Good morning. The shock ouster of Indonesia’s finance chief is worrying global investors. In Japan, shoppers are waking up to a pricing problem they haven’t seen before. And BYD is going big in Europe. Listen to the day’s top stories.

— Hari Govind

The sudden dismissal of Sri Mulyani Indrawati as Indonesia’s finance minister has rattled global investors, who saw her as a crucial guardian of fiscal discipline in an administration eager to ramp up spending. Analysts warned that her ouster may lead to capital flight. Whether incoming Finance Minister Purbaya Yudhi Sadewa—who has pledged to accelerate growth—can maintain the fiscal restraint Indrawati championed remains uncertain, Bloomberg Economics wrote.

French Prime Minister Francois Bayrou lost a confidence vote in parliament, forcing a third government change in just over a year. President Emmanuel Macron seeks his fifth prime minister in less than two years, with no obvious candidates to tackle France’s debt problems. 

JPMorgan’s trading desk warned the Federal Reserve’s expected rate cut this month may trigger a “Sell the News” event, potentially tanking stocks. The bank points to risks including inflation, employment, and trade war. The traders recommend buying VIX options and boosting gold exposure as a hedge against heightened risks. DoubleLine’s Bill Campbell predicts aggressive rate cuts will lead to a steeper yield curve, potentially widening the gap between 2-year and 10-year Treasury yields.

Elon Musk’s SpaceX agreed to acquire EchoStar’s wireless spectrum for $17 billion, allowing Charlie Ergen’s beleaguered telecommunications company to resolve an FCC probe and pay down debt. The deal combines SpaceX’s satellite capabilities with EchoStar’s spectrum, advancing the former’s mission to end mobile dead zones globally and potentially reshaping the wireless landscape.

The European Union is considering fresh sanctions on Russian banks, energy companies and oil trade as part of its 19th round of measures since Moscow’s 2022 invasion of Ukraine. Coordinating with the US, it hopes tougher measures will push Vladimir Putin toward peace talks. Moscow is already under crippling sanctions from both the US and Europe, but has blunted their impact by sourcing goods from China and other nations, as well as selling oil to India and beyond.
 

Deep Dive: Tracking Shrinkflation

Paying more for less? You’re not alone. After decades of deflation in Japan, consumers there are facing shrinkflation, a phenomenon well known in other parts of the world but new to them. To cope, they’re turning to grassroots websites that track how items like laundry detergent and instant noodles are getting smaller but more expensive. 

• One site, Neage.jp—which translates as “price increase” in Japanese—gets about 2,000 visits each day from price-conscious shoppers. Sweet-toothed surfers will be gutted to know that the price of the chocolate-filled crackers Koala’s March has jumped by 70% since 2022, when a standard box shrank to 48 grams (1.7 ounces) from 50 grams. Calbee has cut the weight of its main potato chips by 20% since 2008, while the price went up by ¥15.
• Japan may find itself under pressure to curb shrinkflation as the trend hits households already grappling with squeezed budgets, including the surging price of rice. Major food and beverage companies are set to boost prices for over 1,010 items in August, 50% more than a year ago, according to a report by Teikoku Databank.  
• South Korea has announced fines for food makers who hide shrinkflation, while Australia’s consumer and competition regulator wants supermarkets to publish notifications when instances of shrinkflation occur. French retailers must warn shoppers when sizes drop without price cuts.

The Big Take

Opinion

Transformative investments are needed to avoid being left behind in a fast-changing world, Shuli Ren writes. Thematic investing—identifying technology trends and the stocks that might benefit—is one solution, but investors must look beyond earnings.