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Though Europe was once considered home, many European Jews say they are considering leaving

BERLIN—A Star of David crudely daubed on the doors of Jewish homes in Berlin. An Orthodox Jewish man punched in the face on a London bus. Threatening letters sent to a prominent Jewish politician in France.

Across Europe, where centuries of pogroms and the Holocaust nearly wiped out Jews, those who remain have taken a double blow. The first is the grief and shock from the Hamas attack on Israel that shattered an assumption that at least there, Jews were safe from the kinds of attacks that mark their history in Europe.

The second blow is a rise in antisemitic incidents following the attack and amid Israel’s military campaign against Islamist militant group Hamas. The U.K., which harbored Jews fleeing continental Europe during World War II, has recorded at least 805 antisemitic incidents since the Hamas attacks, the highest ever across a 21-day period and more than the total for the first six months of the year, according to the Community Security Trust, a Jewish group that has been tracking antisemitism since 1984.

France, Germany and other countries have also recorded a jump in incidents, including Molotov cocktails thrown at a Jewish center with a synagogue and school in Berlin. On Oct. 24, German police arrested a former Islamic State fighter who served a prison sentence for membership of the militant group on suspicion of planning to drive a truck into a pro-Israel rally, prosecutors said.

On Sunday, a mob stormed an airport in the Russian republic of Dagestan, which is majority Muslim. Hundreds of people, some chanting antisemitic slogans and waving Palestinian flags, rushed onto the landing field to seek passengers on a flight arriving from Tel Aviv. There were about 15 Israelis on the flight, and none was harmed, Israeli officials said. Muslim leaders in Dagestan condemned the incident. A Jewish center in a neighboring republic was set alight.

The Hamas attack and the subsequent rise in antisemitic incidents have some European Jews wondering if they will ever be safe, either in Israel or Europe, a continent that was the center of Jewish life for centuries until World War II. Jews in Europe say they now face a combination of far-right antisemitism as well as growing antagonism due to Israel’s conflict with the Palestinians from both the far left as well as Europe’s growing Muslim populations, which unlike in the U.S. far outnumber Jewish communities.

“I have not left my home in days and my daughter is not going to school,” says Mirna Funk, 42, an author and mother of an 8-year-old from Berlin. Many of her peers are considering emigrating, she says, but now there is a sense that not even Israel is safe. “Where should we go?” she says.

Funk says she was disheartened by rallies denouncing Israel around the world that often included antisemitic chants, from those at college campuses in the U.S. to one in Australia. She says she was terrified about what she feels is mounting antisemitic sentiment in Germany, some coming from its Muslim population of 5.5 million. Germany’s Jewish community, by contrast, numbers around 118,000 people, most of them Jews from the former Soviet Union who emigrated after the end of the Cold War.

Anna Staroselski, head of the German Union of Jewish Students, says she changed the name she uses on Uber and other apps to avoid being identified by drivers from the Middle East. “I have never been so afraid in my life,” says the 27-year-old, referring to recent days.

Many Muslims also face prejudice. Incidents targeting Muslims in Europe and elsewhere also typically increase during troubles in the Middle East or following Islamist terrorist attacks. There were 400 incidents of anti-Muslim prejudice in the U.K., for instance, between Oct. 7 and 24, according to Tell MAMA, a group that measures anti-Muslim attacks.

The Muslim Council of Britain, which represents British Muslims, says that while Muslims and Jews may hold differing views on events in the Middle East, both communities share common values. A spokesperson rejected the idea that Muslims hold more antisemitic attitudes than the general public.

“Just as there are many tropes used to fuel antisemitism, so too are there many negative and generalized assertions of Muslims that fuel Islamophobia. One such trope is that Muslims are somehow inherently antisemitic,” the spokesperson said.

It is difficult to overstate the level of historical trauma among European Jews, says Ben Judah, a senior fellow at the Atlantic Council. Of the roughly nine million Jews in Europe in the late 1930s, there are now just 1.3 million, or 0.1% of Europe’s total population, according to the Institute for Jewish Policy Research, a U.K.-based organization. That compares with some six million Jews in the U.S., or some 2% of the population—a share that is some 20 times as large relative to the total population.

While many U.S. Jews migrated before World War I, European Jews lost even greater numbers of relatives to the Holocaust and have closer family ties to Israel, says Judah. A higher proportion of them are Orthodox, meaning they wear clothes that highlight their religion, increasing the risk of harassment.

“There’s a sense the community has to stick together, while U.S. Jews don’t have to or need to do that to the same extent,” Judah says.

In France, which has Europe’s largest community of Jews at some 440,000, there is widespread apprehension. As of Oct. 29, French authorities have registered more than 819 antisemitic acts and arrested 414 people since the Hamas attack, according to Interior Minister Gérald Darmanin. The incidents include swastikas sprayed next to Jewish institutions and students harassed outside Jewish schools.

Yaël Braun-Pivet, president of the National Assembly, France’s lower house of parliament, filed a police complaint after receiving a letter with a threat to decapitate her. A student was arrested this month at a high school in the French Alps for allegedly shouting death threats against Jews during an homage to a teacher killed recently by an Islamist radical.

“We know that it’s only a matter of days before we have a situation of people being attacked because they are Jewish,” says Yonathan Arfi, president of the Representative Council of French Jewish Institutions, or CRIF, an umbrella group of Jewish associations. “That’s always the case when we have war in the Middle East.”

The resurgent threat has cast a pall over the daily life of France’s Jews. Daniel Marburger, who runs a kosher pizzeria in Paris, says business has fallen since the attack as customers avoid going out. Even when violence isn’t flaring in Israel, Marburger doesn’t wear his yarmulke on the street, fearing antisemitism. “It is also not worth it to provoke,” he says.

France’s Jews have long been the target of attacks, ranging from a bombing of a synagogue in 1980 allegedly by pro-Palestinian militants to the killing of three children and a rabbi at a Jewish school near Toulouse in 2012. In 2015, an Islamist militant gunman held people hostage at a kosher supermarket east of Paris and killed four of them.

Around nine synagogues and Jewish schools in the Paris region received bomb threats on Monday, said Benjamin Allouche, a member of the executive office of the CRIF. Some students were sent home for the day but no explosive device was found, he said.

A 2019 report by the European Union Agency on Fundamental Rights found that 89% of European Jewish people say antisemitism had grown in their countries in the past five years. Nearly four in 10 say they were considering leaving Europe because of it.

The U.S. has also seen a steady increase in antisemitic incidents, to 3,697 in 2022 from 751 in 2013, according to the Anti-Defamation League, a Jewish civil-rights organization.

In both the U.S. and Europe, much of the current hostility comes from a rare combination of radical Islamism and the far left, both of whom view Jews as white, colonial oppressors of Palestinians, says Charles Small, director of the Miami-based Institute for the Study of Global Antisemitism and Policy.

“Both reactionary Islam and the radical left in the West are both opposed to Western hegemony and they see the Jewish state in this region as the quintessential expression of Western domination. It is a toxic combination,” he says.

In the U.S., the population of Jews is nearly double the size of the Muslim community of 3.5 million. Europe’s Muslim population numbered 26 million in 2016, or some 5% of the total—at least 20 times as large as the Jewish community. There are a similar number of Muslims in Greater London to Jews in all of Europe, according to census data.

A 2017 survey by the Institute for Jewish Policy Research found that 12% of people in the U.K. harbor “deep ideological hatred” toward Israel, and 30% hold at least one view that Jews would find antisemitic, a proportion that was double among Muslims. A 2022 survey in Germany by the American Jewish Committee found roughly a third of Germans hold at least some antisemitic views, rising to roughly half of Muslims in Germany.

But current concerns among some Jews in Europe go beyond antisemitic beliefs among some Muslims, many of whom become increasingly secular the longer they live in Europe. Many European Jews are just as concerned about the lack of support following the attacks from non-Jews, including secular or Christian Europeans.

Hadley Freeman, an American-British newspaper columnist, went to a vigil outside the U.K. prime minister’s residence at 10 Downing Street after the Israel attacks. It was difficult to find a non-Jew at the event of a few hundred people, she says. Days later, a far more diverse crowd of tens of thousands gathered for pro-Palestinian and anti-Israel protests, she adds. A follow-up pro-Palestinian protest drew 100,000.

In her liberal north London neighborhood, Freeman says residents were quick to put up posters in support of other causes, from Black Lives Matter to Ukraine, in years past. She says she saw no Israeli flags in the area or on social-media profiles following Hamas’s recent attacks. It feels like “Jews really are on their own,” she says.

Comptes dans le rouge, crise de gouvernance, restructuration contestée: Atos, ex-fleuron informatique en déroute, a le profil pour intéresser des fonds activistes. Contrairement aux grands fonds d'investissement, qui votent "avec leurs pieds" - c'est-à-dire revendent leurs actions s'ils sont insatisfaits -, les gérants de ces petits fonds donnent de la voix pour peser sur la gestion des entreprises et faire valoir leurs intérêts. Leurs armes: la com', à coups de lettres ouvertes, rapports d'enquête accablants et interviews de presse, pour bousculer les dirigeants et rallier d'autres actionnaires à leur cause; et le droit pour contester auprès des autorités de régulation, voire devant les tribunaux.

Chez Atos, le fonds britannique TCI, actionnaire à 3% d'Airbus, a utilisé la première arme avec succès. Christopher Hohn, son fondateur, a pilonné le projet de Guillaume Faury, patron de l'avionneur européen, de prendre 30% d'une filiale de la société informatique, dénonçant "une opération de sauvetage forcée par l'Etat français". Finalement, Airbus a préféré renoncer.

Comptes dans le rouge, crise de gouvernance, restructuration contestée: Atos, ex-fleuron informatique en déroute, a le profil pour intéresser des fonds activistes. Contrairement aux grands fonds d'investissement, qui votent "avec leurs pieds" - c'est-à-dire revendent leurs actions s'ils sont insatisfaits -, les gérants de ces petits fonds donnent de la voix pour peser sur la gestion des entreprises et faire valoir leurs intérêts. Leurs armes: la com', à coups de lettres ouvertes, rapports d'enquête accablants et interviews de presse, pour bousculer les dirigeants et rallier d'autres actionnaires à leur cause; et le droit pour contester auprès des autorités de régulation, voire devant les tribunaux.

Chez Atos, le fonds britannique TCI, actionnaire à 3% d'Airbus, a utilisé la première arme avec succès. Christopher Hohn, son fondateur, a pilonné le projet de Guillaume Faury, patron de l'avionneur européen, de prendre 30% d'une filiale de la société informatique, dénonçant "une opération de sauvetage forcée par l'Etat français". Finalement, Airbus a préféré renoncer.

Le fonds français CIAM, détenteur de moins de 1% du capital d'Atos, a quant à lui brandi la deuxième arme et obtenu victoire. Anne-Sophie d'Andlau et Catherine Berjal, ses cofondatrices, ont porté plainte auprès du parquet financier contre le président d'Atos Bertrand Meunier, contestant la présentation "trompeuse" de son projet de scission et cession d'activités, au profit de l'homme d'affaires Daniel Kretinsky, "spoliant" les autres actionnaires. Finalement, Bertrand Meunier a été forcé de démissionner, le projet est reporté.

Animateurs omniprésents de la cote aux Etats-Unis, les fonds activistes ont longtemps eu mauvaise réputation en Europe, où ils sont vus comme des cow-boys brutaux et vénaux. Qu'ils jugent une société sous-cotée et interviennent pour faire remonter le cours ou que, au contraire, vendeurs à découvert, ils visent une entreprise surévaluée pour faire baisser le cours, leur méthode est la même: bien éplucher le dossier, construire un argumentaire, acheter quelques actions et faire du bruit, pour remettre en cause le management et infléchir la stratégie.

Un tableau de chasse français

Mais le regard sur ces investisseurs agitateurs a changé. Notamment depuis le scandale Wirecard, en 2020. Cette fintech allemande vedette a fait faillite après que le spéculateur activiste britannique Fraser Perring, entre autres, a révélé d'énormes fraudes comptables. L'affaire a même coûté son poste au directeur du gendarme de la Bourse de Francfort, la BaFin, coupable de n'avoir rien vu.

Du coup, les francs-tireurs, qui pointent les mauvaises décisions managériales voire les comptes trafiqués, ont gagné leurs lettres de noblesse. "On constate une lente évolution de la perception des activistes, se réjouit Anne-Sophie d'Andlau. Ces actionnaires font pourtant ce que chaque actionnaire devrait faire: avoir une approche engagée de manière à créer de la valeur pour tous."

Quitte à employer la manière forte. En France, en 2017, TCI a mené une offensive acharnée auprès de Safran pour l'obliger à renégocier le prix de son acquisition de Zodiac. En 2021, le fonds britannique Bluebell a poussé vers la sortie Emmanuel Faber chez Danone et s'est invité en juillet au capital de Kering, où il milite pour un rapprochement avec le suisse Richemont dont il est aussi actionnaire.

Amber Capital a participé en 2021 au démantèlement de Lagardère. Leur terrain de jeu est mondial. Ces six derniers mois, Google, Disney, Bayer, Goodyear, Spotify, Alibaba ont été ciblés, avec plus ou moins de succès. Et parfois une victoire à la David contre Goliath, comme quand le cabinet américain Hindenburg Research (5 millions de dollars de chiffre d'affaires), à l'issue d'un rapport approfondi, a fait dégringoler les actions du conglomérat du milliardaire indien Gautam Adani (220 milliards de dollars de chiffre d'affaires) accusé de fraudes et blanchiment d'argent.

Désormais, ces fonds spéculatifs ont pignon sur rue et multiplient leurs actions. Christopher Couvelier, associé gérant en charge du conseil aux actionnaires européens chez Lazard, ne dénombre pas moins de 130 fonds activistes à l'échelle mondiale quand ils n'étaient que quelques dizaines il y a dix ans. Et l'étude de Lazard a recensé 138 nouvelles campagnes au premier semestre, en hausse de 9%.

Une "chasse en meute"

La dynamique est soutenue en Europe, avec 21 campagnes recensées, un record. Le Royaume-Uni et l'Allemagne sont les plus ciblés. "Avec l'émergence des sujets environnementaux, les énergéticiens allemands sont dans le collimateur", note Christopher Couvelier. Dans l'Hexagone, "les grands fonds activistes n'osent plus trop intervenir car les conseils d'administration et les managers se tiennent les coudes à grand renfort de cabinets d'avocats et de consultants pour se défendre", analyse Catherine Berjal, cofondatrice de CIAM.

Le fonds Elliott, le plus puissant parmi ses pairs, s'est ainsi cassé les dents lors de ses offensives sur Pernod Ricard en 2018 et Norbert Dentressangle. Sur le dossier du groupe de transport, l'Autorité des marchés financiers lui a infligé une amende de 20 millions d'euros en 2020 pour avoir tenté de contrarier son rachat par XPO. Depuis, le fonds américain se tient à l'écart des sociétés françaises.

Cependant, TotalEnergies a expérimenté à ses frais, lors de sa dernière assemblée générale (AG), l'émergence d'un nouveau phénomène: la "chasse en meute". Une ONG écologiste a coalisé 17 investisseurs internationaux pour réclamer une stratégie climat plus ambitieuse (non adoptée). Outre la démonstration de force, voilà qui montre que, au-delà de leur rôle utile de poil à gratter, tous les activistes ne partent pas à l'offensive seulement pour gonfler leur portefeuille.

Certains conjuguent business et convictions, tel Christopher Horn, chez TCI, redoutable harceleur de patrons pour qu'ils dégagent plus de rentabilité, mais aussi écologiste militant, qui a imposé en AG à la société aéroportuaire espagnole Aena la mise en œuvre d'un plan d'action pour réduire ses émissions de gaz à effet de serre. L'influence des fonds activistes s'exerce même là où on ne l'attend pas.

The former Céline creative director’s refined debut collection largely picks up where she left off five years ago

There has been a Phoebe Philo-shaped hole in fashion since the designer stepped down from Céline in 2018. For a decade at the LVMH-owned label, the British native served up an evolving wardrobe of polished ease — of mannish “Crombie” coats, generous trousers and sculptural accessories that women, particularly those who worked in the fashion industry, coveted and felt empowered by. And where Philo went — lining sandals with fur, pairing neons with muted colours, reviving the once-dowdy midi-length hem — much of the rest of the industry followed.

Five years later, Philo has returned with her own long-awaited fashion line, with minority backing from her previous employer LVMH.

The line, which was shown via one-to-one press appointments at the brand’s west London studio last week and debuted on Monday at phoebephilo.com, largely picks up where Philo left off at Céline.

It looks and feels great, grounded in hard-working pieces that function as building blocks of a wardrobe — roomy striped shirts and knits pre-washed so as not to look new; high-waisted wool trousers cut wide in the leg (some with back zips that whizz from the ankle all the way up to the waistband); and fluid, deconstructed trenchcoats similar to those Philo designed for Céline. Useful too are the stretch-satin dresses with built-in bodysuits short enough to double as blouses.

More adventurous are oversized leather bomber and flight jackets cut with elegant standing collars and low ruched waistbands — sure-fire hits — and furry trousers of hand-combed viscose. There are also “show pieces” more suited to a museum than the corner office, including a handful of voluminous, shaggy coats of that same hand-combed viscose, each of which takes 300 hours to make and weigh as much as a small child (they will be released later this autumn).

And what of the bags? During her tenure at Céline, Philo turned out a number of styles — among them the curvaceously topstitched Luggage tote and functional Trio cross-body — that achieved bona fide “It” status and led to a fourfold revenue increase to €750mn-€800mn, according to Citi analysts.

The designs for her own range are simpler and more understated, with minimal hardware and not a logo in sight (her name is embossed only in the interior). Of these, a topstitched leather frame bag and a trio of rectangular weekender totes (so supersized they would just about fit in the overhead locker of a plane) are the most promising, if not precisely “It” material.

Philo has kept quantities small, purportedly to limit the label’s environmental impact, but probably also to whip up hype. Of the 150 styles she has designed thus far, no more than 100 of each have been produced. They will be released across three “edits” — A1, A2 and A3 — between now and mid-December.

The possibility — and it does seem possible — that the collection will sell out quickly may help shoppers overcome any potential qualms about the prices. Shearling coats top the collection at £12,000 to £18,000 apiece. Knits range from £650 to £3,200, while tailored trousers start at £950 and jackets at £2,400 — about the same as The Row, the American label that has perhaps come closest to filling the void left by Philo. Bags run from £2,600 to £6,200, on a par with Bottega Veneta and Dior.

Internally, the company is bracing for a shopping deluge, and has limited purchases to one of each style per customer to prevent them from being resold at even higher prices on secondary marketplaces. That will happen anyway — particularly as the collection is only shipping to the US, UK and mainland Europe, and customers further east will be seeking out other channels to buy.

Does the collection justify the hype? To many, the clothes and bags may appear spectacularly plain, the prices exorbitant. Generally, the colours are muted and dark, the fabrics simple, the fit relaxed and elongated. But the devil, as any “Philophile” worth their salt will tell you, is in the details — in the precision of the cuts, the quality and hand-feel of the fabrics and leathers, and the exactness of the proportions. It’s what has driven the popularity of fan accounts such as @oldceline (360,000 followers) and kept secondary market values for Philo-era Céline at (and sometimes surpassing) their original retail prices.

The name on the label also certainly matters. Gold metallic leggings, which might be naff coming from another designer, look cool and irreverent in the context of a Philo collection; so too does a silver collar necklace linking the word “MUM” on repeat. Philo’s good taste is so unquestioned that women who might not trust their own feel confident investing in her pieces.

Not every design is a success. It’s difficult to imagine the Phoebe Philo customer unzipping her trousers to her midriff, or going wild for the frayed skirts that offer scant coverage on the legs but trail on the floor. The metallic jewellery, much of it cube-shaped, is rather plain. More successful are the shoes, particularly the low-heeled Club loafers, and a studded black leather suspender belt that would propel a simple pair of trousers into fashion-forward territory.

The collection does beg the question of why Philo has decided to go it alone. She is not shackled to any house archives, yet the aesthetic is not significantly different from what she produced at Céline. And the luxury market today doesn’t financially favour small, independent labels that can’t afford to build fleets of stores (the vast majority of luxury goods are still sold physically), invest hundreds of millions in marketing or produce the minimums needed to secure the best suppliers (though Philo’s reputation seems to have helped her overcome that). The strength of Philo’s name alone will sell her wares at the prices she is asking, but they would benefit from being shown on a runway and sold in physical stores, where the quality and nuance of fit and design could be best appreciated.

That may come in time. Or she may continue to keep quantities small and distribution tight, defying the mass-marketisation and relentless demand for newness that has gripped the rest of the luxury goods industry. The advantage of having her name on the door is that Philo can do exactly as she pleases, on her own terms.

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German energy group begins cost-cutting programme after expropriation of its Russian assets

The chief executive of Wintershall Dea has warned of European “complacency” over energy security in the wake of the escalating war in Gaza, as the German company continues to grapple with the loss of its Russian gasfields.

Mario Mehren on Monday said Europe faced a “fragile situation with multiple potential supply risks, including the current Middle East conflict,” adding that policymakers and industry alike should be aware of “winter looming”.

His comments came as Wintershall, which is majority owned by chemical group BASF, embarks on a cost-cutting programme after the Kremlin in January expropriated its joint ventures in Russia — which before the war made up half of its output — and confiscated €2bn from its bank accounts.

The loss of control over its Russian business prompted Wintershall to announce in January that it would exit the country, having been one of the last western oil and gas explorers to continue doing business there after the invasion of Ukraine. The decision led to a €5.3bn writedown of its business, as well as the deconsolidation of its Russian assets.

Wintershall said on Monday that it would complete the “legal separation” of its remaining energy exploration and production, carbon management and hydrogen businesses from its Russian assets — including its stake in the Nord Stream pipeline as well as its joint ventures with Kremlin-controlled Gazprom — by mid-2024.

The company’s oil and gas revenues in the first nine months of 2023 nearly halved compared to the same period last year, reaching €7.4bn. In the quarter ending September, the company reported a net loss of €535mn, compared to a €388mn profit in the same period last year.

Wintershall has in response to its crisis announced 500 job cuts — roughly a quarter of its workforce — as it will seek to save €200mn a year.

Aside from the loss of its Russian business, Wintershall blamed lower oil and gas prices as well as impairments worth €587mn, most of which came from its 10 per cent stake in an offshore gas project in the United Arab Emirates.

In January, BASF was forced to write down its stake in Wintershall by €6.5bn. Even before the war, the chemicals group had been trying to divest Wintershall but faced opposition from minority shareholder LetterOne, the London-based investment company that was founded by two now-sanctioned Russian oligarchs including Mikhail Fridman.

As CEO of Twitter, Jack Dorsey was widely panned for his hands-off style, seen as contributing to the company’s uneven growth and slow-to-evolve culture, which paved the way for last year’s takeover by Elon Musk. Dorsey’s other public company, Block, originally known as Square, has a whole different problem: Its divisions feud so intensely they can’t agree on even minor points of cooperation.

For example, last year staffers from Square, a payments processing service popular among small and medium-size businesses, and its sibling division, Cash App, which is similar to Venmo, got bogged down in a negotiation over sharing technology to integrate Apple Pay’s Tap to Pay on iPhone feature. No one from Block, including CEO Dorsey, intervened to resolve the fighting. Today, the dispute still hasn’t been resolved: While Square offers the Tap to Pay on iPhone feature, Cash App doesn’t.

THE TAKEAWAY

• Square and Cash App staffers fought over Apple Pay deal

• Fight reflected culture of divisional autonomy

• Dorsey now wants Block units to work together more

The dispute’s business impact is likely small: the feature is important to merchants, who are more likely to use Square than Cash App to accept payments. But the disagreement was emblematic of a major issue at Block: Employees on different teams have trouble working together. That issue threatens to hurt Block’s ability to become an interconnected marketplace for financial services as Dorsey has envisioned.

Internal rivalries between company divisions is an age-old problem, endured by firms as diverse as film and TV empire Time Warner in the 1990s and Microsoft before Satya Nadella took the reins as CEO. One reason siloes exist, however, is that giving different units autonomy often helps them grow faster.

That was the case at Block, a 14-year-old financial services firm founded by Dorsey under the original name of Square. He has since built it into a financial tech powerhouse with annual revenue of $18 billion and a market cap of around $25 billion. In valuation terms, Block is smaller than fintech firms such as Stripe, most recently valued at $50 billion, and PayPal, which has a market capitalization of around $55 billion. It is significantly bigger than “buy now, pay later” company Affirm, which has a market capitalization of about $5 billion.

While Block started by offering a way for small merchants to accept credit cards, its launch of Cash App in 2013 helped it broaden into the consumer market. But in the wake of Block’s biggest expansion—its all-stock acquisition of buy now, pay later firm Afterpay in January 2022, a deal then valued at $29 billion—Dorsey has changed tack. He wants the company to evolve into a one-stop shop for payments technology, whereby each of its parts is made more valuable by connecting with the others.

For example, employees at businesses that use Square could receive their paychecks through Cash App, Dorsey has said, while fledgling entrepreneurs selling their products through Cash App could become Square customers as their businesses grow. Afterpay, meanwhile, would bring more business to Square’s merchants and allow Cash App users to pay for a wider range of items in installments.

First, though, Dorsey will have to change Block’s culture of independence. The company’s units have often struggled to cooperate, acting at times as if they were competitors, according to former employees.

“They have not been able to really show, just yet, how all these things are interconnected,” said Dominick Gabriele, an equity analyst at Oppenheimer who covers the fintech industry.

Rivalry extends to teams within units: Members of one Square team last year became frustrated that they couldn’t simplify the Square app’s checkout process because other teams controlled parts of the process. So they built a prototype of a simpler app that would compete with the main Square app, according to a former executive. The team ultimately decided not to launch the competing app because it didn’t have enough staff to keep it running smoothly after its release.

Finding more ways for its businesses to help each other could reignite the growth of Block’s gross profit—a metric some analysts see as more important than revenue because it excludes unavoidable expenses like the transaction fees Square passes along to credit card networks and the cost of the bitcoin that Cash App sells to its users. Last year, Block’s gross profit growth slowed to 36% from 62% the year before and 45% in 2020. Growth slowed further in the first half of this year to 30%.

Though Block’s cumulative growth since before the pandemic has been impressive, said Dan Dolev, an equity analyst at Mizuho Securities who covers the fintech industry, the company’s inability to connect its businesses may explain why investors are pessimistic about its prospects. Block stock has dropped around 80% since the beginning of 2021. By comparison, the Nasdaq-100 Technology Sector Index has risen 1% over that period.

“The narrative right now is not good,” Dolev said. To change investors’ minds, the company will have to be more successful in making its businesses work together, Dolev added.

Even Dorsey has acknowledged the divisions within Block at least twice since last year, according to three former employees, expressing dissatisfaction with the number of “silos” inside the company during an all-hands meeting and adding that he wants to improve how Block’s units work together.

A Block spokesperson didn’t have a comment.

Cash App Versus Square

The most obvious rift within Block is between Square and Cash App. Cash App is run by longtime Block manager Brian Grassadonia. Until earlier this month, Square had been run by former Amazonian Alyssa Henry, although she has since departed. Dorsey didn’t replace Henry but took the reins at Square himself.

Rivalry has been an issue for years. In 2019, when Square was adding Cash App as a payment option to its point-of-sale tablets, Cash App’s product team wouldn’t agree to share some of the data Square’s product team wanted, such as details about the customers who used Cash App to pay at Square terminals. The Square team thought that data would help them more easily detect fraud on Square and allow Square merchants to create more effective marketing campaigns, according to two former managers familiar with the talks.

Cash App staffers wanted to protect the privacy of the app’s users, relying on technology that can limit the risk of hackers stealing credit card information. Instead of sharing the user data, they said Cash App would assume the risk of fraudulent transactions, one of the former managers said. In addition to squabbling over data, the teams took months to decide on a revenue-sharing agreement for the fees the Cash App transactions would generate from Square merchants.

Eventually the quarreling teams agreed on an even split.

From the point of view of Block, the parent company, the allocation of revenue between the divisions has little significance. The consolidated profit statement that Block reports publicly excludes fees paid by Cash App to Square, as well as the other way around. But those fees do affect divisional revenues, which the company does report publicly. And the profits of each division determine the future budgets they receive, which gives them an incentive to fight with each other, even at the expense of the company’s overall well-being.

The biggest fight between the two units was over Apple’s Tap to Pay on iPhone feature, which launched in 2022. Months later Square began rolling out the feature to its customers.

Apple’s Tap to Pay feature allows shoppers to quickly pay for items by placing their smartphone or credit card on a merchant’s iPhone. Adding the feature to Cash App would allow merchants who use Cash App to receive payments from customers who don’t have it.

Cash App was already integrated to some extent into Apple Pay: Since 2016 Apple users with Cash App’s debit card have been able to add their card to their Apple Pay wallets and make contactless payments. But merchants couldn’t receive those payments through Cash App. And unlike Square, Cash App hasn’t built the technology to connect merchants with credit card networks, so it would have to buy that feature from Square or another payment processor that specializes in making those connections.

Staffers from Square and Cash App couldn’t agree on the terms. Square staffers wanted to charge Cash App a fee to use the Tap to Pay technology, since Square would be processing the payments on Cash App’s behalf. Cash App staffers, meanwhile, asked for a bigger cut of each transaction than Square was receiving from Apple.

Cash App employees were also frustrated that their Square counterparts wanted them to adhere to technical requirements forcing them to add software code to the app that could make it too large for new users to download over cellular data networks. They threatened instead to buy the Tap to Pay feature from a rival payments processor like Stripe or Adyen.

Square staffers were further irritated that Cash App didn’t want to give them data on Cash App users that could help Square sell more of its products. The best outcome for Block would have been for both sides to share their technology and data freely, as time spent hammering out terms wouldn’t help Block’s bottom line. But that’s not what happened.

Since Dorsey has called for more cooperation between units, signs of change have emerged. For example, last year, the company expanded a team focused on cross-unit engineering projects, such as moving more of its computing infrastructure to Amazon Web Services, according to five former managers.

Ministers seek to strengthen oversight of stablecoins, bringing rules in line with traditional financial services

The UK is pushing ahead with plans to regulate the crypto industry, starting with stablecoins, as it seeks to strengthen oversight of the digital assets market.

The Treasury on Monday published its response to a consultation on the future of crypto industry rules, which comes as the government tries to bolster protections for investors while also attracting investment in digital tokens to London.

Fiat-backed stablecoins are a type of crypto token that are pegged to an existing currency and can be used to make digital payments.

Prime Minister Rishi Sunak has championed the UK as a global crypto hub but faces increasing tensions with the Financial Conduct Authority as the regulator tries to beef up safeguards for consumers.

In the past year, the demand for tougher regulation has grown following the collapse of high profile exchange FTX, which resulted in huge financial losses for thousands of investors.

The Treasury said its proposals were informed by recent events “including the failure of FTX” and that it planned to lay out secondary legislation for the new rules in early 2024.

Under the proposals, stablecoins will be regulated under the same umbrella as existing rules for traditional payment service providers known as Payment Services Regulations.

Tether’s USDT token, which is linked to the dollar, is the world’s biggest stablecoin in circulation with a current market capitalisation of $85bn.

The issuance and custody of stablecoins, in cases where the coin is issued from the UK, will be brought under the regulatory perimeter of the Financial Services and Markets Act.

“Certain stablecoins have the potential to become a widespread means of retail payment, driving consumer choice and efficiencies” the Treasury said.

The government is also seeking to regulate the wider crypto industry, including custodians who hold crypto assets on behalf of investors, and mandating exchanges to disclose all tokens that they list.

But some financial regulation experts have raised concerns over whether the new proposals are workable. “It’s unlikely that crypto regulation will be easily shoehorned into the existing regulatory framework. Time, money and thought will need to be given on how this can be achieved quickly,” said Jonathan Cavill, a partner at law firm Pinsent Masons.

He added that the rules were “likely to create a change in the way in which the industry will be structured and developed,” adding that “becoming regulated and maintaining regulation and compliance is incredibly expensive, time-consuming”.

The crypto industry “should follow the standards expected of similar existing financial service activities, commensurate to the risks they pose,” the government said.

It added that the regulations will “stimulate growth and innovation in the sector . . . whilst mitigating financial stability risks and ensuring consumer protection”.

Multilateral lender says commodity markets still reeling from Russia’s war in Ukraine

Crude prices could rise to more than $150 a barrel if the conflict in the Middle East escalates, the World Bank warned on Monday, risking a repeat of the 1970s oil price shock if key producers cut supplies.

In its quarterly Commodities Markets Outlook, the multilateral lender said a prolonged Israel-Hamas conflict could drive big rises in energy and food prices in a “dual shock” for commodity markets still reeling from Russia’s full-scale invasion of Ukraine.

“The latest conflict in the Middle East comes on the heels of the biggest shock to commodity markets since the 1970s — Russia’s war with Ukraine,” said Indermit Gill, the World Bank’s chief economist and senior vice-president for development economics.

Under the bank’s baseline forecasts, overall commodity prices are predicted to fall 4.1 per cent in the next year, with oil prices declining to an average of $81 a barrel, down from a projected $90 a barrel in the current quarter, as economic growth slows.

However, the report said this outlook could quickly reverse if the conflict in the Middle East intensifies. In a worst-case scenario, global oil supply could shrink by 6mn to 8mn barrels a day, sending prices to between $140 and $157 a barrel, if leading Arab producers such as Saudi Arabia moved to cut exports. Under small and medium disruption scenarios, prices could hit $102 to $121 a barrel, the report added. Current global oil demand is about 102mn b/d.

The war began when Hamas launched cross-border attacks from Gaza on October 7, killing more than 1,400 people and taking more than 230 hostages, according to Israeli officials. The Israeli bombardment has killed more than 8,000 people in Gaza and injured more than 20,000, according to Palestinian officials. The conflict threatens to spread beyond Israel and the occupied Palestinian territories, with energy analysts warning that global exports could be hit if leading crude producers such as Iran became actively involved.

European gas prices this month jumped to their highest levels since March as traders feared pipeline disruptions would hit global supplies, but oil markets have mostly shrugged off the impact of conflict. Benchmark Brent prices fell more than 1 per cent to about $89 a barrel on Monday, little changed from levels after the outbreak of the latest conflict. Crude prices hit a record $147 a barrel in 2008 on the eve of the global financial crisis.

The World Bank said the global economy was in a better position to withstand a supply shock than in October 1973, when Arab members of Opec cut exports to the US and other countries that supported Israel in the Yom Kippur war, quadrupling crude prices.

But it warned that there had not yet been a full recovery in commodity markets from Russia’s full-scale invasion of Ukraine in February 2022.

“Policymakers will need to be vigilant,” said Gill. “If the conflict were to escalate, the global economy would face a dual energy shock for the first time in decades.”

This would have severe consequences for food security in poorer countries already facing rising levels of hunger, according to the bank. Increases in oil and gas prices would also drive up shipping and fertiliser costs, making agricultural commodities more expensive.

“Higher oil prices, if sustained, inevitably mean higher food prices,” said Ayhan Kose, the World Bank’s deputy chief economist, adding that at the end of 2022 nearly a tenth of the world’s population was undernourished.

“An escalation of the latest conflict would intensify food insecurity, not only within the region but also across the world,” Kose said.

Alo Yoga parent seeks investment at $10 bln valuation -sources

Oct 30 (Reuters) - Alo Yoga's parent company is exploring a potential investment that could value the U.S. maker of celebrity-donned workout clothes at about $10 billion, according to people familiar with the matter.

The deal deliberations come as the privately held company makes strides in winning young consumers away from bigger brands such as Lululemon Athletica (LULU.O) and Nike (NKE.N), often thanks to savvy marketing using internet influencers.

Alo Yoga founders Danny Harris and Marco DeGeorge have hired investment bank Moelis (MC.N) to advise on options that include selling a stake in the company, the sources said.

The potential investors, which include private equity firms and sovereign wealth funds, have discussed structuring a deal so that they receive preferential returns or debt-like protections, the sources added.

No transaction structure has been agreed, and it is possible that Alo Yoga decides against any deal, said the sources, who requested anonymity because the matter is confidential.

Spokespeople for Alo Yoga and Moelis declined to comment.

Alo, an acronym for air, land and ocean, is often worn by celebrities such as Taylor Swift, Katie Holmes, Hailey Bieber and Kendall Jenner and featured in paparazzi photos.

It was founded in 2007 and has more than 50 stores in the U.S. and several international locations. Many locations have yoga studios offering a variety of classes.

The company's bestsellers include $128 leggings and $108 sweatshirts. Alo has also expanded into footwear, beauty and wellness categories.

Alo Yoga is part of Harris and DeGeorge's company Color Image Apparel, which also includes their Bella+Canvas brand. Bella+Canvas manufactures blank tee shirts and other apparel for wholesalers.

Los Angeles-based Color Image generated over $1 billion of revenue in 2022 and the business doubled in size from 2021 to 2022, Harris, who is also Alo's chief executive officer, told the Wall Street Journal in May.

Dealmaking is picking up in the athleisure sector. Activewear brand Vuori Inc is planning an initial public offering as early as next year after securing an investment from SoftBank Group Corp (9984.T) at a $4 billion valuation in 2021.

Kim Kardashian’s underwear brand Skims, which sells active and loungewear, also raised financing this year at a roughly $4 billion valuation.