>>> Barron’s Weekend Summary

Barron’s Weekend Summary: The Fed, battling inflation unlike any it has seen in the past 40 years, could raise interest rates higher than currently expected


Cover Story:
-The Fed, battling inflation unlike any it has seen in the past 40 years, could raise interest rates higher than currently expected—there’s a 89% chance of another three-quarter-point increase in July, although the chances of that happening in September are much lower—while signs of an economic slowdown emerged this past week as housing starts fell 14% month over month in May and retail sales dipped 0.3%: “The Fed needs to bring inflation down, and the growth rate of the economy will be a victim,” says Dave Donabedian, chief investment officer at CIBC Private Wealth US.
That’s scary enough, but the biggest near-term concern for the stock market might be earnings. Right now, they’re expected to be quite good, with analysts forecasting 11% growth to $228 per share in 2022, and 9.6% growth to nearly $250 in 2023.

Interview:
-Economist Lawrence H. Summers spoke with Barron’s by phone about where monetary policy, and the economy. He warned early and often that massive fiscal and monetary stimulus unleashed in response to the impact of the Covid pandemic would result in the economy overheating. He was right: Consumer prices rose 8.6% year over year in May, the fastest pace in 40 years. Summers is now concerned that the U.S. economy is headed for a hard landing as the Fed fights inflation.

Tech Trader:
-Investors have made Apple the country’s most highly valued company largely due to its ability to innovate—to deliver new ideas that can drive revenue even higher. To boost revenue by 10%, Apple needs to find $40B in additional annual sales. That’s about the size of the company’s Mac business, which has been around since 1984, or its entire “wearables, home, and accessories” segment, which includes Apple Watch, AirPods, and HomePods.

The Trader:
-Even the factors that should have helped banks have yet to work in their favor. After years of low interest rates that squeezed profits, higher rates were supposed to provide a boost to earnings. Instead, the bank ETF dropped 3.8% on Thursday, the day after the Fed raised rates by three-quarters of a percentage point. It turns out that investors are less excited about the prospect of growing net interest income when it’s expected the Fed will trigger a recession. It’s a challenging economic backdrop for banks—but they should be able to handle it. This isn’t 2008, when financials were at the center of a global meltdown. Even if the economy is recession-bound, banks are better equipped to handle economic shocks than they were more than a decade ago.
-Small-company stocks have gotten hit hard—harder than their larger peers. That means small-caps could face less risk if the market continues to fall and more upside once it starts to turn. Make no mistake—the pain in small-cap stocks has been acute. The Russell 2000 has fallen 26% in 2022, on pace for its worst first-half performance on record. The worst before now was in 2020, when the Russell fell 13%, and then 1982, when it dropped 11%, and 1984, when it fell 9.5%. The index followed up with a much better second half in all three cases, gaining 38% during the last six months of 2020, 40% in 1982, and 2.4% in 1984. “Worst 1st half ever for small-caps, tends to mean better 2nd half,” writes Jefferies strategist Steven DeSanctis.

Features:
-The transformation of the United Kingdom–based GSK is the culmination of a long process that’s turned virtually all of the world’s largest pharmaceutical companies into bigger versions of biotechnology companies like Amgen (AMGN) and Gilead Sciences (GILD), which sell high-priced, complex medicines, often for rare conditions. It’s a shift investors have demanded—and the science has, too, drug executives say. But by taking away stable revenue streams that cushioned the ups and downs of the drug-discovery business, it could turn Big Pharma stocks from buy-and-stuff-under-the-mattress blue chips into riskier bets. At the same time, it may reinforce the long-term shift that has pulled Big Pharma’s focus toward expensive, specialized treatments and away from drugs for the most common causes of death in the US, such as heart disease and diabetes.
-Many women work successfully with male advisors, and vice versa. In this case, the woman had recently taken over the investments after her husband became unable to manage them. Holland was the fit she was looking for. “As a female advisor, I naturally take other women’s questions, concerns, and worries as valid and important to them,” says Holland, who has $1.7B in assets under management and places 91st in Barron’s Top 100 Women Financial Advisors for 2022.

European Trader:
-A shortage in semiconductor chips caused robotics and industrial automation giant ABB to miss first-quarter revenue forecasts in April, dragging down the stock. But new leadership and the effects of the electrification trend that is sweeping the globe—ABB is the market leader for robotics in China and it also makes charging points for electric vehicles around the world—means this is time for the stock to get a boost. The Zurich-based company has turned a corner since CEO Björn Rosengren joined in 2020, following a decade of disappointing performance. Disruption from a period of deal making caused ABB’s American depository receipts to decline 17% in the past 12 months.

Emerging Markets:
-Alibaba stock has recouped 30% in the past month to a recent $106.45, as Chinese policy makers intent on stabilizing the economy have hit the pause on their regulatory onslaught of the internet sector. Even emerging markets managers bargain-hunting elsewhere in China—in software, financials, or renewable companies while de-emphasizing the internet sector that once dominated their portfolios—expect Alibaba to remain dominant and the go-to spot for anyone trying to sell to Chinese consumers.

Commodities:
-Gold has once again shown itself to be a solid haven investment in the face of market turmoil. Even though bullion prices have dipped a little this year, they have massively outperformed other major asset classes such as stocks, bonds, and cryptocurrencies, which have all taken a beating. It should be a reminder to prudent investors to consider allocating a portion of their portfolio to the yellow metal.

Streetwise:
-What’s next for housing? That’s the question Jack Hough explores this week. Home equity is said to be hitting record highs. Then again, taking comfort there would be like slipping on a financial toupee—everyone knows that underlying conditions have deteriorated. The latest reading on nationwide pricing comes from back in March. Since then, 30-year mortgage rates have shot up to nearly 6%, and applications from buyers have slowed.

BArrons : This Robotics Stock Has Dropped 17%. EVs Might Turn It Around.

This Robotics Stock Has Dropped 17%. EVs Might Turn It Around.

A shortage in semiconductor chips caused robotics and industrial automation giant ABB to miss first-quarter revenue forecasts in April, dragging down the stock.

But new leadership and the effects of the electrification trend that is sweeping the globe—ABB (ticker: ABB) is the market leader for robotics in China and it also makes charging points for electric vehicles around the world—means this is time for the stock to get a boost.

The Zurich-based company has turned a corner since CEO Björn Rosengren joined in 2020, following a decade of disappointing performance. Disruption from a period of deal making caused ABB’s American depositary receipts to decline 17% in the past 12 months. Shares also have a dual Swiss and Swedish listing.

A series of tailwinds could push the shares higher. In its last quarterly update, ABB said its order book jumped 28% based on strong demand from customers across the board rather than any one-off mega orders. This was the trigger for Anders Roslund, an analyst at Pareto Securities, to estimate future sales will rise 30%, to $36.6 billion, in 2024.

“The extraordinarily strong order intake will support better margins in the coming quarters,” he wrote in a note in which he estimates the margin on earnings before interest and taxes will rise from 13.4% in 2021 to 15.6% by 2024.

Revenue could rise further after ABB’s e-mobility division signed a new agreement with Shell (SHEL.UK) in April to provide electric-car charging stations. Shell has about 90,000 charging points, with ambitions to reach 2.5 million by 2030, either at residential, commercial, or Shell retail sites.

Sebastian Kuenne, an analyst at RBC Capital Markets, estimates ABB has 10% to 13% global market share for EV battery-charging equipment and has developed the world’s fastest car charger—the Terra, which has 360-kilowatt output versus a standard output between 50kw and 350kw.

The Shell agreement could generate average annual sales of $50 million a year by 2025 and $130 million a year in 2026-30, Kuenne estimates.

“We do not know how big ABB’s portion in Shell’s installed charger fleet will be,” he wrote. “But even if ABB supplies only 50% of those chargers it would add considerable revenues to the group, accelerate sales growth in the next years and increase earnings visibility.”

ABB, which has a market value of 58 billion Swiss francs ($57.9 billion), employs 105,000 workers in more than 100 countries. It trades at a multiple of 19 times this year’s expected earnings, in line with its peers. ABB posted income from operations of $5.7 billion in 2021, up from $1.6 billion in 2020. Sales in 2021 were $29 billion, up from $26 billion in 2020.

Rosengren, in the first-quarter update, said that increased efficiency would help deliver margin improvement of at least 15% toward the 2023 target.

“Over the past 24 months, ABB has made solid progress in implementing its decentralized organization and improving quality of revenue,” Rosengren told Barron’s. “But we are still not where we want to be. Our technology leadership, aligned with sustainability and the global megatrends, is at the core of ABB’s purpose and gives us a competitive edge.”

ABB will also create value by spinning off parts of its business, including the e-mobility division. The company on June 7 delayed the division’s initial public offering, citing challenging market conditions. Joseph Giordano, an analyst at Cowen, estimates the IPO’s valuation could be about $4.5 billion.

Rosengren said ABB is also eyeing a sale or spinoff of the turbocharging division, which boosts engine power. That could fetch about $4 billion. b

Barrons : The Stock Market Had a Very Bad Week. Why It Gets Worse Before It Gets

The Stock Market Had a Very Bad Week. Why It Gets Worse Before It Gets Better.

After a three-year hiatus, the Golden State Warriors are the best team in basketball again—and they had to navigate an injury-driven tumble from the top to the absolute bottom to do it. There’s a lesson in there about bear markets, recessions, and all the fears gripping investors right now.

After the stock market’s tumble this past week, investors probably feel like Warriors star Stephen Curry in 2020 asking what else could possibly go wrong. The S&P 500SPX +0.22% dropped 5.8%, its worst weekly decline since March 2020, while the Dow Jones Industrial AverageDJIA –0.13% and the Nasdaq Composite COMP +1.43% both fell 4.8%.

It was “the worst stretch of selling in the history of the S&P 500,” according to Sundial Capital Research’s Jason Goepfert, who noted that there were five days since June 8 when more than 90% of the index’s stocks finished lower. The question now is how much more can go wrong.


Plenty. The week’s drop, which sent the S&P 500 into a bear market, was caused by rising bond yields, some weak economic data, and, of course, the Federal Reserve, which raised interest rates by three-quarters of a point for the first time since 1994.

And there’s more where that came from. The Fed, battling inflation unlike any it has seen in the past 40 years, could raise interest rates higher than currently expected—there’s a 89% chance of another three-quarter-point increase in July, although the chances of that happening in September are much lower—while signs of an economic slowdown emerged this past week as housing starts fell 14% month over month in May and retail sales dipped 0.3%.

“The Fed needs to bring inflation down, and the growth rate of the economy will be a victim,” says Dave Donabedian, chief investment officer at CIBC Private Wealth US.


That’s scary enough, but the biggest near-term concern for the stock market might be earnings. Right now, they’re expected to be quite good, with analysts forecasting 11% growth to $228 per share in 2022, and 9.6% growth to nearly $250 in 2023.

But Wells Fargo strategist Chris Harvey expects companies to sound far more worried on their next conference calls in the kind of abrupt pivot that hasn’t occurred since 2007.

“Overall, we think the market has quickly shifted from fears of undersupply to oversupply, and corporate outlooks will shift dramatically as earnings are revealed,” explains Harvey, who recommends avoiding “broken stories,” stocks that include Walt Disney (ticker: DIS), Etsy (ETSY), Netflix (NFLX), and Boeing (BA).

If he’s right, earnings forecasts will have to come down—and the S&P 500, which trades at 15.4 times 12-month forward earnings, isn’t nearly as cheap as it looks. Goldman Sachs’ David Kostin notes that if S&P 500 companies earn $239 and trade at 17 times, the index would trade at 4165, up 13% from Friday’s close. That’s the optimistic case.

But if 2023 earnings come in lower—say, at $225—and the price/earnings ratio slips to 14, the index could trade down to 3150, off 14% from Friday’s close. “Investors looking for value opportunities should consider both valuations and potential downside risk to earnings estimates,” he writes.

Still, it isn’t the end of the world. Jim Stack, president of InvesTech Research, took equity exposure down to 44% this past week, his most defensive portfolio since the tech bubble in 2000. He doesn’t sound down about it. Instead, he’s looking ahead. “The ‘good news’ is that this will ultimately lead to one of the best buying opportunities in decades,” he writes. “But for now, patience is paramount.”

It may take time, but the market will get that winning feeling once again. Bet on it.

>>> France could plunge the eurozone into its next crisis

France could plunge the eurozone into its next crisis
The country is dancing on a debt volcano

https://www.spectator.co.uk/article/france-could-plunge-the-eurozone-into-its-next-crisis


In the French presidential elections, and now in the legislatives that will close on Sunday evening, the one issue kept under the carpet is finance. Neither the centrist Macronista grouping ‘Ensemble!’, nor the far-left Corbynista-like Nupes coalition of Jean-Luc Mélenchon has updated the electorate on how their manifestos are to be funded. And yet over the last month French finances have deteriorated dramatically. Neither programme has the slightest chance of being implemented without plunging French finances, and thus the eurozone generally, into a new sovereign debt crisis. France is dancing on a debt volcano.

The unabashedly ideological Nupes programme calls for nationalisation of the banking and energy sectors, motorways, strategic industries, raising the minimum wage to €1,500 (£1,500) a month, increasing paid holidays from five to six weeks, cutting the working week for certain sectors from 35 to 32 hours and reducing the pension age from 62 to 60. Not to mention the European Central Bank nullifying all member states’ debt. To be fair, Nupes has itself costed its programme at an astronomical €250 billion (£210 billion) annually, though more independent organisations such as the respected Institut Montaigne puts the figure closer to €332 billion (£280 billion) annually.

France finds itself in the same perilous place it was in after the First World War
Nupes claims that its programme will be financed by taxes on the rich and renewed consumer spending resulting from shifting wealth from rich to poor. But costings were done when French inflation was at 2 per cent and the interest on French debt close to zero per cent. French inflation in May was 5.2 per cent and debt financing at 2.2 per cent, both rising fast. Add to that a French national debt to GDP ratio of 115 per cent which, in absolute, rather than percentage, terms is the highest in the EU; when public and private debt are combined, it reaches a staggering 361 per cent (UK 289 per cent, Germany 205 per cent) making France for the first time the greatest debtor in the world.

It is all but certain that Mélenchon’s coalition will not win an outright majority on Sunday. However, the latest polling gives Nupes between 150 and 190 seats, with Macron’s coalition probably denied an outright majority (289) on 255 to 295; marking a fall from his present 346 seats. That will make governing particularly difficult. Add to that the French parliamentary rule that the largest opposition party automatically chairs the highly influential and interventionist finance committee and the financial picture is worse than sombre.

But what of Macron’s programme, if he gets a chance to implement it? Macron continues to claim that his second presidential mandate will see more company and personal tax cuts paid for by reforming the French social benefit system and raising the pension age from 62 to 65. His financial calculation done months ago rests firmly on continued economic growth. But in the last quarter the French economy shrunk by 0.3 per cent and growth prospects are poor. What's more, seat projections for the new assembly put the Rassemblement National – opposed, like Nupes, to pension and social reform – on 20-45 seats, meaning Macron is unlikely to have the parliamentary muscle to reform anything. Meanwhile servicing French debt is predicted to cost huge sums that will not only stymie tax reductions but likely require tax increases (a VAT hike has already been leaked as a possibility).

Both the French presidential and legislative elections have been lacklustre affairs, with Emmanuel Macron continuing to maintain his habitual Jupiterian and scornful posture. To the extent that there has been any serious political debate, all sides have studiously avoided the explosive issue of France’s perilous finances and how to fix them. Fear of depressing French voters further with the reality that after Covid, and potential stagflation, greater pain is to come, is motivated by fear of where historically that leads the French.

After Brexit, France aspired to regain the position she occupied before the first world war as Europe’s banker, with Paris once more at the heart of European finance. That dream came to nought. Now the scenario is more that of France after the first world war: mired in debt, stalemated in policy and with the broader modern prospect of seriously contributing to a new eurozone debt crisis. In the past, France devalued to extricate herself from financial plight, most notably after president Mitterrand’s socialist reforms of 1981 to 1983. Without that option, France could end up passing on the burden to a far more indebted eurozone than in 2012/13, once again fragmented by widening spreads on Italian, Spanish, Greek and Portuguese government bonds. The euro would never survive.

>>> US Close Dow -0.13% S&P +0.22% Nasdaq +1.43% Russell +0.96%

Closing Market Summary: Slight volatility ahead of the long weekend

The major indices saw a bit of volatility ahead of the long weekend, opening firmly higher before giving way to selling pressure. All the indices set session lows in early trade, climbed as the day went on, but backpedaled from highs into the close. Bargain hunting activity helped keep the S&P 500 in positive territory as the market was oversold on a short-term basis coming into today.

The market saw high volume on this quadruple witching options expiration day which left the S&P 500 up 0.2% for the day and down 5.8% for the week; the Nasdaq up 1.4% for the day and down 4.8% for the week; and the Dow Jones Industrial Average down 0.1% for the day and down 4.8% for the week.

The energy complex selling off today, no doubt, helped buying sentiment. WTI crude oil futures fell 6.3% to $108.06/bbl, natural gas futures settled down nearly 7% to $6.95/mmbtu, and Unleaded gasoline futures fell 4.2% to $3.68/gal. In addition, the energy sector was the worst performing S&P 500 sector by a wide margin, down 5.6% at the close.

The modest gains today were not enough to claw back out of the red for the week. The losses experienced earlier this week were attributed to economic growth concerns, which have been an offshoot of aggressive rate-hike actions from many of the world's leading central banks racing to combat inflation.

The Bank of Japan, however, isn't even in the race. Today, it agreed to leave its key policy rate unchanged at -0.1% and to maintain yield curve control with an aim of keeping the 10-yr JGB yield at around zero percent. The yen sank on this news, falling 2.1% against the dollar to 134.99.

A stronger dollar is doing nothing to help U.S. multinational companies like Adobe (ADBE 360.79, -4.29, -1.2%) which reported better-than-expected earnings before the open but lowered Q3 guidance below consensus citing foreign exchange headwinds and Russia's war on Ukraine as contributing factors. Adobe reached a new 52-week low today.

Six of the 11 S&P 500 sectors closed in the green to end the week. The heavily weighted communication services (+1.3%), consumer discretionary (+1.2%), and information technology (+1.0%) sectors finished atop today's leaderboard.

The discretionary sector played a significant part in keeping the S&P 500 in positive territory even though several of its components hit fresh 52-week lows before bouncing. Travel-related names were at the forefront of the advance with Carnival (CCL 9.60, +0.85, +9.7%) leading the way, as it bounced after approaching its pandemic low in recent days. Top-weighted Amazon (AMZN 106.22, +2.56, +2.5%) held above its May low (101.26), contributing to the strength in the sector.

The laggards, besides energy, were utilities (-1.0%), consumer staples (-0.4%), and industrials (-0.2%).

Treasuries finished a down week on a mostly higher note with the 10-yr yield falling seven basis points to 3.24%. The 2-yr note underperformed, pressuring the spread between the 10-yr yield and the 2-yr yield to just six basis points.

Reviewing today's data:

  • Total industrial production increased 0.2% month-over-month in May ( consensus 0.5%) following an upwardly revised 1.4% increase (from 1.1%) in April. The capacity utilization rate increased to 79.0% ( consensus 79.3%) from a downwardly revised 78.9% (from 79.0%) in April.
    • The key takeaway from the report is the dip in manufacturing output. That dip, however, followed three months where growth averaged nearly 1.0%, so it is too soon to say if the dip in May is a sign of true weakness or a natural moderation following an extended period of solid growth.
  • The Leading Economic Index for May was down 0.4% after decreasing a revised 0.4% (from -0.3%) in April.

Bond and equity markets will be closed on Monday for Juneteenth while Tuesday's economic data will be limited to the 10:00 ET release of May Existing Home Sales (prior 5.61 mln).

· Dow Jones Industrial Average -17.8% YTD
· S&P 400 -21.8% YTD
· S&P 500 -22.9% YTD
· Russell 2000 -25.8% YTD
· Nasdaq Composite -31.0% YTD

WSJ : Battered Crypto Hedge Fund Three Arrows Capital Considers Asset Sales, Bai

Battered Crypto Hedge Fund Three Arrows Capital Considers Asset Sales, Bailout
Firm’s founders say they still believe in the future of cryptocurrencies

Cryptocurrency-focused hedge fund Three Arrows Capital Ltd. has hired legal and financial advisers to help work out a solution for its investors and lenders, after suffering heavy losses from a broad market selloff in digital assets, the firm’s founders said on Friday.

“We have always been believers in crypto and we still are,” Kyle Davies, Three Arrows’s co-founder, said in an interview. “We are committed to working things out and finding an equitable solution for all our constituent.”

The nearly decade-old hedge fund, which was started by former schoolmates and Wall Street currency traders Su Zhu and Mr. Davies, had roughly $3 billion in assets under management in April this year.

That was shortly before a sudden collapse in the values of TerraUSD, a so-called algorithmic stablecoin, and its sister token, Luna, in mid-May.

Three Arrows is exploring options including asset sales and a rescue by another firm, Mr. Davies said. The fund is hoping to reach an agreement with creditors that would give it more time to work out a plan. The firm is still operating as it seeks a solution.


Three Arrows was among a group of large investors that took part in a $1 billion token sale earlier this year by Luna Foundation Guard, a nonprofit organization started by South Korean developer Do Kwon, the creator of TerraUSD. The funds went toward a bitcoin-denominated reserve for the stablecoin, and were meant to help maintain TerraUSD’s value at $1 per coin.

Mr. Davies said Three Arrows invested about $200 million in Luna as part of that deal, a sum that was effectively wiped out when TerraUSD and Luna both became worthless in a matter of days.

The two cryptocurrencies were previously among the 10 largest digital coins before they lost a total of $60 billion in market capitalization last month, he added. Before the collapse, a few people in the crypto industry had voiced concerns about TerraUSD’s stability and its dependence on traders to act as its backstop, saying this mechanism could allow for a potential downward spiral.

“The Terra-Luna situation caught us very much off guard,” Mr. Davies said, adding that the massive selloff was unprecedented. The Luna Foundation’s sale of bitcoin to help support TerraUSD also worsened declines in the value of bitcoin in May.

Mr. Davies said Three Arrows was able to withstand the Luna losses, but the subsequent cascade of events that caused prices of bitcoin, ether and other cryptocurrencies to plummet in recent weeks created more problems, he added.

Credit conditions have tightened markedly as digital asset values have fallen across the board, leading some lenders to demand partial or full repayment on loans they previously made to crypto investors. Rapidly rising U.S. interest rates—a result of the Federal Reserve’s attempts to rein in high inflation—have also worsened a selloff in riskier assets.


Crypto’s total market capitalization, which had topped out at nearly $3 trillion in November last year, had tumbled to $910 billion as of Friday, according to data provider CoinMarketCap. Last weekend, Celsius Network LLC, a widely used cryptocurrency lender, abruptly froze customer withdrawals, swaps and transfers between accounts, blaming what it said were extreme market conditions.

“We were not the first to get hit…This has been all part of the same contagion that has affected many other firms,” Mr. Davies said.

He said Three Arrows is still trying to quantify its losses and value its illiquid assets, which include venture-capital investments in dozens of private cryptocurrency-related companies and startups.

“We are the biggest investors in the fund, and our intent was always for everyone to do well in it,” said Mr. Zhu, Three Arrows’s other founder.

Back in early 2021, Mr. Zhu had predicted that bitcoin would enter what’s known as a growth supercycle with continually rising prices as the cryptocurrency gained more mainstream adoption. In late May, as the market selloff was under way, he tweeted that the “Supercycle price thesis was regrettably wrong, but crypto will still thrive and change the world every day.”

The sudden comedown of Three Arrows follows the firm’s previously strong performance record. Messrs Zhu and Davies started their fund in late 2012 with just $1.2 million. It originally focused on trading emerging markets currencies before moving heavily into cryptocurrencies in recent years—multiplying the fund’s investments as bitcoin and other digital assets increased in value.

The firm is known to have had large positions in the Grayscale bitcoin Trust and “Lido staked ether” tokens, both of which have also suffered losses recently. The latter is derivative of the cryptocurrency ether that is locked up until the Ethereum network transitions to a less energy-intensive model. These tokens have recently traded at a discount to ether itself.

Nichol Yeo, a partner of law firm Solitaire LLP who is advising Three Arrows, said all of the fund’s investors are institutions or wealthy investors. He added that the firm is keeping Singapore’s financial regulator, the Monetary Authority of Singapore, apprised of its recent developments.

Just before the latest downturn, Three Arrows said it was making plans to move its headquarters to Dubai, where the digital-asset industry is booming. The firm operated as a regulated fund manager in Singapore until last year, when it shifted its domicile to the British Virgin Islands as part of its relocation plan.

CNN : Putin's much-hyped speech delayed due to 'massive' cyberattacks, Kremlin s

Putin's much-hyped speech delayed due to 'massive' cyberattacks, Kremlin says
By Ivana Kottasová, Anna Chernova, Fred Pleitgen and Zahra Ullah, CNN

(CNN)Russian President Vladimir Putin's much-hyped speech at St. Petersburg International Economic Forum was delayed on Friday after a "massive" cyberattack, the Kremlin has announced.

Kremlin spokesperson Dmitry Peskov told journalists in an impromptu conference call that the speech would be postponed by an hour due to distributed denial of service (DDoS) attacks on the conference's systems.
"Unfortunately, today, due to massive DDoS attacks on the forum's system, the base of accreditation and admission were disabled," Peskov said.
Peskov told CNN in a text message that the technical specialists working to fix the systems would "need 30-40 minutes" to restore the database.
Putin's speech at the annual conference in the western Russian city is seen as an opportunity for the world to get some insight into the Russian leader's thinking four months into his war on Ukraine.
The Russian president has long framed his decision to launch an invasion of Ukraine as a response to Kyiv's growing diplomatic and security ties with the West. Last week, he hinted that his aim in Ukraine is the restoration of Russia as an imperial power.
Just before Putin's speech on Friday, Russian senator Konstantin Kosachev told CNN he believed Russia's actions in Ukraine "prevented a huge war, probably a third world war."
"If you keep in mind the perspective which could have become a reality, Ukraine becoming a part of NATO," said Kosachev, who is the Deputy Speaker of Russia's Federation Council.
"Member states having their view on Crimea, having their view on matters that don't involve NATO, the United States of America included in the military conflict with Russia. And now, this military conflict is prevented and this is the end of the story and this is the only good news."
The European Commission announced Friday that it was recommending Ukraine and neighboring Moldova as EU candidate states, with the commission's chief Ursula von der Leyen saying that Ukrainians are "ready to die" for the European perspective. Peskov said the announcement required Moscow's "increased attention."
"We all know about the intensification in Europe and discussions about strengthening the defense component of the EU. Therefore, there are different transformations that we observe," he said earlier on Friday during a routine daily call with reporters.