FT : Hurricane Beryl fuelled by record sea temperatures

Hurricane Beryl fuelled by record sea temperatures
Earliest category five storm on record hits Caribbean

Hurricane Beryl became the earliest hurricane to develop into a category five storm on record, meaning its winds and storm surges could prove catastrophic, as warming seas fuelled destruction across the Southeastern Caribbean.

Forecasters said it was expected to bring “life-threatening” winds and storm surge to Jamaica on Wednesday, before hitting the Cayman Islands.

Beryl made landfall Monday on Carriacou, an island that is part of Grenada, as well as hitting St Vincent and the Grenadines, leaving several dead and causing widespread damage.

Simon Stiell, the head of the UN’s climate change arm who is from Carriacou, said his homeland had been “hammered by Hurricane Beryl”.

“It’s clear that the climate crisis is pushing disasters to record-breaking new levels of destruction,” he said, urging countries to set more ambitious plans to tackle global warming.

“This is not a tomorrow problem. This is happening right now in every economy, including the world’s biggest — disasters on a scale that used to be the stuff of science fiction are becoming meteorological facts, and the climate crisis is the chief culprit.”

The US National Hurricane Center warned of winds of up to 155mph at its peak, and said Beryl would begin to “weaken very slowly” on Wednesday to a category four storm before strengthening again.

“Weakening is forecast during the next day or two. However, Beryl is forecast to be at or near major hurricane intensity while it passes near Jamaica on Wednesday and the Cayman Islands on Wednesday night,” it said.


The Alliance of Small Island States, a group of about 40 low-lying states threatened by rising seas across the Caribbean, Pacific, Africa, Indian Ocean and South China Sea, said the hurricane highlighted the urgent need for finance to help countries deal with the effects of climate change.

While the “full extent of the losses and damages are yet to be ascertained, lives have been lost, homes have been ground to nothing. Shelter, security, memories, history — all gone,” said Aosis chair Fatumanava-o-Upolu III Dr Pa’olelei Luteru.

In May, the US’s National Oceanic and Atmospheric Administration (Noaa) warned that there was an 85 per cent higher chance of an above average hurricane season in the Atlantic this year.

Noaaa said it expected 17 to 25 named storms this season, bearing winds of 39mph or higher, and between eight and 13 of those storms were expected to become hurricanes with wind speeds of 74mph.

It said the rise in storms was linked to “confluence of factors” that favoured tropical storm formation, including record-breaking ocean temperatures, the expected shift to the naturally occurring La Niña weather phenomenon across the Pacific, and reduced Atlantic trade winds that allowed hurricanes to grow in strength without the disruption of strong wind shear.

“Human-caused climate change is warming our ocean globally and in the Atlantic basin, and melting ice on land, leading to sea level rise, which increases the risk of storm surge,” Noaa warned.

Beryl is the second named Atlantic storm this season, following Alberto in June. It is forecast to move north-west across the south-west Gulf of Mexico by Saturday, further affecting the communities and the economies in the region.

FT : The money man behind Hindenburg’s Adani trade

The money man behind Hindenburg’s Adani trade

The silent partner to the trade that rocked Adani
When Nathan Anderson of Hindenburg Research unveiled a detailed bet against Gautam Adani’s group of companies in January 2023, the feared short seller conceded he likely wouldn’t make a massive profit off an investment that rocked the empire of one of India’s richest men. 

On Monday, Anderson laid out the relatively paltry windfall from his bet against Adani Group, stating he’d earned just over $4mn for his bets against the parent company.

The gain is small when compared with the impact of Hindenburg’s report, which accused the conglomerate of moving billions of dollars in and out of Adani-controlled entities, often without disclosure. 

Though Adani vehemently denied Hindenburg’s claims, it sent the group’s shares into a free fall, shaving billions from the fortune of the world’s then third-richest man.

Adani’s extensive ports, power and infrastructure empire pulled a $2.5bn share sale plan and saw $140bn wiped off its market value.

There was other money made on the trade, however.

In a blog post on Monday, Anderson disclosed that India’s main securities regulator had issued a “show cause” notice to the US-based hedge fund, often the precursor to a formal regulatory action.

In the 46-page notice, the regulator named US hedge fund Kingdon Capital Management as a silent partner to Hindenburg’s short bet against Adani, reports the FT.

For years, it has been known that Anderson, a dogged researcher who has successfully taken on companies such as hydrogen truck seller Nikola Motors and Carl Icahn’s public holding company, has worked with partners to finance his trades due to his firm’s small size. Activist short sellers tend to sell research to third parties who in exchange provide cash to execute their trades.

Many on Wall Street have wondered how Hindenburg put on his trade and who backed him. 

Kingdon is an established New York-based hedge fund founded in 1983 and owned by financier Mark Kingdon. It is one of Wall Street’s oldest hedge funds, but has seen assets shrink from nearly $5bn after the 2008 financial crisis to $640mn as of March.

According to the regulator’s report, Kingdon stood to make about 70 per cent of the gains from Adani, while Anderson’s cut was about 30 per cent.

After expenses related to its two-year investigation into Adani, “we may come out ahead of break-even on our Adani short”, said Hindenburg.

In its notice, the regulator said Hindenburg “deliberately sensationalised and distorted certain facts”. (Shares in Adani group have recovered most of their value).

Hindenburg called the allegations “an attempt to silence and intimidate those who expose corruption and fraud perpetrated by the most powerful individuals in India”.

It pointed to numerous media reports that have brought new colour to Adani’s operations, including a number of FT investigations. 

The probe has also roped in one of India’s largest banks. Kotak Mahindra Bank “created and oversaw the offshore fund structure used by our investor partner to bet against Adani”, Hindenburg said.

Kotak Mahindra International Limited and its K-India Opportunities Fund “unequivocally state that Hindenburg has never been a client of the firm nor has it ever been an investor in the fund. The fund was never aware that Hindenburg was a partner of any of its investors,” it said. 

FT : Deutsche Bahn struggles to shake off ‘travel hell’ reputation

Deutsche Bahn struggles to shake off ‘travel hell’ reputation
Delays mar Germany’s once well-respected rail network, with massive repair work still ahead

Deutsche Bahn recently took journalists from Berlin to Frankfurt on a trip aimed at showcasing massive new investment in Germany’s rail network. Their train was 45 minutes late.

Such delays are now typical of a railway system that used to symbolise sleek, speedy efficiency and is now a byword for travel hell.

Fans converging on Germany for the Euro 2024 football championship have been shocked by how poor the DB system is. Last year, only two out of three long-distance trains arrived on time. Switzerland is even thinking of excluding German trains from its network because they’re often so late.

“With all this travel chaos the railways have become a national embarrassment,” said Ulrich Lange, transport spokesman for the opposition Christian Democrats. 

The press trip ended as badly as it began. On the way back, reporters were directed to take a local train to Frankfurt, which arrived with a 35-minute delay. As a result, many missed their connection home.


“Of course, it sucks,” said Wolfgang Weinhold, the DB executive in charge of the company’s infrastructure renewal programme, who attended the misbegotten trip. “But it also spurs us on to make things better.” 

The reason for the poor service is prosaic — wear and tear. Years of under-investment means the equipment needed for a smooth-running rail service — signal boxes, overhead lines, crossings, switches and track — is in a terrible state.

“For decades, we basically ran the system into the ground,” Berthold Huber, head of infrastructure at Deutsche Bahn, told the Financial Times. “And now we’re at a tipping point.”

The problems have been compounded by the huge spike in demand for rail travel seen over the past few years. More people are taking the train than ever before — helped by the success of the Deutschlandticket, first introduced in May last year, which allows unlimited travel on regional and local transport for €49 a month.

“We have a lot more rail traffic, which is exactly what we wanted,” said Andreas Geissler of Allianz Pro Schiene, a rail lobby group. “But that combined with massive under-investment over many years has led to the crisis we’re seeing now.”

“The rail infrastructure is too old, too full, and too prone to disruption,” said Huber. “We’re operating ever more trains on a system that hasn’t kept up with our needs.”


Deutsche Bahn has a solution: a massive modernisation programme.

The only catch: some of the network’s busiest lines will have to be closed down for months to allow for repairs. For DB’s hard-pressed customers, that means things will get worse before they even start to get better.

“It’s like open heart surgery,” said Geissler. “No one has experience of carrying out repairs on this kind of scale. It’s uncharted territory.” 

DB’s woes have their origins in the 1990s, a time when the government contemplated taking it public and turning it into a global, partly privatised player along the lines of Deutsche Telekom and Deutsche Post.

The company cut costs to make itself more palatable to potential investors. It shut down unprofitable lines and reduced the amount of track in its network from about 40,000km to 34,000km.

“With the reform of Deutsche Bahn in the 1990s we were trying to create the most efficient railway system possible,” Huber said. “But we removed too much infrastructure. With the efficiency drive, we went too far.”

Germany now invests much less per capita in its rail infrastructure than most other countries — just €114 in 2022, compared to €450 in Switzerland and €319 in Austria. Rail became the Cinderella of German transport policy, as successive governments channelled billions into road construction.


“The railway got the warm words and the roads got the money,” said Geissler.

Now that is changing. Chancellor Olaf Scholz’s government is channelling much more investment into the system than his predecessor Angela Merkel ever did. DB bosses hope the current multi-billion-euro modernisation programme will presage a real turnaround in the company’s fortunes.

First up for an overhaul is the “Riedbahn”, which connects Frankfurt to Mannheim and is used by up to 16,000 passengers a day. Hardly a day goes by without train cancellations or delays on a route transport minister Volker Wissing has called Germany’s “most neuralgic line”.

Now it will be closed for five months, with trains diverted along alternative, longer routes and local travellers forced to take replacement buses.

The plan is to fix everything in one fell swoop — stations, tracks, ballast beds, switches, overhead lines and crossings.

DB chiefs insist there is no alternative. “Imagine both your knees and elbows are bust. If you just deal with the first knee, you’ve solved a problem, but the other three will just get worse,” said Huber. “That’s why you have to deal with everything simultaneously.”

The Riedbahn is just the start. Ultimately, 41 of Germany’s most important rail transport corridors will be modernised by 2030, with DB promising tangible improvements in the service by the end of this year.


Wissing has said DB needs €45bn to repair all of Germany’s rail infrastructure. So far he has only managed to secure about 60 per cent of that sum — €27bn. DB’s equity capital will be increased by €20bn by 2027 in part to pay for the renewal programme and some funds will come from the sale of DB’s logistics unit Schenker, which could fetch more than €15bn.

Huber said he still wonders how they will finance it all. “But the fact is we’re getting an extra €27bn, and that is a helluva lot. And that means funding for all the projects we’ve planned for the next two years is secured.”

Yet the new funds have been slow in coming. As a result, the company was forced to dip into its own pockets to pay for essential repairs — one of the reasons why it made an operational loss of almost €1.3bn in 2023, down from a profit of €1.2bn in 2022.

Executives insist the renewal programme is good news for customers. But it’s not much consolation to the 150 Austrian fans who arrived too late for a Euros match in Dortmund last month due to network problems.

Or to Philipp Lahm, the Euros tournament director and former German captain, who missed a TV appearance where he was due to comment on a Euros game because his train was late.

Many will agree with French film star Julie Delpy, who vented her frustration on Instagram last year after a flurry of missed connections. “Please travellers never ever travel by train in Germany,” she wrote. “Go by foot if you have to.”

FT : French political turmoil throws spotlight on debt vulnerability

French political turmoil throws spotlight on debt vulnerability
Overseas investors who own half the nation’s bonds could demand higher borrowing costs, warn analysts

Political upheaval in Paris is prompting the financial vulnerabilities of the Eurozone’s second-biggest economy to be reappraised, investors have warned. 

Many fear that the prospect of dysfunctional politics, flagging growth and a steadily rising debt burden may dent France’s long-term attractiveness to foreign investors who hold around half the country’s government debt.

Traders doubt that this will result in turmoil akin to the gilts market crisis triggered by former UK prime minister Liz Truss in 2022, as the country’s finance minister has warned. But they fear that France’s bond market could increasingly resemble Italy’s over time, facing permanently higher borrowing costs and becoming a potential flashpoint when bloc-wide crises hit.

“This is causing some consternation amongst those investors who maybe have been complacent about France’s political risks and fiscal sustainability risks,” said Mark Dowding of RBC BlueBay Asset Management.

If France enacts the wrong policies over time, “there is no reason why it can’t end up in a situation akin to where Italy sits today,” he added. 

Borrowing costs have already widened in response to the prospect of either the far-right Rassemblement National forming the next government, or the increasingly likely prospect of an unstable hung parliament.

Since President Emmanuel Macron announced a snap election early last month, the gap between yields on 10-year French and German debt — a measure of risk — has rocketed from 0.48 percentage points to 0.85 percentage points last week, although it has since fallen to 0.71 percentage points.

According to Rohan Khanna of Barclays, the yield on French bonds is at its highest level relative to a combination of those on ultra-safe German Bunds and traditionally riskier Spanish debt since the beginning of the 2000s.


The first-round victory of Marine Le Pen’s RN and its allies on Sunday and the NFP’s second-place finish have bolstered fears of further political turmoil ahead of the second round on July 7. It has also intensified market fears of either political deadlock or a potential move away from market-friendly policies, which could damage confidence after the election.

Pollsters believe a hung parliament or an outright majority for the RN are the most likely outcomes after the second round. In the case of a strong finish for the RN, President Emmanuel Macron could face an uncomfortable power-sharing arrangement with the far-right known as “cohabitation”.

The uncertainty comes at a time of budgetary weakness in France. S&P Global lowered its credit rating in May, following a downgrade by Fitch. France is forecast to run a budget deficit of 5 per cent of GDP next year, modestly down from 5.3 per cent this year but still one of the highest in the EU and above that of Italy, according to the European Commission.

France is also reliant on overseas investors — including a big cohort of Japanese institutions looking for secure European sovereigns — to buy its bonds. While this gives it a more diversified investor base than some, it also leaves it more vulnerable to a sharp change in sentiment, say analysts.


Half of French government debt is held by non-residents, compared with about 27 per cent in Italy and 43 per cent in Spain, according to Eurostat data. While Italian households hold 11 per cent of the country’s debt, that figure for France is 0.1 per cent.

Markets are nervous about what the Japanese investors will do in particular, as shifts in Japanese monetary policy could make their trades less profitable, said Tomasz Wieladek, an economist at T Rowe Price.


On June 19, the commission proposed opening an excessive-debt procedure for France, as Brussels warned of “high risks” emerging from its debt sustainability analysis over the medium term. The general government debt ratio is on track to rise continuously to about 139 per cent of GDP in 2034, it stated.

France has so far avoided the kind of crises experienced in Italy and the UK in recent years. In 2018, the spending plans of Italy’s coalition of the Five-Star Movement and the League party pushed the gap between Italian and German 10-year bond yields to more than 300 basis points. That was the highest level since the aftermath of Silvio Berlusconi’s premiership, reflecting investors’ assessment of Italy’s political risk.

Analysis by JPMorgan suggests France could weather a sudden leap in borrowing costs. A “shock” under which borrowing costs leap by 1.5 percentage points over a two-year period would only lift the debt-to-GDP ratio to just over 115 per cent, marginally above its central projections, the bank said in a recent note. 


That is partly because France’s debt stock is relatively long-dated, with an average maturity of 8.5 years, according to S&P. That means that just 8-10 per cent of its debt comes up for refinancing every year, according to Barclays, slowing the impact of a rise in borrowing costs. 

“The Liz Truss scenario seems unlikely at this point — I don’t see a sudden disruption to the French bond markets,” said Holger Schmieding, chief European economist at Berenberg, who predicts Le Pen’s party will seek to be relatively moderate on fiscal policy.


However, the country’s long-term fundamentals are not good, Schmieding said, especially if France diverges from Macron’s pro-growth policies. A confrontational approach with Brussels is seen as raising the risk of wider turbulence in the EU. Some investors also worry that a wider sell-off in French debt would spark contagion in other European countries, forcing the European Central Bank to intervene.

France’s public debt rose above 115 per cent of GDP in 2020, nearly double that in 2007. Last year, its debt-to-GDP ratio was the EU’s third-largest, after that of Greece and Italy, at 111 per cent of GDP.

Against that backdrop, Schmieding pointed to the potential for higher borrowing costs or further credit rating downgrades, particularly if growth falters.

“It adds up to a serious fiscal issue over the longer term,” said Schmieding.

>>> US After Hours Summary: Quiet after hours session; CDMO +4.5% higher on earn

After Hours Summary: Quiet after hours session; CDMO +4.5% higher on earnings; SLP -7.8% lower on earnings; RPAY -10.9% lower on convertible offering

After Hours Gainers:

Companies trading higher in after hours in reaction to earnings/guidance: CDMO +4.5%

Companies trading higher in after hours in reaction to news: SCLX +13.5% (SCLX and DECA sign LoI for proposed business combo), NFE +2.2% (launches Klondike Digital Infrastructure), SPB +1.8% (files registration statement for spin-off of its Home & Personal Care unit), CHX +1.6% (SLB and CHX each receive DOJ request for additional info related to merger), VSTO +1.2% (confirms receipt of additional info from MNC Capital), CIFR +1.1% (provides June operations update), SLB +0.5% (SLB and CHX each receive DOJ request for additional info related to merger), RNST +0.1% (sells assets of Renasant Insurance to Sunstar), STN +0.1% (names new CFO)

After Hours Losers:

Companies trading lower in after hours in reaction to earnings/guidance: SLP -7.8%

Companies trading lower in after hours in reaction to news: FFWM -24.2% (announces $225+ mln equity investment anchored by Fortress Investment), RPAY -10.9% ($260 mln convertible notes offering), ATOS -0.9% (names new CFO), RIVN -0.9% (denies media report that it's in talks to extend partnership with VW beyond software JV, according to Reuters), AAPL -0.3% (AAPL to get observer role on OpenAI's board, according to Bloomberg), ON -0.1% (acquires SWIR Vision Systems), MSFT -0.1% (AAPL to get observer role on OpenAI's board, according to Bloomberg)

>>> US Research Calls II

Research Calls II
  • Upgrades:
    • Atlassian (TEAM) upgraded to Overweight from Neutral at Piper Sandler; tgt raised to $225
    • PayPal (PYPL) upgraded to Positive from Neutral at Susquehanna; tgt $71
    • Principal Fincl (PFG) upgraded to Neutral from Underweight at JP Morgan; tgt raised to $96
  • Downgrades:
    • Medical Properties Trust (MPW) downgraded to Neutral from Outperform at Exane BNP Paribas; tgt $4
    • Pure Storage (PSTG) downgraded to Sell from Neutral at UBS; tgt raised to $47
    • Roblox (RBLX) downgraded to Mixed from Positive at OTR Global
    • Shoals Technologies (SHLS) downgraded to Sell from Buy at Citigroup; tgt lowered to $5
    • WideOpenWest (WOW) downgraded to Underperform from Mkt Perform at Raymond James
  • Others:
    • Bioceres (BIOX) resumed with a Buy at ROTH MKM; tgt $15
    • Rapport Therapeutics (RAPP) initiated with a Buy at Stifel; tgt $35
    • Rapport Therapeutics (RAPP) initiated with a Buy at Jefferies; tgt $35
    • Rapport Therapeutics (RAPP) initiated with a Buy at TD Cowen
    • Royal Bank of Canada (RY) initiated with a Buy at UBS
    • Schrodinger (SDGR) initiated with an Outperform at Leerink Partners; tgt $29
    • TeraWulf (WULF) initiated with a Buy at ROTH MKM; tgt $6.50
    • Toronto-Dominion Bank (TD) initiated with a Neutral at UBS
    • Upwork (UPWK) resumed with a Neutral at UBS; tgt lowered to $12
    • Viking Holdings Ltd (VIK) initiated with an Overweight at Barclays; tgt $39
    • Waystar Holding Corp. (WAY) initiated with a Buy at Canaccord Genuity; tgt $30
    • Waystar Holding Corp. (WAY) initiated with an Outperform at Raymond James; tgt $30
    • Waystar Holding Corp. (WAY) initiated with an Outperform at RBC Capital Mkts; tgt $27
    • Waystar Holding Corp. (WAY) initiated with an Outperform at William Blair
    • Waystar Holding Corp. (WAY) initiated with an Outperform at Evercore ISI; tgt $25
    • Waystar Holding Corp. (WAY) initiated with an Overweight at JP Morgan; tgt $24
    • Waystar Holding Corp. (WAY) initiated with a Buy at Goldman; tgt $32
    • Waystar Holding Corp. (WAY) initiated with a Buy at Deutsche Bank; tgt $27
    • Waystar Holding Corp. (WAY) initiated with an Overweight at Barclays; tgt $24
    • Wipro (WIT) initiated with a Buy at Nomura