Ukraine puts power of U.S. tech firms on new level 28 Feb 2022 Facebook is fighting Russian hackers while SpaceX is providing internet access. Such communications services are critical in a war. It’s easy for the CEOs concerned to take one side with little risk to revenue from the other. Next time, the incentives could be more complicated.
Russian economic collapse will be hard to avoid 28 Feb 2022 The central bank more than doubled its main policy rate to 20% to support the plunging rouble. It won’t be enough. But further hikes or capital controls would compound pain in an economy where Western sanctions are spurring a run on banks. Moscow has few viable policy options.
Capital Calls: Buffett, Sanctions, Defence, Canada 28 Feb 2022 Concise views on global finance: The Oracle of Omaha has seen value in his company’s own stock; Switzerland breaks with traditional neutrality over Ukraine; military-equipment stocks are surging; and Ottawa may let the Rogers-Shaw telecom merger follow a discouraging U.S. path.
Germany is turning fiscal exceptions into the rule 28 Feb 2022 Chancellor Olaf Scholz will hike defence spending to 2% of GDP and invest 100 bln euros in the military. A historic foreign-policy shift is just the latest instance of Berlin finding ways around its budget rules. Scrapping them would be simpler given a looming energy transition.
BP’s bruising Russian exit almost worth the pain 28 Feb 2022 The UK oil giant is getting out of its 20% stake in $39 bln Rosneft. Russia’s pariah status maximises the hit to its income statement. But the crisis has forced BP to take a step that could eventually allow investors to take a more generous view of its green transition.
Use dollar’s clout, even if that means losing it 27 Feb 2022 Efforts by America and its allies to isolate Russia from the international financial system may hasten other countries’ efforts to bypass the greenback and eventually erode its global dominance. But there’s little point in having power that can’t be wielded in dire circumstances.
Sanctions shock-and-awe reverberates beyond Russia 27 Feb 2022 Western allies will limit Moscow’s ability to use its currency reserves and kick some of the country’s banks out of the SWIFT payment system. While details are vague for now, it looks like a targeted attempt to undermine Russia’s financial system. Other countries, notably China, will take notice.
Russia is dry run for bigger China sanctions test 25 Feb 2022 The threat of penalties didn’t stop Vladimir Putin from invading Ukraine. Sanctions would have even less chance of preventing China from taking control of Taiwan. The deeper the trade ties, the greater the chance of self-harm. And China has a head start in creating workarounds.
Trump’s Truth Social is an overvalued threat 25 Feb 2022 The former U.S. president launched his social media app after Twitter and others booted him from their platforms. Twitter’s slowing growth suggests he might be able to capture a unique following. But based on its users, its $20 bln market cap is at least double fair value.
Western banks face Russian triple whammy 25 Feb 2022 EU and U.S. bank stocks tumbled after Vladimir Putin invaded Ukraine. The conflict may blunt the benefits of higher interest rates and inflict losses on cross-border loans. In a worst-case scenario, Raiffeisen, UniCredit and SocGen could have to write off their Russian units.
Russia’s wheat clout can hit world where it hurts 25 Feb 2022 The grain’s price hit a record high after the invasion of Ukraine, source of 8% of world exports. A long conflict in a country called the “breadbasket of Europe” would mean global shortfalls. President Vladimir Putin would cause even more disruptions if he curbed Russian exports.
Hong Kong is failing Chinese migrants 25 Feb 2022 Departures by the financial hub’s vocal but tiny population of Westerners have monopolised headlines. Less obvious but more important are professionals from the mainland. The city, long a haven for Chinese people fleeing chaos in the north, is fast losing its allure.
Russia gets the Huawei treatment, on steroids 24 Feb 2022 The U.S. government plans to cut the country off from American microchips, telecoms gear and other items. It’s a grander version of the trade curbs that hobbled China’s telecom giant Huawei, and could sting the Russian economy more than financial sanctions.
Viewsroom: Russia and Ukraine, Credit Suisse woes 24 Feb 2022 As President Vladimir Putin launches the biggest attack on a European state since World War Two and the West prepares its response, Dasha Afanasieva and Gina Chon discuss what comes next. And Liam Proud explains how an embarrassing data leak is the Swiss bank’s latest headache.
Bond market sends flawed signals on U.S. economy 24 Feb 2022 A dash to safe havens means Treasuries are in big demand. But the yield curve is sending the same messages it was before Russia invaded Ukraine: that Fed rate hikes may trigger recession and that policy rates won’t rise much above 2%. Both presumptions could be wrong.
West has some cover to ramp up Russian sanctions 24 Feb 2022 Sberbank and VTB halved after troops invaded Ukraine, suggesting Moscow’s banks and oligarchs may end up pariahs, like the Nord Stream 2 pipeline. A Russian tit-for-tat might hit European gas supplies. The one comfort is that end of winter makes it less of an immediate problem.
Putin prods planet into riskier post-pandemic funk 24 Feb 2022 The Russian president’s invasion of Ukraine exposes the limit of sanctions in deterring conflict. The soaring oil price will punch still-fragile economies as they recover from Covid-19, testing Western unity. Global markets for energy and technology face further fragmentation.
China has already won, and lost, in Ukraine 24 Feb 2022 Russia's assault embarrasses Beijing, which has perhaps inadvertently backed a foreign invasion despite its mantra of sovereign non-interference. But the war will distract the West and boost China’s leverage over a key energy supplier.
Capital Calls: Ukraine/chips, Lloyds 24 Feb 2022 Concise views on global finance: Russia’s invasion could exacerbate the semiconductor shortage; New Chief Executive Charlie Nunn wants to boost the 34 bln pound British bank’s fee income, but the bigger prize may come from rising rates.
Besieged Hong Kong fires loud stimulus cannon 24 Feb 2022 As daily Covid-19 infections set new records, Beijing is pressing the city to quickly curb the outbreak. But Hong Kong lacks the systems and ways required to implement China’s strict control model. The city’s $22 bln relief package attempts to balance its conflicting realities.