| The U.S. says the period of "engagement" with China is over. Asia's super-rich are making a beeline for Singapore. And China is struggling to maintain order in its financial markets. Here's what you need to know to start your day. The U.S. is entering a period of intense competition with China as its government becomes ever more tightly controlled by President Xi Jinping, the White House's top official for Asia said. "The period that was broadly described as engagement has come to an end," Kurt Campbell, the U.S. coordinator for Indo-Pacific affairs on the National Security Council, said at an event hosted by Stanford University, adding that the new "dominant paradigm is going to be competition." His remarks came as Joe Biden ordered the U.S. intelligence community to determine where the Covid-19 virus came from, after conflicting assessments of whether its origins are natural or from a lab accident in China. The move is certain to anger officials in Beijing. Asian stocks are set for a steady open after gains in U.S. shares tied to the economic reopening from the pandemic. The dollar climbed with Treasury yields. Japanese, Australian and Hong Kong equity futures were little changed. In the U.S., small-caps surged, while energy producers and retailers helped the S&P 500 to a more modest increase. Banks advanced after the chief executives from the largest lenders testified before Congress. Oil was steady above $66 a barrel, while gold slipped from a four-month high. Bitcoin retreated back below $40,000. China's battle to maintain order in financial markets is getting tougher as money floods into everything from commodities to housing and stocks. In May alone, the government vowed to tackle speculation in metals, revived the idea of a property tax, oversaw hikes in mortgage rates in some cities, banned the mining of cryptocurrencies and played down calls within the central bank for a stronger yuan. Authorities are zeroing in on the risks of assets overheating as they maintain a relatively loose monetary policy. Targeted intervention is likely to weigh on China's financial markets as the Communist Party seeks to avoid volatility in the run up to the July 1 centenary of its founding. The U.S. Department of Justice is investigating the market-rattling meltdown of Bill Hwang's Archegos Capital Management in March, a debacle that left big banks in Europe, Asia and the U.S. nursing more than $10 billion in losses. Federal prosecutors in Manhattan sent requests for information to at least some of the banks that dealt with the firm, according to people with knowledge of the matter, who asked not to be identified discussing the confidential probe. It's unclear what potential violations or entities authorities are examining. Here's how Bill Hwang lost $20 billion in two days. As the coronavirus pandemic hammers Southeast Asia and political turmoil threatens Hong Kong, Singapore has become a safe harbor for some of the region's wealthiest tycoons and their families who are staying for months, and in some cases seeking residency to ride out the storm. The number of single family offices in the city-state has doubled since the end of 2019 to about 400, demand for private golf club memberships is soaring, and real estate prices have jumped the most since 2018. Global banks like UBS Group meanwhile are expanding in the city to manage the massive influx of assets. What We've Been ReadingThis is what's caught our eye over the past 24 hours: And finally, here's what Tracy's interested in todayIt's never a good thing when a financial services company has to deny using phrenology. Lemonade, the Softbank-backed insurance start-up that went public last year at a valuation of $2.9 billion, was forced to delete a Twitter thread after a huge outcry over how it described using artificial intelligence to help process insurance claims. "Our AI carefully analyzes these videos for signs of fraud," the now-deleted tweet said. "It can pick up non-verbal cues that traditional insurers can't, since they don't use a digital claims process." In an online post, Lemonade quickly walked that idea back, saying that it never lets AI auto-reject claims. Instead, the post said, claims flagged by AI as potentially suspicious or problematic "then get reviewed by our human investigators." What's fascinating here is the degree to which AI-powered due diligence and a streamlined claims process has been previously touted by Lemonade as a competitive advantage. In its S-1 filing from last year, it talked about its claims bot (named "AI Jim") handling "the first notice of loss for 96% of claims as of March 31, 2020, and in approximately a third of cases can manage the entire claim through resolution without any human involvement." Five years ago, the company even issued a press release touting the fact that AI Jim had processed a claim in three seconds and with zero paperwork.  Presumably Softbank wouldn't be that interested in a stodgy insurance company without the promise of some sort of technological edge. Judging by the pop in Lemonade's shares last year, investors certainly seemed to love the whole idea of machine-learning AI to help make the insurance process more efficient. But ultimately, you can't really have it both ways. You can't play up a business model based on blackbox technology and the screening of "non-verbal cues" without expecting a heated discussion over de facto discrimination and redlining. Similarly, you can't justify a tech-sized valuation for a traditional financial service that's using AI around the edges. You can follow Tracy Alloway on Twitter at @tracyalloway. | 
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