. Joe Ianniello, formerly chief operating officer, has been running the New York-based company as interim CEO ever since.

The Redstone family, which controls both CBS and Viacom, has long advocated a merger of those two companies. Shari Redstone can’t propose such a deal for a couple years under a legal settlement her family holding company reached with CBS when Moonves left. But that doesn’t prevent other board members at CBS or Viacom from proposing a deal.

Stock Surge

Shares of Lions Gate jumped to $15.60 on Friday, giving it a market value of $3.23 billion. The stock had been down 16% this year through Thursday’s close.

Viacom slipped less than 1% in the wake of the news, while shares of CBS were little changed.

Lions Gate has been speaking to financial and strategic investors about financing the rollout of its Starz network in overseas markets, people familiar with the situation said last week. A deal could involve raising several hundred million dollars for a multiyear rollout of the subscription video service into more countries, the person said, asking not to be identified as the details aren’t public.

In March, Apple said it will carry the channel on its upcoming streaming service, following an agreement last year for it to be part of Amazon Prime in the U.K. and Germany.

Starz has also launched in Canada on Bell Media and is the leading subscription video-on-demand service in the Middle East and North Africa. The network could be in over 50 international territories by next year.

Brainstorm Health: Drugstore as Doctor, Social Media and Suicide Spike, Missouri Abortion Ban

Happy Friday, readers!

We have a veritable feast of must-read features accompanying the latest Fortune 500 list’s release (I’ve included links to several of them down below and will continue to in the coming days). But I wanted to highlight one specific story, penned by our own veteran journalist Shawn Tully, on the status of the combined CVS-Aetna behemoth.

CVS mega-deal with Aetna birthed a vertically integrated firm that its various executives have argued will simplify patient care by providing a “front door” of access to medicine at your friendly neighborhood drugstore. The multi-pronged strategy would incorporate insurer Aetna’s gigantic customer base into a retail pharmacy giant that also happens to control its own pharmacy benefits business and a slew of walk-in clinics for primary care.

It’s an exciting–and ambitious–proposition. But these are the kinds of projects that may take some time to produce veritable results.

“The $70 billion merger with Aetna made CVS the world’s biggest health care company, with projected revenues of $250 billion in 2019. But so far it hasn’t paid off,” writes Shawn. “In the first quarter of 2019, the new CVS posted profits one-third lower than the amount the two companies had earned separately a year earlier. An integration plan targeting $750 million in savings should help lift profitability.” He goes on to note less-than-enthusiastic reactions from the broader investor market.

Of course, there’s much more to this kind of corporate marriage than immediate profitability or market value growth; in health care, things take time. But I encourage you to read Shawn’s deeply reported and insightful piece on one of the most extraordinary health care M&As in recent history.

Read on for the day’s news, and have a wonderful weekend.

Sy Mukherjee
@the_sy_guy
sayak.mukherjee@fortune.com

DIGITAL HEALTH

Is social media playing a role in girls’ suicide spike? A new study published in the journal JAMA Open Network on Friday finds that the suicide rate among young people of both biological sexes has increased since 2007–and while suicide tends to afflict boys at a higher rate, the biggest surge has been among young girls aged 10 to 14 in recent years. The research has led some experts to urge deeper exploration of social media’s potential role in the trend. “The fact that social media has become a primary forum for interpersonal engagement in adolescence, a developmental period when social contact is rapidly rising and becoming increasingly important to well-being, makes this an area of great potential influence and importance,” wrote Joan Luby, of Washington University School of Medicine, and Sarah Kertz, of Southern Illinois University, in an accompanying opinion piece. (Fortune)

INDICATIONS

AbbVie faces setback for brain cancer drug hopeful. Glioblastoma, among the most intractable of cancers, has felled yet another drug hopeful. This time, the victim is biotech giant AbbVie’s depatuxizumab mafodotin, or ABT-414, which failed to show any survival benefit against the aggressive brain cancer in a late-stage study. The fact that a brain cancer drug proved disappointing is unsurprising; but, for AbbVie, this is yet another knock to the company’s experimental cancer drug pipeline, which has produced a number of late-stage failures including the treatment Rova-T.

THE BIG PICTURE

Missouri piles on with restrictive abortion bill. Mere days after Alabama enacted the most restrictive anti-abortion law in the country, Missouri lawmakers followed up by passing legislation that would ban abortions after the eight week of pregnancy (well before most women know they’re pregnant). Missouri’s governor is expected to sign it into law. The difference between the two bills is that Missouri’s includes an exception for medical emergencies, which Alabama’s law does not. Abortion opponents have openly admitted that such laws are meant to be a conduit to ultimately striking down Roe v. Wade at the Supreme Court. (Reuters)

REQUIRED READING

Inside Google’s Civil War, by Beth Kowitt

 

[ceo_attribution author=”Produced by Sy Mukherjee” email=”sayak.mukherjee@fortune.com” twitter=”the_sy_guy”] Find past coverage. Sign up for other Fortune newsletters.

U.S. Tariff Deal with Mexico, Canada Is Also About Cutting Off China’s Steel

The U.S. has reached an agreement to drop steel and aluminum tariffs on the two countries in return for preventing Chinese steel from coming over their borders into the U.S.

In a speech before the National Association of Realtors, President Trump said, “I’m pleased to announce that we’ve just reached an agreement with Canada and Mexico and will be selling our product into those countries without the imposition of tariffs or major tariffs,” according to Bloomberg.

This would remove one barrier the new USMCA agreement, the replacement for NAFTA, has faced in getting passage from Congress. Reactions have been relatively positive. “It’s a pretty good agreement,” said Usha Haley, a professor of management and director of the Center for International Business Advancement at Wichita State University and co-author of Subsidies to Chinese Industry. “It looks promising and I think it’s a win for Trump.”

“One client of mine, who fabricates and sells critical components to the world’s leading airplane manufacturers, has resorted to stockpiling their own supply of internationally sourced steel in their parking lot as trade negotiations play out,” Carlos Martinez, a principle with southern California-based accounting firm Haskell & White, wrote in an email to Fortune. “Today’s news comes as a relief as it brings some clarity to metal pricing in North America.”

The United Steelworkers sent a statement to Fortune that quoted USW International President Leo W. Gerard as saying, “Today’s agreement will help restore confidence and stability to the North American steel and aluminum markets. From day one, we made it clear that the real problem isn’t Canada or Mexico, but those countries that are undermining the trading system through predatory trade practices and non-market policies that have created massive overcapacity and trade imbalance.”

The second sentence hints to a lynchpin of the deal. Beyond a mutual end to tariffs, Canada and Mexico will agree to prevent Chinese steel from crossing their borders into the U.S., as the Washington Post reported.

On the surface, steel from China would seem something of relatively low importance. According to the International Trade Administration, the country isn’t even one of the top ten sources of steel imports into the U.S.

However, the picture is actually murky because of an economic term called trade deflection. “When you have a trade agreement with Canada and Mexico, they can have completely different agreements with other countries,” said Giacomo Santangelo, a senior lecturer in economics at Fordham University. Steel from China can be incorporated with products from either country and then come into the U.S. with the country of origin wiped clean. “It’s literally just an additional step [to get the products in],” Santangelo said.

The U.S. has complained that China floods markets with cheap steel that depress prices and undermine competing manufacturers. “Trump intuitively understands the situation in Chinese steel,” said Haley, who has studied China’s steel production closely. She said the country provides at least a 30% subsidy to its steel production “through government loans that don’t have to be repaid, free power, free land, and so on.”

Then there is the constant increase in its production capacity. “The excess capacity added to [China’s steel production] annually is more than the entire production of Japan, the second largest steel producer,” Haley said.

China produces about half of the world’s total supply. Beyond domestic use, that means massive exports and the chance of the metal entering the U.S. through other countries even if not directly because of imports from other sources.

More must-read stories from Fortune:

–Despite world events, the oil market is surprisingly calm

–A new Google antitrust probe could spell trouble for its automotive plans

Why is Donald Trump threatening Huawei? Because he’s without options

–How China tariffs are affecting Fortune 500 king Walmart

–Grindr, the popular dating app, has been declared a national security risk

Follow Fortune on Flipboard for the latest news and analysis.

Tesla Shares Drop 7.6%, the Stock’s Lowest Level Since December 2016

Tesla shares closed at the lowest level in almost 2 1/2 years after Elon Musk called for a “hardcore” review of all the electric-car maker’s expenses and an analyst warned of potentially severe fallout from a fatal crash involving Autopilot.

Musk, Tesla’s chief executive officer, wrote in an email to staff late Thursday that he and new Chief Financial Officer Zachary Kirkhorn will review “literally every payment” that leaves the company’s coffers to confirm that expenditures are critical.

Musk referred to Tesla losing $700 million in the first quarter, and said that while the company raised about $2.4 billion in capital recently, it won’t last long at the rate the company was burning through money early this year. The carmaker’s shares dropped 7.6% to finish at $211.03 on Friday in New York, the lowest close since December 2016.

The email is similar to a missive Musk, 47, sent to employees in April 2018, when he announced having asked Tesla’s finance team to “comb through every expense worldwide, no matter how small, and cut everything that doesn’t have a strong value justification.”

As was the case a little over a year ago, Tesla is also dealing with criticism of Autopilot following the death of a customer using the driver-assistance system. After the National Transportation Safety Board linked Autopilot to a fatal crash in March, Consumer Reports called for Tesla to make immediate changes to restrict drivers from using the system in unsafe conditions, and said the company needs to more effectively monitor driver engagement.

“The eventual outcome of this investigation may have severe ramifications,” Arndt Ellinghorst, an analyst at Evercore ISI, said in a note Friday. The analyst said that if Tesla were to be required to recall or shutter Autopilot until the system is modified and validated, sales will drop, sentiment will worsen, and liabilities will increase.

Through Friday’s close, Tesla shares have dropped 37% this year.

Mnuchin Rejects House Subpoena for Trump’s Tax Returns

Treasury Secretary Steven Mnuchin rejected House Ways and Means Chairman Richard Neal’s subpoena for six years of President Donald Trump’s personal and business tax returns. Now, Neal will likely turn to the courts, embarking on a lengthy battle that could help define Congress’ powers to oversee the executive branch.In a letter denying Neal’s subpoena, Mnuchin on Friday doubled down on earlier assertions that Neal did not have a legislative purpose for obtaining the returns. In response to Neal’s earlier requests, Mnuchin has said Democrats merely want to expose Trump’s private information for political purposes.

“For the same reasons, we are unable to provide the requested information in response to the committee’s subpoena,” Mnuchin wrote, adding that the Justice Department intends publish a legal opinion memorializing its advice to him to reject the requests.

Neal has fought for six weeks to obtain Trump’s returns, stating that he needs them to determine whether the Internal Revenue Service is following its policy of annually auditing the president. He first requested the returns at the beginning of April, invoking a section of the tax code that allows the heads of Congress’ tax-writing committees to obtain the returns of any taxpayer.

Mnuchin told a Senate panel this week that Treasury officials would be willing to help Ways and Means committee members examine the audit process without seeing the president’s returns.

But Democrats have also been eager to see Trump’s tax documents ever since he broke with 40 years of presidential campaign precedent by refusing to release them in 2016. They want to see if he has been truthful about the extent of his wealth, his business ties and whether he cheated on his taxes.

Mnuchin formally rejected the request about a month after Neal first asked. Neal responded with the subpoena last week, setting Friday as the deadline for Mnuchin to respond.

Friday’s rejection likely sets up a court battle between the legislative and executive branches that could extend beyond the 2020 election. An attempt to enforce a subpoena related to a botched Justice Department investigation during President Barack Obama’s administration extended well into the Trump administration.

Congress could vote to hold Mnuchin in contempt of Congress and sue in court to enforce the subpoena or the earlier request under the tax code. That would make him the second Trump Cabinet official to be held in contempt of Congress, following Attorney General William Barr.

Neal on Friday indicated that he might go straight to court rather than hold Mnuchin in contempt of Congress.

“I don’t see what good it would do at this particular time,” Neal told CNN Friday. “I think that if both sides have made up their minds, better to move it over to the next branch of government: the judiciary.”

A Ways and Means spokesman did not immediately respond to a request for comment once Mnuchin’s letter was released.

Trump has claimed that he is under audit and won’t release the returns while that process is ongoing, though no law prevents him from doing so.

Neal’s tax return fight is just one in a panoply of investigations waged by House Democrats since they took over the chamber this year. The Trump administration also has rejected or ignored subpoenas from the House Intelligence and Judiciary committees, claiming that the inquiries amount to “presidential harassment.”

More must-read stories from Fortune:

–What would impeachment look like in Trump’s America?

–Bernie Sanders has a message for Trump on trade

–Trump keeps alluding to extending his presidency. Does he mean it?

–Meet the Republicans likely to challenge Trump in the 2020 primary

–Is the Muslim Brotherhood a terrorist organization? Trump thinks so

World’s Top Fashion Houses Clash Over Underage Model Ban

The world’s leading luxury fashion houses are clashing over the ethics of using models under 18 years old in photo shoots and fashion shows.

Kering SA–the owner of Gucci, Alexander McQueen, Balenciaga, Alexander McQueen, and Saint Laurent–has announced a pledge to stop hiring models under 18 to “represent adults” on the runway and in advertising campaigns starting fall 2020.

“As a global luxury group, we are conscious of the influence exerted on younger generations in particular by the images produced by our Houses,” Kering CEO Fran?ois-Henri Pinault said in a statement sent to Fortune. “We believe that we have a responsibility to put forward the best possible practices in the luxury sector and we hope to create a movement that will encourage others to follow suit.”

However, two days after the Wednesday announcement, rival global luxury group LVMH–which owns Louis Vuitton, Christian Dior, Celine, and Givenchy– told Women’s Wear Daily they disagreed.

“We will not be following suit,” said Antoine Arnault, head of LVMH communication and image, as well as CEO of Berluti and chairman of Loro Piana.

The fashion competitors haven’t always been at odds when it comes to standardized protection for working models.

LVMH and Kering in 2017 signed a joint charter pledging to use only models ages 16 and up to represent adults, and mandating those underage models only work from 10 a.m. to 6 p.m. and have a chaperone at all times. The charter also requires casting agencies to provide female models who were over a U.S. size 4 and male models over a U.S. size 6.

While LVMH doesn’t see a need to bar 16-year-old models from work, Kering now disagrees.

As Marie-Claire Daveu, chief sustainability officer and head of international institutional affairs, said in Kering’s statement, “In our view, the physiological and psychological maturity of models aged over 18 seems more appropriate to the rhythm and demands that are involved in this profession.”

Some industry advocacy groups don’t think Kering’s ban goes far enough.

The Model Alliance tweeted: the pledge “will amount to little more than lip service” if it doesn’t take more explicit action against the unhealthy pressure for models to maintain an unhealthy “adolescent physique.”

The organization also expressed its dismay the “limited pledge” didn’t touch on dangers models of all ages face “such as sexual harassment and assault, pressures to fit into tiny samples, late, and nonpayment, and the lack of an independent complaint mechanism to resolve complaints.”

For several years, conditions under which models work, as well as requirements for their profession, have been scrutinized. In 2015, France banned hiring ultra skinny models.

Kering’s pledge to higher models no younger than 18 follows its announcement this week of new requirements mandating suppliers meet certain treatment standards for all animals used in products ranging from cashmere sweaters to suede shoes.

The issue of ethical business behavior for producers of all consumer products is at a peak.

“Younger generations’ passion for social and environmental causes has reached critical mass, causing brands to become more fundamentally purpose driven to attract both consumers and talent,” McKinsey & Company wrote in a 2019 report on the state of the global fashion industry. “Consumers from some, but not all markets will reward players that take a strong stance on social and environmental issues beyond traditional CSR [Consumer Social Responsibility.]”

Girls’ Suicide Spike is Raising Questions About the Role of Social Media

A troubling spike in the suicide rate among young girls is prompting leading researchers to ask questions about the role of social media in adolescent mental health.

A study published Friday in the JAMA Open Network led by Donna Ruch, a research scientist at Nationwide Children’s Hospital, analyzed suicide trends in 10- to 19-year-olds between 1975 and 2016. The rate of suicide decreased from the early 1990s until 2007 but has increased in years since for both genders.

While boys die by suicide at a higher overall rate than girls, female youth suicides have surged most in recent years. In the 10- to 14-year-old age group, the rate of suicide increased by 12.7 percent for girls and 7.1 percent for boys since 2007.

The data show the gap known as the “gender paradox” in suicide–wherein males typically die by suicide at a rate higher than females, while females report suicidal thoughts or attempt suicide at higher rates than males– appears to be closing.

“We really wanted to look at this and say ‘Hey wait a minute, is this just a phenomenon, is it an occurrence, is it a blip or are we seeing a trend?'” Ruch said.

Her paper concludes the gap is narrowing most among those 10- to 14-year-olds. “We want to look at treatments, look at interventions, and really take into account the unique needs of girls versus boys.”

The study wasn’t designed to investigate why the rate of suicide is increasing among young people, but other researchers who looked at the data suggest the prevalence of social media could be an avenue to explore.

“The fact that social media has become a primary forum for interpersonal engagement in adolescence, a developmental period when social contact is rapidly rising and becoming increasingly important to well-being, makes this an area of great potential influence and importance,” wrote Joan Luby, of Washington University School of Medicine, and Sarah Kertz, of Southern Illinois University, in an opinion piece in JAMA Open Network.

More than 95 percent of youth are now connected to the internet in some form, they point out. Girls’ use of social media could be “more likely to result in interpersonal stress,” a factor implicated in youth suicide, according to Luby and Kertz.

The pair noted that girls use social media more frequently than boys and are more likely to face cyberbullying.

“Increasing rates of suicidality may be the ‘canary in the coal mine’ signaling important health concerns arising from the increased and pervasive use of social media affecting child and adolescent development,” Luby and Kertz wrote.

Male Mentors Are Leaning Out

Here’s your week in review, in haiku.

 

1.

Iran’s furrowed brow,

Xi’s crossed arms, D.P.’s deep thirst,

Canada’s trash canned

 

 

2.

[Man smiles at mirror]

“President de Blaaaaaaasioooo.”

He nods. [Cue laugh track]

 

3.

Sony, Microsoft

sitting in a tree P-L-

A-Y-I-N-G

 

4.

Linda Brown walked and

walked and walked and walked to school:

separate, not equal

 

5.

I had fun once,” she

purred to Saint Peter. “And it

wasn’t that awful.”

 

Wishing you the least-grumpy weekend possible.

On Point

[bs-title]Men are leaning out when it comes to mentoring women, a new survey finds[/bs-title][bs-content]In an essay exclusive to Fortune, Sheryl Sandberg and Marc Pritchard say that new research by LeanIn.Org and SurveyMonkey shows that 60% of male managers now say they are uncomfortable participating in common job-related activities with women, such as mentoring, working alone together, or socializing. Last year, that number was 46%. “This is disastrous,” they write. “The vast majority of managers and senior leaders are men. They have a huge role to play in supporting women’s advancement at work–or hindering it.”[/bs-content][bs-link link=”https://fortune.com/2019/05/17/sheryl-sandberg-lean-in-me-too/” source=”Fortune”]

[bs-title]President Trump’s new immigration plan seems doomed from the start[/bs-title][bs-content]Most experts agree that his latest plan, which involves instituting a “merit-based” system for issuing green cards, is unlikely to be taken up by Congress. The new scheme, which would prioritize highly skilled workers over people with family members in the U.S. and score potential workers on certain factors such as English fluency, is called a “Build America” visa. But without any details on implementation, it’s unlikely to be anything more than campaign rhetoric. “Internally, a number of White House aides are skeptical the plan has any chance of passing and believe the president holding a Rose Garden speech on it was a waste of his time, when he should be promoting trade or working on international affairs,” reports The Washington Post.[/bs-content][bs-link link=”https://www.washingtonpost.com/politics/white-house-says-daca-protections-too-divisive-to-be-included-in-trump-immigration-plan/2019/05/16/5ee50606-77e3-11e9-b3f5-5673edf2d127_story.html?utm_term=.deab33b62ea6″ source=”Washington Post”]

[bs-title]Taiwan legalizes same-sex marriage[/bs-title][bs-content]The Western world wakes up to some wonderful and affirming news: LGBTQ couples are getting engaged all over Taiwan today after the country became the first in Asia to legalize same-sex marriage. In a 66-27 vote, same-sex married couples now enjoy the same benefits as opposite-married ones. Thailand is the only other Asian country that has proposed a law to recognize same-sex unions. According to Jennifer Lu, a member of the Marriage Equality Coalition Taiwan, the country has shown that tradition doesn’t necessarily mean a rejection of LGBT culture. “[T]hat’s the message we want to send the world.”[/bs-content][bs-link link=”https://www.washingtonpost.com/world/asia_pacific/taiwan-becomes-first-country-in-asia-to-legalize-same-sex-marriage/2019/05/17/d60e511e-7893-11e9-bd25-c989555e7766_story.html?utm_term=.0b15fc1d5bf6″ source=”Washington Post”]

[bs-title]West Point graduating class has the largest number of black women ever[/bs-title][bs-content]This year’s graduating class at West Point will have 34 black women, the largest in the military academy’s history. It’s up from 27 last year. “[T]he expectation is next year’s class will be even larger than this year’s,” says a spokesperson. This historic class also has the highest number of Latina graduates along with the 5,000th female cadet of any race to graduate since the academy’s first class of women in 1980. Cadet Tiffany Welch-Baker says, “My hope when young black girls see these photos is that they understand that regardless of what life presents you, you have the ability and fortitude to be a force to be reckoned with.” Click through to see what she means.[/bs-content][bs-link link=”https://www.cnn.com/2019/05/15/us/west-point-largest-graduating-class-of-black-women-trnd/index.html” source=”CNN”]

 

On Background

[bs-title]Why are federal nominees so wishy-washy about Brown v Board of Education?[/bs-title][bs-content]The landmark Supreme Court decision striking down school segregation turns 65 day, and it’s long been heralded as a ground-breaking achievement, publicly lauded by people on all sides of the political spectrum. Especially during job interviews. But lately, judicial appointees are refusing to say whether they agreed with the decision as part of their normal confirmation hearings. “Even if you believe nominees have spent decades telling polite lies about the enduring importance of Brown, the fact that we are now dispensing with those polite lies is extraordinary,” says Perry Grossman and Dahlia Lithwick writing for Slate.It matters. “It’s frightening and destabilizing to watch ridiculous notions about pregnant migrants and transgender service members make their way into the legal discourse,” they say. “Basic ideas about equality and race are slipping out of the canon of universally accepted legal truths. That shouldn’t be met with silence.”[/bs-content][bs-link link=”https://slate.com/news-and-politics/2018/04/why-it-matters-that-trumps-judicial-nominees-refuse-to-answer-questions-about-brown-v-board.html” source=”Slate”]

[bs-title]An immigration lawyer burns a candle for her young charges[/bs-title][bs-content]Brianna Rennix is an immigration lawyer, writer, and editor at Current Affairs. In this extraordinary essay, she explains life in Dilley, Texas, where she works as a lawyer at a child detention center. While shopping at a non-home improvement grocery store that happened to be called Lowes, she stumbled on a devotional candle with the image of a saint she hadn’t heard of before, called the Holy Infant of Atocha. “Who would’ve thought that a little vestige of the medieval world would turn up in my local grocery store?,” she says. “Secondly, what better patron for someone who works at a jail for child refugees than a child-saint who defends both travelers in peril and the unjustly imprisoned?” You will want to read and share this piece, I promise.[/bs-content][bs-link link=”https://www.currentaffairs.org/2019/05/waiting-for-the-holy-infant-of-atocha” source=”Current Affairs”]

[bs-title]Abortion access is in trouble[/bs-title][bs-content]With abortion access and reproductive health care under siege in Georgia, Ohio, Alabama, Missouri and increasingly across the country, women have taken to social media to share their abortion stories under the hashtag #YouKnowMe. Actor and late-night talkshow host Busy Phillips was one of the first women in this most recent wave of public sharing to tell her own story and encourage others to do the same.”The statistic is one in four women will have an abortion before age 45,” she said on her show. “That statistic sometimes surprises people, and maybe you’re sitting there thinking, ‘I don’t know a woman who would have an abortion.’ Well, you know me.” If sharing your story isn’t for you, Huffpost has a list of other ways to show support.[/bs-content][bs-link link=”https://www.nytimes.com/2019/05/15/style/busy-philipps-abortion-youknowme.html” source=”New York Times”]

[bs-content]Aidan Taylor assisted in the preparation of today’s summaries.[/bs-content]

Quote

[bs-quote link=”https://twitter.com/pamgrier/status/1126446472772218880?s=12″ author =”–Pam Grier”]In 1976, I placed Richard Pryor’s injured horse in the back seat of my 4 door Jaguar to take to the Vet. I drive down the 405 with Richard in the passenger seat wearing his bathrobe, Ginger his horse thinking I’m crazy, drivers following us, we saved her life that day.[/bs-quote]

What ‘Game of Thrones’ and the Crypto Market Have in Common

Last month, millions of viewers tuned into HBO for the premier of the final season of Game of Thrones. Game of Thrones offers an intimate look at the consequences of using backroom dealing to pursue an outcome in a competitive setting and fans of the show await with anticipation to see who will finally rule Westeros. But one need not look to television to find such a battle for power–just look to the crypto market. Every investor is vying for the throne (or in this case, a maximized profit) but not all players are made equal. Those with better social ties or monetary power can more easily enter into coalitions and create backhanded deals to achieve a better outcome.

As in Westeros, the crypto landscape does not behave according to Nash equilibrium. There are too few individuals controlling the fate of the market, making it difficult for others to fairly pursue their own rewards. However, if Nash equilibrium were present, these impediments to the pursuit of individual reward would be eliminated.

By definition, Nash equilibrium describes “players” in a “game” in a pure non-cooperative setting (a competitive setting devoid of alliances). In such a scenario, any strategy change by one player will not result in a better outcome at the expense of the other players if all players’ continue to pursue their own strategies. This outcome serves the self-interests of all players, not just merely a few. And in order for any decentralized currency or token to enjoy enduring success, its price must be described by Nash equilibrium. If it is not, all participants (or players) will not understand the value and as a result it become subject to artificial pricing factors.

While most markets do not operate in a non-cooperative setting (there typically exists coalitions and cartels which yield significant influence and pressure on a market), more sophisticated marketplaces function in closer alignment with Nash equilibrium because greater participation inevitably means more transparency and better infrastructure promoting fair competition. The equities market, for example, has a large number and variety of established participants and a supporting infrastructure which promotes information transparency. The cryptocurrency marketplace on the other hand, which is still a much more nascent and emerging ecosystem, remains plagued by coordination among a few larger participants to profound effect.

Take, for example, Bitcoin. The coin’s rapid rise and decline is the result of investors speculating on the winning cryptocurrency. It’s akin to the various characters of Game of Thrones throwing their support behind those seeking the throne and, to function in Nash equilibrium, the players must simultaneously work, unimpeded, to serve their own best interests. In forming alliances, the parallel pursuit of self-interest by all players no longer occurs, replaced by the interests of the group, to the detriment of those outside of the coalition.

If the cryptocurrency market were to function in a truly non-cooperative setting, where individuals can pursue their own utility more fairly, it would defend against potential manipulation by eliminating incentives for collaboration. The so-called 51% attacks, for instance, where substantial computing resources are utilized to take over a network’s mining power to reverse and block transactions (akin to robbing a bank), are a symptom of the current marketplace. Larger players take advantage of their size to wield influence.

There are a few ways such behavior can be eliminated. First, a digital asset with well-acknowledged, long-term price dynamics is necessary. If a digital assets’ price evolution is more or less knowable and clear then the resulting certainty defeats the incentives for coordinated behavior that would be detrimental to other players.

Second, a marketplace where a clear relationship exists between the outstanding supply of tokens and the value of the ecosystem should be established. In such an environment, price discovery is more likely to exhibit well-organized and orderly characteristics. Public companies, for example, list their stock on an exchange, which serves as a centralized source for price discovery. They also publicly disclose the number of shares on the market. All participants have an expectation of the general contours of the outcomes in the market, so there is less risk of market manipulation.

Third, introduce a token or blockchain construction that disincentivizes bad behavior (like the 51% attacks). If all token holders enjoy the same privileges in the ecosystem, there would be no additional benefit from coordinating to seize mining power of a network, or join any other coalition. Such an ecosystem is achievable via a token construction where ownership confers on all holders the same capabilities and privileges on the blockchain. In other words, one cannot buy their way to influence. As the ecosystem grows, the token would capture the value of that increased adoption, creating equal motivation for involvement from all participants and leveling the playing field.

The crypto market will burn to the ground if it continues to operate outside of Nash equilibrium and without a construction that promotes the self-interest of all players. If participants just keep vying for the Iron Throne through manipulation, we’ll continue to see a few prevailing at the expense of everyone else.

Seth Patinkin is co-founder and CEO of Ampersand Markets and did his PhD work in mathematics under the late John Forbes Nash at Princeton University.

More opinion in Fortune:

–Why you should pay less attention to all those IPOs

–What it means when A.I. can read your thoughts

–The U.S. needs responsible capitalism, not socialism

–Making the case for companies to disclose their workforce policies

–Disney’s CEO deserves his $66 million pay package. Here’s why