(ZH) Russian FSB Identifies Alleged Dugina Assassin

Russian FSB Identifies Alleged Dugina Assassin

By BlueApples
At the turn of the 20th century the delicate fabric of social order in Europe rested on a knife's edge. As imperial powers expanded their empires, it was only a matter of time before conflict between them would shatter peace in Europe. In that era, Russia found itself against Europe's most powerful empires, namely Austria-Hungary and Germany.
The fissure between those empires was cemented by the Bosnian Crisis of 1908 which saw Austria-Hungary annex Bosnia and Herzegovina by using Bulgaria's declaration of independence from the Ottoman Empire as an advantageous political catalyst given its destabilization of the Balkan region. Austria-Hungary's actions would provoke Russia to rise to the defense of its Slavic brethren situated in Serbia and Montenegro in a response that would forever alter how Russia would align itself among the continental powers of Europe. While a widespread conflict was averted by the amending the Treaty of Berlin, the political climate the Bosnian Crisis cast would light the fuse for the inevitable outbreak of WWI which was detonated with the assassination of Archduke Franz Ferdinand by Bosnian-Serb nationalist Gavrilo Princip.
As the war in Ukraine places Russia at familiar odds with the powers of Europe yet again, the precarious position of ostensibly unsustainable peace across the continent echoes on longer than a century following the First World War. The tension illustrates the axiom that nothing is new under the sun as the volatility of Europe in 2022 mirrors that in 1908. Russia's position against the European hegemony vested in NATO is analogous to its stance in support of the Slavic realm longer than a century ago. Now, following the assassination of Darya Dugina, this century may have found its own Franz Ferdinand.

The Russian Federal Security Service ("FSB") has claimed that the assassination of Dugina was committed by a covert operative of Ukraine. The FSB has identified Natalia Vovk as the alleged assassin. "As a result of a complex of urgent operational-search measures, the Federal Security Service has solved the murder of Russian journalist Darya Dugina, born in 1992," the FSB announced, going on to emphasize the culpibility of the Ukrainian government by stating that "the crime was prepared and committed by the Ukrainian special services[.]"
According to the FSB's investigation, Vovk entered Russia in July before situating herself in the same apartment building that Dugina resided in. Vovk would then follow Dugina to the festival in which the explosive device that led to her death was planted. Vovk, who was accompanied by her 12-year old daughter, fled to Estonia following the assassination, according to Russian intelligence. Following her identification, Russian law enforcement agencies declared their intent to seek her extradition.
FSB alleges that Ukrainian spy Natalia Vovk assassinated Darya Dugina.
Following Dugina's assassination, Ukraine was naturally implicated as being behind the murder given her father's significant, albeit enigmatic, reputation as one of Vladimir Putin's most influential ideologues. Kiev urgently washed its hands of any involvement as advisor Mykhailo Podolyak stated “Ukraine, of course, has nothing to do with yesterday’s explosion[.]” Although Ukrainian officials denied any involvement in the attack, President Volodymyr Zelensky warned of his anticipation that Dugina's murder would inextricably result in the intensification Russia's military campaign.
Given the reports of Vovk's escape to Estonia, the location of the alleged assassin places Russia in a conflict against a NATO member state even more directly than the proxy war in Ukraine has. In 2016, the European Court of Justice set precedent which would justify any extradition request for Vovk by Russia. The case law that set that standard occurred when the court found that any member state of the European Union is obligated to accommodate an extradition request of any third-party non-member state even if the subject of the request is not a citizen of the EU nation itself. This decision followed a case in which Russia requested to have Estonian national Aleksei Petruhhin extradited from Latvia for drug trafficking offenses.
The legal framework set by the European Court of Justice will place Estonia in a crucible if Vovk has indeed found safe haven in the Baltic state. In addition to joining the EU in 2004, Estonia joined NATO that same year. The potential conflict arising between Estonia and the Russian Federation has the potential to trigger Article 5 of the NATO Charter which puts forth a collective defense clause meaning that any military engagement with a NATO member state constitutes action taken against the entire trans-Atlantic body whether it occurs as far east as Tallinn or as far west as Hawai'i.
Article 5 has been constantly dangled before Russia as a Sword of Damicles of sorts designed to dissuade any escalation of the Ukrainian conflict. The veiled threat was most recently invoked in response to Russian attack on Zaporizhzhia Nuclear Power Plant and increased military incursions by Ukrainian military forces into Crimea. “Any deliberate damage causing potential radiation leak to a Ukrainian nuclear reactor would be a breach of NATO’s Article 5,” said UK MP Tobias Ellwood. His sentiments were echoed by US Congressman Adam Kinzinger (R - IL) who followed Ellwood's declaration by stating “This really isn’t even up for debate; any leak will kill people in NATO countries, that’s an automatic article 5[.]" just hours before Dugina's assassination.
While Article 5 of the NATO Charter has been used to threaten Russia from intensifying any aggression, the officials who have constantly cited the collective defense policy have done so under the pretense of preventing any further aggression. The assassination of Darya Dugina is a drastically different circumstance as Russia will surely perceive any potential action it takes to have Vovk extradited from Estonia as entirely justified and as a response to the murder, not an offensive attack against a NATO member state. As the manhunt for Vovk ensures, Europe again finds itself in the political crucible that enveloped the continent following Gravrilo Princip's assassination of Archduke Franz Ferdinand. However, in this historical iteration, it is the European central powers who find themselves in a position of being the aggressor that could provoke a catastrophic conflict with Russia

>>> Europe : Brokers Upgrades & Downgrades - 23rd of August 2022

>>> Up
* FD Technologies Raised to Hold at Berenberg; PT 1,900 pence
* Tallinna Sadam Raised to Buy at SEB Equities; PT 1.77 euros

>>> Down
* Halfords Cut to Hold at Panmure Gordon; PT 150 pence
* Hapag-Lloyd Cut to Sell at Citi
* Maersk Cut to Sell at Citi

>>> Initiation


>>> Call
* FD Tech Raised at Berenberg, Though Awaiting Better Entry Point
* Maersk, Hapag-Lloyd, ZIM Cut at Citi on Cautious Shipping View

>>> What to look at today - 23rd of August 2022

Global stocks dropped toward the lowest levels of the month on Tuesday and sovereign bonds nursed losses as worries about tightening Federal Reserve monetary policy filtered across markets. The equity weakness lopped about 0.8% off MSCI Inc.’s Asia-Pacific share index. S&P 500 and Nasdaq 100 futures stabilized, eking out gains after slumps of more than 2% in both indexes on Monday. European contracts wavered. The energy sector was the only one in the green in the stock market as crude scaled $91 a barrel, lifted by the possibility of OPEC+ output cuts. Hong Kong and China bourses were fairly resilient. China has cut borrowing costs and plans special developer loans worth as much as 200 billion yuan ($29.3 billion) to ease a property crisis, moves that may aid sentiment. The Fed’s brake on the US economy to ensure high inflation keeps cooling remains the key driver in global markets. Traders are bracing for hawkish talk at the central bank’s Jackson Hole symposium later this week. Treasuries held a selloff, with the 10-year yield above 3%. Australian bonds fell. The dollar inched lower and the euro was near a two-decade low.  Hedge funds collectively placed a big short across futures referencing the official successor to the London interbank offered rate known as the Secured Overnight Financing Rate. This position stands to benefit should Fed Chair Jerome Powell effectively rule out a dovish pivot at Jackson Hole. Bitcoin found its footing but is about $2,000 off levels that prevailed before a crypto swoon on Aug. 19. US After Hours PANW +8.1% jumps on earnings and 3-for-1 stock split; ZM -8.9%, DLO -8% lower on earnings.

Nikkei -1.21% Hang Seng -0.74% CSI -0.47% Shanghai -0.04% Shenzen -0.19%

Eur$ 0.9920 CNH 6.8698 CNY 6.8522 JPY 137.27 GBP 1.1751 CHF 0.9648 RUB 60.1080 TRY 18.1080 WTI$ 90.94 +0.65% Gold 1,737.50 +0.07% BTC 21,030 -0.45% ETH 1,578 -0.07%

S&P -0.12% Nasdaq -0.09% EuroStoxx -0.09% FTSE -0.28% Dax -0.06% SMI -0.40%

Macro :
- US Natural Gas Hits Fresh 14-Year High as European Prices Soar
- After Losing Its Vowels, Abrdn’s FTSE 100 Status Could Be Next
- German Gas Levy Will Likely See Adjustments: Rheinische Post

Keep an eye on :
- ACKB BB : Ackermans & van Haaren’s Delen Private Bank Buys Groenstate
- ALC SW : Alcon to Buy Aerie Pharma in $770 Million Deal: Deals Snapshot
- ARBN SW : Arbonia Sees FY Organic Revenue Above +5%
- B2H NO : B2Holding 2Q Total Revenue NOK825M Vs. NOK812M Y/y
- BAKKA NO : Bakkafrost 2Q Operating Ebit Misses Estimates
- BNP FP : BNP vs. SocGen; Barclays vs. Deutsche as ECB's 4Q Battle Begins
- IAG LN : British Airways to Cancel More Flights up to End of October: Sky
- DMP GY : Dermapharm 1H Adjusted Ebitda EU149M Vs. EU137M Y/y
- GSF NO : Grieg Seafood 2Q Ebit Beats Estimates
- ISN SW : Intershop 1H Vacancy Rate 13.8% Vs. 12.8% Y/y
- KSS US : Kohl’s Gains After Chairman Buys Over $750,000 of Shares (1)
- LHA GY : Kuehne Won’t Buy More Lufthansa Shares: Frankfurter Allgemeine
- MITRA BB : Mithra Issues 799,861 New Shares to Lenders Highbridge, Whitebox
- REV US : Revlon Tells Bankruptcy Judge Its Shares Are Likely Worthless
- CFR SW : Richemont Wins Support of ISS Against Activist Investor Bluebell
- SSABA SS : SSAB Says It’s Looking at Hydrogen Steelmaking Capabilty in US
- TEG GY : TAG Immobilien 2Q FFO EU48.5M Vs. EU45.9M Y/y
- TOBII SS : Tobii 2Q Operating Loss SEK50M, Est. Loss SEK66.6M
- URW NA : Retail REITs' Revival Short-Lived as Inflation Trauma Kicks In
- ZM US : Zoom Video Cuts FY Revenue Forecast, Misses Estimates
- FHZN SW : Zurich Airport 1H Ebitda Beats Estimates

FT : Investors struggle to trade eurozone debt without ECB safety net

Investors struggle to trade eurozone debt without ECB safety net
The central bank had propped up the region’s markets with vast bond-buying programmes

German government bonds are recording their biggest swings since the eurozone debt crisis a decade ago as the European Central Bank’s withdrawal strips the market of one of its most important buyers.

The deteriorating trading conditions have led to a strong uptick in volatility in a market that acts as a yardstick for borrowing costs across the region.

The yield on Germany’s 10-year Bund has moved in at least a 0.1 percentage point range on 79 days in 2022, according to Financial Times calculations based on Refinitiv data. Bund yields have not swung in such a wide range so regularly since 2011 and only did so on one day last year.

Liquidity in the region’s bond markets — the ability to trade debt easily — has been hampered by fears over a looming recession, with many growing bearish about the outlook as the ECB raises interest rates to curb red-hot inflation.

“Market conditions are impaired in the bond markets,” said Antoine Bouvet, senior rates strategist at Dutch bank ING. “Everyone has the same view so no one’s willing to take the other side,” he added.

ECB rate-setters have been signalling another half percentage point rate rise is likely at its meeting on September 8, after a similar-sized move last month. “Even if we entered a recession, it’s quite unlikely that inflationary pressures will abate by themselves,” ECB executive board member Isabel Schnabel said last week.

German central bank chief Joachim Nagel warned at the weekend that inflation in Europe’s largest economy was likely to surpass 10 per cent for the first time in 70 years, adding: “With the high inflation rates, further interest rate hikes must follow.”


At the same time, traders can no longer rely on the ECB as a guaranteed bond buyer of last resort, after the bank removed a critical safety net this year with the halting of its €1.7tn pandemic-era asset-purchasing programme and its main €3.3tn bond-buying scheme.

Italian bonds have also endured significant fluctuations in recent months. The spread between German and Italian 10-year yields — seen as a key gauge of risk — was close to 2.3 percentage points on Monday, its highest level for almost a month, highlighting anxiety over the outcome of Italy’s election next month and expectations of further rate rises by the ECB.

Higher rates and the prospect of a protracted global slowdown have prompted fund managers to reassess their portfolios, with many pulling money out of bond markets where value is being eroded by inflationary pressures. Some are instead sitting on cash, awaiting data releases for clues about the trajectory of European and US economies. Germany’s 10-year Bund yield has, for example, soared to 1.3 per cent from minus 0.18 per cent at the end of 2021.

Market activity typically quiets down during the summer months. But Bouvet said that even before entering the seasonal August lull, “the liquidity in the bond market was getting worse because of macro uncertainty [and] risk appetite being much more reduced”.

Poor liquidity has fuelled greater volatility, with bond prices swinging on ostensibly small developments and news. “[There’s] large pricing moves on not a lot and you also get a bit of dislocation,” said Lyn Graham-Taylor, senior rates strategist at Rabobank.

Snigdha Singh, co-head of European fixed income, currencies and commodities trading at Bank of America, noted that there are now fewer new sovereign and company bond deals across the continent. “Issuers will need to navigate volatile windows” if they want to come to market, she said, adding that “it certainly is conceivable that we could see some deals being postponed.”

Liquidity woes in debt markets have not been confined to the eurozone this year. Participants in the $23tn US Treasury market have also faced significant challenges, with William Marshall at Wall Street investment bank Goldman Sachs noting that US “market liquidity has been a prominent theme in rates [government bonds] this year”.

Craig Inches, head of rates and cash at Royal London Asset Management, said that the global bond market conditions had led to rising bid-offer spreads, denoting the difference between the immediate sale price of an asset and its purchase price. Bid-offer spreads tend to expand during volatile markets and a wider gap usually points to worsening liquidity.

“Bid-offer spreads have become really quite large, especially when markets are moving quite quickly,” said Inches. “There may be an element where we get shown a price where we’d rather not pay that price to transact that trade,” he added.

For now, central banks have ended bond-buying, or quantitative easing, but have not yet started to sell what they have on their books. Investors are divided over the likely impact of ‘quantitative tightening’ when it happens, and are waiting with bated breath for the Bank of England to sell gilts into the market next month with a view to shrinking its balance sheet.

“When you have a major player pushing the market in a certain direction, that’s a problem,” said Bouvet. “That is spooky for any investors . . . Who’s going to take the other side of that and at what price?”

FT : Thames Water reviews data centres’ water use as London hosepipe ban looms

Thames Water reviews data centres’ water use as London hosepipe ban looms
Fast growing sector in south-east England is switching to water cooling systems to cut electricity use

Thames Water has launched a probe into the impact of data centres on water supplies in and around London as the company is set to impose a hosepipe ban on its 15mn customers in one of the worst drought-hit areas of the UK this week.

The company, which has faced heavy criticism over its dismal record on fixing leaks, has started what it called a “targeted exercise” to understand how much drinking water the 24-hour facilities — which generate huge amounts of heat — use to cool their servers, given the scale and demand of the sites around the capital.

John Hernon, strategic development manager at Thames Water, said he had launched the review because of the growing demand for data centres particularly in the Slough area, which is set to become the second biggest data centre hub in the world.

“It isn’t necessary for data centres to use drinking quality water for cooling. We want to look at how raw, non-drinking water can be used and reused,” he said.

One proposed site in Slough recently applied for permission to use 25 litres per second, though Thames Water challenged the request and was able to negotiate more on-site water storage to reduce the demand, he added.

The sector, which has faced a barrage of criticism over the high levels of electricity it consumes, is increasingly using water cooling to cut back on energy-intensive refrigeration systems and reduce costs and emissions.

Sir Robert Goodwill MP, the Conservative chair of the House of Commons environment, food and rural affairs select committee, called for a government or regulator-led investigation into the impact of data centres on water supplies. “As more and more data centres spring up we need to figure out what their demands will be and what the impacts will be on other consumers,” he said.

Drought was officially declared in mid-August across much of the UK, including London and the surrounding area, and Thames Water will bring in a hosepipe ban on Wednesday. The UK is experiencing its driest summer for 50 years and farmers are struggling to save their crops.

Thames Water has been heavily criticised for its record on leaks and sewage pollution with its network losing almost a quarter of the water it supplies, or more than 600mn litres, per day. The company said leakage was inevitable over its 20,000 miles of pipes and that it was fixing more than 1,000 leaks every week.

Last month, the Financial Times revealed developers in west London faced a potential ban on new housing projects until 2035 because the electricity grid has run out of capacity to support new homes — a cluster of data centres around west London was partly blamed.

Greater London Authority said it was “aware of the high volume of electricity and water required for the running of data centres” and that it was working with utility companies and local councils to reduce their impact.

Gary Aitkenhead, senior vice-president of operations at Equinix, one of the biggest data centre companies in the world, said that companies such as his faced a “real tension” between electricity and water use. He added that in warmer climates, with temperatures similar to those experienced in London this summer, water was usually the only viable way to reduce energy consumption.

Ian Bitterlin, a chartered engineer specialising in data centre power and cooling, said the switch to water cooling can cut a data centre’s electricity use by 20 per cent.

“The data centres don’t want to use rain or river water because they have to get an environmental licence and would also have to clean it up first,” Bitterlin said, explaining using untreated water can corrode the equipment or release diseases. He added that switching to using ground or river water could cause other environmental problems by reducing the water table.

He suggested the UK’s water system was to blame for constraints on supply and that it used to be far better set up for industrial levels of use.

>>> US After Hours Summary: PANW +8.1% jumps on earnings and 3-for-1 stock split; ZM -8.9%, DLO -8% lower on earnings


After Hours Summary: PANW +8.1% jumps on earnings and 3-for-1 stock split; ZM -8.9%, DLO -8% lower on earnings

After Hours Gainers:

Companies trading higher in after hours in reaction to earnings/guidance: PANW +8.1% (also declares 3-for-1 stock split, increases share repurchase auth to $1 bln), AFYA +0.6%, NDSN +0.5%

Companies trading higher in after hours in reaction to news: KKR +3.3% (invests in US renewable energy developer), GERN +2.8% (first patient has been dosed in IMproveMF Phase 1 combination study), KSS +1.8% (director buys 25K shares), FDX +0.2% (co and several airlines awarded a $1.63 bln modification US Transportation Command contract), BHC +0.2% (retains advisers after losing patent on gastrointestinal tract drug Xifaxan, according to WSJ), BA +0.1% (first Boeing commercial satellites delivered since pandemic)

After Hours Losers:

Companies trading lower in after hours in reaction to earnings/guidance: ZM -8.9%, DLO -8%

Companies trading lower in after hours in reaction to news: ASRT -26.4% (to offer $60 mln of convertible senior notes), EGIO -1.7% (names new CFO), LXRX -1.7% (highlights publications relating to Sotagliflozin's Differentiated Dual SGLT1 and SGLT2 Mechanism), SON -0.1% (to raise prices on all recycled paperboard grades sold in EMEA)

>>> US Close Dow -1,91% S&P -2,14% Nasdaq -2,55% Russell -2,13% VIX 23,80 +15,50

Closing Stock Market Summary

Ahead of Fed Chair Powell's speech at the Jackson Hole Economic Policy Symposium on Friday, the stock market moved distinctly lower with the major indices closing just above session lows. Broad-based selling was fueled by rising Treasury yields and the lingering feeling the market is due for a pullback after July's upside moves. 

The latter point was reflected by the price action seen in the meme stocks, like AMC Entertainment (AMC 10.46, -7.56, -42.0%) and Bed Bath & Beyond (BBBY 9.24, -1.79, -16.2%), which saw huge downside moves. These stocks were beneficiaries of speculative excess during the recent rally, but are now suffering from the speculative excess being wrung out of their stock prices while facing some additional company specific drivers. The material losses proved to be a risk-off factor, as they undercut sentiment and weighed on most stocks in today's session.

The 10-yr note yield pushing above 3.00% today also helped fuel selling efforts. The 10-yr note yield rose five basis points to 3.04% while the 2-yr note yield rose eight basis points to 3.33%.

The selling was broad-based, leaving many stocks lower, but mega caps and growth stocks were notably weak. The Vanguard Mega Cap Growth ETF (MGK) closed down 2.6% versus a 2.1% loss in the Invesco S&P 500 Equal Weight ETF (RSP) and the S&P 500. The Russell 3000 Growth Index (-2.4%) closed behind the Russell 3000 Value Index (-2.0%).

S&P 500 sector performance reflected broad selling interest and also downside leadership from mega caps. Every sector closed with losses ranging from 0.3% (energy) to 2.8% (consumer discretionary). Consumer discretionary (-2.8%), information technology (-2.8%), and communication services (-2.7%), home to key mega cap names, brought up the rear.

Energy (-0.3%) closed ahead of its peers after WTI crude oil futures pared session losses on a Bloomberg report, citing Saudi Oil Minister Prince Abdulaziz bin Salman, who said the disconnect between the futures market and supply fundamentals might force OPEC+ and its allies to act. WTI crude oil futures settled 0.2% lower at $90.63/bbl after dipping below $87.00/bbl earlier in the session.

The People's Bank of China cut its 1-year loan prime rate by five basis points to 3.65% and its 5-yr loan prime rate by 15 basis points to 4.30%. The design of that policy move is to stimulate growth; however, it was probably not lost on market participants that the basis for the rate cut is a weakening economy.

JD.com (JD), KE Holdings (BEKE), Macy's (M), Dick's Sporting Good (DKS), Medtronic (MDT), and J.M. Smucker (SJM) all report earnings ahead of tomorrow's open.

Looking ahead to Tuesday, market participants will receive July New Home Sales (Briefing.com consensus 580,000; prior 590,000) at 10:00 a.m. ET. The August IHS Markit Manufacturing PMI preliminary reading (prior 52.2) and IHS Markit Services PMI preliminary reading (prior 47.3) are out at 9:45 a.m. ET.

Dow Jones Industrial Average: -9.0% YTD
S&P 400: -11.3% YTD
S&P 500: -13.2% YTD
Russell 2000: -14.7% YTD
Nasdaq Composite: -20.9% YTD

FT : Adidas to replace CEO early as it battles China slowdown

Adidas to replace CEO early as it battles China slowdown
German sportswear group will replace Kasper Rørsted next year, three years before his contract is up

German sportswear group Adidas will replace its chief executive Kasper Rørsted next year — three years before his contract is up — as it continues to suffer from shrinking sales in China and the effects of the war in Ukraine.

The Dax-listed company announced on Monday that Rørsted, who took over in 2016, had agreed to hand over the position during 2023, adding that a successor had not yet been identified.

Shares in Adidas fell by more than 5 per cent in Frankfurt.

Rørsted, a former executive of cleaning products manufacturer Henkel, would stay on to “ensure a smooth transition at the helm of the company” Adidas said in a statement, but did not elaborate on why he was leaving early.

Adidas chair Thomas Rabe said Rørsted had “strategically repositioned the company and fast-forwarded its digital transformation”. He added that the executive had expanded Adidas’ online business “by a factor of more than five” and doubled sales in North America.

But he also said that “after three challenging years that were marked by the economic consequences of the COVID-19-pandemic and geopolitical tensions, it is now the right time to initiate a CEO transition and pave the way for a restart.” 

Rørsted said his tenure had “been marked by several external factors that disrupted our business significantly,” and that it “required huge efforts” to master these challenges. “This is why enabling a restart in 2023 is the right thing to do — both for the company and me personally,” he added.

Adidas last month lowered its earnings guidance for 2022 by at least half a billion euros, because of a substantial decline in its profitable China business, after already lowering its forecasts in May.

Sales in the key market, which Adidas has historically been more exposed to than rival Nike, shrank by 35 per cent in the last quarter compared to 2021, amid widespread lockdowns and supply chain chaos.

It also announced that supply chain constraints in Russia and surrounding countries had cost the company €300mn in sales.

The company has faced a nationalist backlash in China after it announced that it had asked its suppliers not to buy cotton from the Xinjiang region, because of human rights concerns. China is accused by the US and others of committing genocide against the Muslim Uyghur minority in the area.