- In MACRO, MARKETS & CRYPTO NEWS, the US agrees to supply more LNG, a tussle emerges between Sunak and BoJo, Moex reopens and the Bank of England talks tough on crypto
- In SANCTIONS & CONSEQUENCES NEWS, the UK puts more sanctions on Russia while the WTO warns of food riots, various companies reconsider their Russia ties and Lloyds of London considers its war exposure
- In INDIVIDUAL COMPANY NEWS, Uber gets a New York boost while things get heated with P&O
- AND FINALLY, I bring you a mash-up of two classics…
MACRO, MARKETS & CRYPTO NEWS
So the Spring Statement underwhelms, Biden is set to unite Europe and BoJo gets windy…
I AM GOING TO BE HOLDING THE MONTHLY ROUNDUP NEXT WEEK WITH JAKE SCHOGGER OF THE COMMERCIAL LAW ACADEMY. Please register HERE to attend (it’s free). This will really help you as I will navigate the major events and developments that have happened over the course of March in the business news and financial markets and Jake Schogger will be overlaying this with legal insights. We always have a lot of fun with this despite the subject matter (!), so it’d be great to see you! This will save you time and give you better understanding of how things are currently developing in the world.
The crisis in Ukraine is beyond words. Many stories that we see now of tragedy, sacrifice and loss make everything else pale into insignificance. However, I will continue to bring you news on this and everything else in the business and financial markets news because it may well have repercussions that have major consequences for us all and that we still need to understand better.
US plans to boost supplies of liquefied natural gas to EU (Financial Times, Valentina Pop, Sam Fleming and James Politi) shows that the US is finally pulling its finger out and committing to supply more LNG to the EU with up to 15bn cubic metres of extra by the end of 2022. The idea of this is to help the EU reduce dependence on Russian natural gas. * SO WHAT? * The reason why I said “is finally pulling their finger out” is because the Americans have been banging on about Europe weaning itself off Russian oil and gas, but not doing anything practical about it. The EU is actually targeting an extra 50bn cm of LNG from sources outside Russia including the US, Qatar and Egypt, but many are sceptical about this being possible. At least this is a step in the right direction!
Government needs to ‘do more’ on cost of living crisis, says Boris Johnson (Financial Times, George Parker and Jim Pickard) shows that BoJo is having a bit of a dig at his neighbour in No 11, saying that more needs to be done to help people with the rising cost of living following widespread criticism of Sunak’s Spring Statement. * SO WHAT? * As I said yesterday, I don’t think that the new
measures are going to touch the sides of most people’s increasing debt pile but maybe Team BoJo is seeing this as a weakness in potential leadership rival Sunak and an opportunity to weaken him. Given that BoJo seems to have survived what looked like an unsurvivable situation in partygate 2.0, it seems that he now feels confident enough to undermine someone who could be a major rival. I still think that Sunak was trying to keep his powder dry for something more substantial in the autumn Budget, but events could progress such that he might have to do something drastic before that. It’s not the first time that the government has announced something that sounds final but then they alter things afterwards.
Elsewhere, Stock market rallies in first day of trading since Ukraine war (The Guardian, Graeme Wearden) tells us what the first day back for Moscow’s stock market was like after one month’s absence. Moex was closed following the Russian invasion of Ukraine but it opened up yesterday for trading. It was a shorter session than normal and only 33 of the 50 securities on the Moex traded under restrictions such as foreigners not being allowed to sell until April 1st and no short-selling. Energy and commodity companies led the index up by 4.4% (it was up 11% initially) and it is thought that the national wealth fund may have been buying in size in order to support the market. * SO WHAT? * Clearly this is a 🐂💩 market given all the restrictions so we’re not going to be able to see what’s REALLY going on until trading restrictions are lifted. Even then I imagine that there will be a concerted effort by the state to support a market to make it look OK from the outside. The thing is that you can’t go on supporting a market forever – and Putin may need the money to finance his war machine.
Then in We must set crypto rules, admits Bank (The Times, Ben Martin) we see that the Bank of England’s financial policy committee is edging towards more regulation of crypto assets, especially if they mimic conventional financial services that would normally be governed by City rules and standards. The Bank’s Prudential Regulation Authority sent a letter yesterday to CEOs of banks, insurers and investment firms urging them to be “mindful” of potential crypto risks while the FCA also issued a notice saying something similar to firms it works with. * SO WHAT? * It has so far been all talk and no action regarding crypto and regulation, but it continues to get more popular as an asset class and therefore increasingly difficult to ignore. The glacial pace of regulation continues but it does look like there will be guidelines at some point!
SANCTIONS & CONSEQUENCES NEWS
More sanctions rain down but consequences persist and broaden…
UK imposes fresh sanctions on Russian companies (Financial Times, Sebastian Payne and Chris Cook) shows that foreign secretary Liz Truss yesterday announced another raft of sanctions covering more individuals and Russian companies and Johnson leads efforts to freeze Kremlin’s vast gold reserves (Daily Telegraph, Simon Foy) shows that BoJo is targeting Russia’s $140bn pile of bullion while the US Treasury also issued a notice banning Russian gold transactions. * SO WHAT? * This all sounds great as I think that Putin’s piles of gold could be a source of finance for him in his war, but it does sound like this move has been rather a long time in coming. I’m also not sure how measurable the impact of this will be either! But hey ho.
The consequences of the sanctions, however, will become patently obvious. WTO boss warns of food riots in poor countries (The Guardian, Larry Elliott) highlights concerns that 35 African countries were dependent on food imported from the Black Sea region. There are fears that, as countries hoarded vaccines under Covid, they will this time hoard food. Back in the UK, Milk this cheap is udderly ludicrous, say angry farmers (The Times, Ashley Armstrong) highlights dairy co-operative Arla’s assertion that supermarket milk prices need to go up by about a third to mitigate rising costs or it will export more because farmers will get more money.
Consequences of ongoing sanctions are wide-reaching. Next boss warns of 8pc price rises due to war in Ukraine (Daily Telegraph, Laura Onita) reflects a warning by the boss of Next that price rises are coming this autumn to cushion the impact of staff shortages and disruption from Russia/Ukraine-related sanctions and Renault closes Moscow factory and looks to reverse out of Lada (The Times, Adam Sage) highlights a U-turn from French
carmaker Renault so it will now look to reverse out of operations there and consider a sale of its majority stake in Avtovaz, which owns the Lada brand and is the biggest carmaker in Russia while Geely questions future in Russia despite opening for China’s carmakers (Financial Times, Peter Campbell and Edward White) shows that Geely is wavering on its commitment to Russia despite the obvious opportunities opening up to it as other carmakers hit the exit. Shell to pump up to £25bn into Britain as it quits Russia (Daily Telegraph, Rachel Millard) shows that the oil supermajor it going to invest a big slug of cash over the next decade as it pulls out of Russia and brings its HQ to London from Amsterdam. More than 75% of this will be put into low-carbon endeavours. * SO WHAT? * The world is really shifting isn’t it! There is a huge rebalancing exercise going on here and it seems that the longer the war is raging, the more these temporary pull-outs look like they could become permanent. I also think it’s pretty interesting to see that a company like Shell, which looked like it was being shunned after COP26, is now BFF with the government again and reconsidering drilling in the Cambo oilfield after flouncing off in a fit of pique last year about it.
Then in Lloyd’s of London predicts Ukraine war will represent ‘major claim’ (Financial Times, Ian Smith) we see that Lloyds of London warned everyone about the impending impact of Russia/Ukraine as it unveiled annual results yesterday that saw them swing back into profit in 2021 (its best year, in fact, for the last six year!). It said that it expected claims in the billions of dollars, but that the final bill was impossible to guess given that the situation is still ongoing. Although this is clearly going to be a lot of money, Lloyd’s of London: insurance market is well covered to deal with war risks (Financial Times, Lex) says that its core capital of £6bn will be enough to protect it, especially when you take the mitigating factor of reinsurance into account. One area it may be vulnerable to as far as claims are concerned is cyber-attacks because they are more difficult to blame on Russia.
INDIVIDUAL COMPANY NEWS
Uber gets a boost and P&O continues to sail through murky waters…
Uber gets a lift from New York’s yellow cabs (The Times, Callum Jones) shows that the enfant terrible of the minicab world has struck up a deal with an unlikely partner and will list the city’s traditional taxis on its app for the first time. Uber/NYC taxis: co-operation wins over conflict as rides business remains tough (Financial Times, Lex) says that both sides need each other in a tough market after years of fighting each other. * SO WHAT? * Will a similar kind of truce happen in London with our Black Cabs??
Then in P&O chief admits breaking law over mass sackings (Financial Times, Philip Georgiadis, Delphine Strauss, Jim Pickard and Simeon Kerr) we see that the chief exec of P&O shocked everyone yesterday when giving evidence to MPs by admitting that he broke the law by firing his entire crew via video message without notice or
consultation. Interestingly, more than 500 or the 800 crew that were sacked have already accepted terms. He is able to pay new agency staff below the minimum wage because they are operating in international waters. UK ministers raise doubts over legal redress against P&O (Financial Times, Delphine Strauss) shows that the government may actually have no comeback despite P&O’s chief admitting his actions so candidly! * SO WHAT? * I think that companies generally offer an amount of money that they can get away with in these kinds of situations rather than what they SHOULD pay. They weigh up how much it’ll cost them to make people redundant, the time it’ll take etc. and offer a bit more what it would cost you to fight them. The fact that over 60% of the staff affected have accepted terms already would imply that P&O’s offer was attractive, quick and effective (but completely unethical). It really blindsided everyone – even the government. I suspect that ALL rivals will be looking into whether they could do the same and unions will be looking to shore up employee protections because this could prove to be a dangerous precedent IMO…
…in other news…
It’s one of those days where there’s not that much about in terms of “alternative” stories, but I came across this the other day which was pretty impressive! Have a look at Deco and their mash-up of two classics HERE. I love mash-ups, don’t you?
Some of today’s market, commodity & currency moves (as at 0756hrs green is up, red is down). THIS IS INTENDED AS A ROUGH GUIDE ONLY!
|FTSE 100 *
|Dow Jones *
|S&P 500 *
|Oil (WTI) p/b
|Oil (Brent) p/b
|Gold Per t/oz
(markets with an * are at yesterday’s close, ** are at today’s close)