China’s iPhone boom, US-Japan defence and competitive stretching

The daily briefing “FirstFT” from the Financial Times.

China’s middle class have plugged in to their iPhones and driven a 27 per cent surge in Apple’s revenues to $58bn in the first three months of 2015. Sales of iPhones jumped 40 per cent to 61.2m units – many of them sold in Greater China, which overtook Europe to become the company’s second-largest market for the first time. (FT)

The world’s most valuable company by market capitalisation promised to return another $70bn to shareholders but warned that gross margins are likely to dip in June because of the new lower-margin Apple Watch. This puzzled analysts who had expected the device, which commands a price between $350 and $17,000, to be more profitable than other products.

Katie Benner argues that with the watch Apple will now have to move into customisation. Catering to people’s personal taste would be a turnround for a company that has so far eschewed modification. (Bloomberg)

In the news

Baltimore riots The US state of Maryland declared a state of emergency and deployed national guard troops as rioters clashed with police in the city of Baltimore. Violence escalated after the funeral of a black man whose death in police custody reignited tensions over the treatment of African-Americans by law enforcement. (FT)

US-Japan defence pact The duo signed new defence agreements allowing for greater military co-operation in the event of a conflict in the East China Sea or North Korea. This is part of a delicate dance as China’s influence increases in Asia; Japanese prime minister Shinzo Abe seeks to reinterpret Japan’s pacifist postwar constitution; and the Obama administration bolsters its “pivot” to Asia. (FT)

Swedish corporate jet scandal The head of one of Sweden’s most powerful business empires was sacked after a scandal over the use of corporate jets by execs. Industrivarden CEO Anders Nyren became the most prominent Swedish executive to lose his job over the scandal, which exposed a convoluted system of cross-ownership in which executives sat on many boards and approved each others expenses. (FT)

Varoufakis reined in Alexis Tsipras overhauled his bailout negotiating team and sidelined his finance minister after three months of fruitless talks with international creditors. The Athens stock market rose nearly 4.4 per cent on the news and borrowing costs on Greece’s July 2017 bonds were down almost 4 percentage points from Friday’s close to 21 per cent. (FT)

It’s a big day for

Google News The company will outline its plans for an alliance with eight European newspaper groups aimed at bolstering the digital skills and business model of publishers. It has said it is considering significant changes to its news service to aid publishers struggling to make money online. (FT)

Golden parachutes America’s biggest trade union federation launches its campaign against “golden parachutes,” which can see top Wall Street executives pocket millions of dollars before taking jobs in government by accelerating the vesting of their stock awards. Critics say such benefits, which do not apply to people quitting for private sector jobs, have ensured a revolving door between finance and policy makers and deferential treatment towards Wall Street. (FT)

Food for thought

English troubles for the United Kingdom “Unionism must take an interest in England before England loses interest in unionism,” argues Janan Ganesh. If England becomes exasperatedwith Scotland, the game is up. (FT)

Competitive stretching Lululemon needs to work on its warrior pose – new yogawear companies are growing to challenge its dominance, claiming to better reflect the yoga lifestyle and to provide more reliable clothing with fewer transparency problems. Even big players such as Nike are in the game now that “yoga pants are the new jeans.” (Bloomberg)

Mammoth projects, woolly ethics The idea of reintroducing extinct species may have some environmental merit, says Anjana Ahuja, but attempts to knit a living woolly mammoth from scratch are misguided. “Recreating the mammoth would be spectacular — but more as aDisneyesque showpiece of human vanity than an environmental fix.” (FT)

California’s next ‘big one’ Scientists predict the risk of a mega quake on the 800-mile San Andreas Fault is higher than previously thought. (FT)

Video of the day

Ethiopia open for business The African growth story is well known and Ethiopia is one of the top performers but it is also one of the markets most closed to foreign money. Zemedenah Negatu from EY explains why investors are flocking to the country and whether it really isrestrictive to foreigners. (FT)

This article is published in collaboration with The Financial Times. Publication does not imply endorsement of views by the World Economic Forum.

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Author: FirstFT is the Financial Times’ editors curated free daily email of the top global stories from the FT and the best of the rest of the web.

Image: A man talks on a mobile phone near the Pudong financial district in Shanghai July 17, 2014. REUTERS/Carlos Barria.