TheChek News Flow

More than 100 million Americans woke up to heat advisories

Record-breaking temperatures from the high 90s to the triple digits are expected Monday from the Gulf Coast to the Great Lakes as a heat wave blankets much of the country.

More than 100 million Americans woke up to heat advisories as the scorching temperatures that baked the Southwest over the weekend shifted eastward into the central U.S. Record highs are likely in cities including Chicago and Dallas.

The heat wave is expected to stick around for the rest of the week, according to Bob Oravec, lead forecaster for the National Weather Service. The core of the weather pattern will shift back to the Southwest and Midwest by Friday, he said. New England and most of the coastal Northeast are unlikely to see much of an impact.

Dallas is forecast to hit 101 degrees Fahrenheit on Monday. That would tie the record high set on June 13, 2011, Mr. Oravec said. The Electric Reliability Council of Texas, which manages the state’s power grid, said it had a record surge in demand on Sunday, breaking a prior peak set in 2019. The agency said it expects similar surges throughout the week.

St. Louis, meanwhile, is on track to top 101 degrees, which would break the record set in 1952 by three degrees.

“There’s heat advisories stretching pretty much from the Gulf Coast all the way up to the parts of the Great Lakes,” said Mr. Oravec.

Roughly 46 cities set record highs over the weekend in Southern California, the Southwest and into Colorado, Mr. Oravec said. Some were in triple digits while others, depending on their elevation, stayed in the 90s.

Rising energy prices will mean much higher air-conditioning bills for consumers as the heat wave moves into the densely populated Ohio Valley and along the Mississippi River. Electricity prices rose 12% in the past year, according to May’s consumer-price index, and have shown no signs of slowing.

The hot, dry conditions in the southwest and parts of California have exacerbated tinderbox conditions for forest fires. Much of the region has been experiencing an extended and severe drought.

Firefighters in New Mexico have since April been battling two blazes that merged into the largest wildfire in state history.

Lenders serve as bridge between retail investors and vast universe of DeFi projects.

The decision by Celsius to temporarily prevent its clients from withdrawing funds has shone a light on a group of crypto lending platforms that have been an important engine powering the growth of cutting edge industry projects.

These lenders have served as a bridge between do-it-yourself retail investors and the vast universe of decentralised finance or DeFi projects seeking financing to help them grow.

The core business model of lending platforms, which include BlockFi and Nexo, is similar to a consumer bank. The platforms take deposits from customers, and then lend that money out for an agreed period to mainly institutional borrowers, such as market makers. The lending platforms then take a cut of the interest on those loans, and pay the rest of the interest back to the depositors.

Consumers have flocked to these platforms because they offer typically interest rates of about 10-15 per cent on their investments, much more than conventional banks and even many traditional investments. Celsius last year said more than 1mn customers had used the scheme.

To meet their promises to pay those outsized returns, crypto lenders have branched out into sometimes riskier activities beyond simple lending. Some firms have themselves traded in crypto markets, such as futures.

But a portion of the money has gone to support new developments in the crypto industry. In particular assets have poured into DeFi projects, which mostly aim to offer replicate parts of the existing financial system, like a stock market, but shorn of the centralised authority that usually underpins the system.

Many need to be backed by pools of assets in order to run their blockchains, and will pay investors who are willing to put their money on the line for a length of time. In return, the consumer receives an attractive yield, which can vary depending on which crypto asset the customer has staked and is happy to receive as payment.

The total assets locked up in DeFi projects rose from $601mn at the start of 2020 to a peak of $253bn at the end of last year, before falling in recent months, according to data from CryptoCompare.

However, crypto lending platforms are generally not subject to the same regulations as banks, meaning clients’ funds aren’t backed by a government guarantee. And some lending platforms activities involve taking on more risk.

DeFi projects are often prone to hacks, design faults or disputes about how they should be run. Critics of lending platforms say that some companies take on excessive risk in their DeFi portfolios, and aren’t transparent enough on what they are doing with client’s money to generate their appealing interest rates.

War in Ukraine has forced US to seek help with supplies from Saudi Arabia

In his State of the Union address days after Vladimir Putin’s forces invaded Ukraine, President Joe Biden listed measures the US was taking to punish Russia in a “battle between democracy and autocracy”. Yet as the west has sought to isolate one autocrat, it has been forced to seek help from others: Saudi Arabia and its fellow absolute monarchies in the oil-rich Gulf.

Since Biden’s February speech, oil and gas prices have hit their highest in more than a decade as the west tries to strangle Russian energy exports. This month, the EU approved a plan to ban Russian seaborne oil imports. The bloc also agreed to co-ordinate with the UK on plans to ban insuring ships carrying Russian crude, which would further stymie Moscow’s ability to export.

Before the war, Russia produced more than 10 per cent of global oil supplies and was a vital source of energy for Europe. The International Energy Agency has forecast its output could now decline by up to 3mn barrels a day. There will be shippers willing to transport Russian crude to China or India. But the level of Moscow’s exports is only heading in one direction, threatening a significant undersupply in the market.

To damp sky-high petrol prices ahead of US midterm elections, Biden is having to turn to a state he pledged to treat as a pariah. Washington has urged Saudi Arabia, Opec’s de facto leader, to raise production. This month, the kingdom and its allies in Opec+, which includes Russia, finally announced a modest acceleration of output.

The White House credited Saudi Arabia for “achieving this consensus among the group members”. Biden is considering visiting the kingdom. That would mean sitting with Crown Prince Mohammed bin Salman — whom US intelligence concluded had authorised the operation to “capture or kill” journalist Jamal Khashoggi, who was murdered four years ago.

The energy crisis is increasing the leverage of MBS and other Gulf leaders. Only Saudi Arabia and the United Arab Emirates, another autocratic state, have the spare capacity to significantly boost oil production. Neighbouring Qatar, the world’s biggest exporter of liquefied natural gas, is meanwhile being courted by European governments and energy companies. While the world frets about energy supplies and inflation, the Gulf is enjoying a boom as the west’s reliance on its hydrocarbons only deepens.

Yet the US has long worried about over-dependence on such a volatile region. Its relations with Gulf states can be fractious. Tensions with Iran amid fears over its nuclear ambitions mean the threat of a conflagration is never far away. US imports from the Gulf have fallen sharply since the shale boom, but its pump prices are still affected by global market dynamics. Even as leaders gathered in Glasgow for November’s COP26 meeting to commit to phasing out fossil fuel use, Biden was berating Russia and Saudi Arabia for not pumping more oil as petrol prices rose.

The reality is that western policymakers were wilfully slow in transitioning to alternative energy sources. Now they are left with few simple solutions to diversify. It typically takes at least three years and billions of dollars to bring a new oil or gas project online, and energy companies will invest only if assured of a long-term market. So the world either locks itself into more fossil fuel projects that undermine net zero targets, or ends up with stranded assets as nations transition to green energy.

Western democracies’ reliance on oil-rich autocrats was always something of a Faustian pact as they turned a blind eye to rights abuses. In the rush to secure alternative supplies to Russian oil and gas they should avoid replicating the mistakes of the past — and not give the likes of MBS a free ride.

Chris Philp insists government is ‘working closely’ with Cambridge-based tech group on IPO process

The UK is still fighting to secure the listing of Cambridge-based tech group Arm Holdings, Britain’s tech minister insisted after the launch of a digital strategy to attract and build fast-growth businesses in the UK.

Chris Philp said that the government was still “working closely with” the management of Arm on the IPO process, despite executives having signalled their preference to float the semiconductor group in New York.

Philp pointed to efforts to change the rules on the London stock market to make it more attractive to tech companies. “I think Arm themselves have said that initial comments suggesting that it would be a Nasdaq listing was sort of premature,” he told the Financial Times.

The suggestion by Arm’s owner SoftBank that it was likely to float the British business in America at a valuation of about $40bn has sparked a charm offensive by UK ministers and London Stock Exchange executives.

Philp also pointed to the number of companies that have launched a dual listing in both the UK and US. “Lots of big successful companies use this model. But we’re also obviously wanting to promote the UK as an exclusive venue for listing.”

The government has boasted of the fact that 37 tech companies floated on the London Stock Exchange last year, including companies such as Wise and Oxford Nanopore.

But tech executives say that the decision by Arm over the future of its listing will be taken as a vote of confidence or otherwise in the UK as a place to base a globally significant tech company.

Philp called on tech companies in the UK to be “globally ambitious” as he outlined plans to cut red tape that governs parts of the tech sector to stimulate growth.

“Brexit has not impacted tech one iota. In fact, it creates opportunities because we can adopt a more flexible regulatory regime. So we’re reducing the burdens imposed by GDPR [for example]. And making sure that data can be better used for innovation.”

He also promised a “very light-touch approach” to forthcoming regulations in areas such as digital competition due later this year, as well as in rules governing emerging technologies such as artificial intelligence.

“Lighter regulation is going to be a source of competitive advantage. We have an opportunity to turn the UK into a free trade hub for digital.”

Philp signalled several initiatives to incentivise investment in the autumn Budget, including changes to research and development tax credits, tax incentives to encourage skills training and changes to the existing apprenticeship levy.

The digital strategy, launched at the start of London Tech Week, is a government initiative to co-ordinate tech policies, including a review into advanced computing announced by Rishi Sunak, the chancellor, and a new council of tech executives to advise on how to tackle the digital skills gap.

The upbeat mood came despite a wider slowdown in tech financing in parts of the world, including the UK, with some start-ups now facing a fall in valuations after several years of rapid growth.

The British government wants UK pension funds to invest more in fast-growing start-ups — which can carry greater risks of failure but also higher, longer-term returns — to help finance the sector’s next phase of growth.

“The UK pension system is missing out on higher returns. Their pensioners are missing out on those returns,” said Philp. “Make allocations to UK tech — your pension will be better off.”

He also said that “tech drives innovation, increases productivity, creates new things, whereas buying bonds or buying a bunch of listed equities in very long-established companies [is] not so much really creating anything new”.

DÉCRYPTAGE - Le groupe pourrait loger ses activités historiques en perte de vitesse au sein d’une entité juridique à part.

Si l’objectif du nouveau plan stratégique que la direction d’Atos présente ce mardi est de retrouver la confiance des investisseurs, cela semble mal parti. L’action du groupe technologique français a chuté de plus de 10 % à la Bourse de Paris sur la seule séance de lundi, ce qui porte à 28 % la baisse de sa valeur sur les cinq derniers jours.

Dans un contexte de marché globalement tendu pour les valeurs technologiques, Atos a subi le contrecoup d’une information de BFM sur la stratégie qu’il détaillera aujourd’hui. Après d’âpres discussions entre le directeur général, Rodolphe Belmer et Bertrand Meunier, le président du conseil d’administration, notoirement en conflit, le groupe serait parvenu à un compromis: loger les activités historiques d’infrastructures et d’infogérance informatiques au sein d’une entité juridique distincte et autonome, Tech Foundation, tout en restant intégrée au sein d’Atos.

Risque d’affaiblissement

À l’ère de la migration des entreprises vers les clouds publics, ces activités sont en déclin et dégagent peu de marges. Or, elles représentent encore près de la moitié du chiffre d’affaires du groupe français, grevant ses performances globales. Séparer d’un point de vue juridique et bilanciel ces activités permettrait de mieux valoriser les performances des deux autres pôles - en croissance - du groupe: la transformation digitale (35 % du chiffre d’affaires) et surtout la division Big Data & Security (BDS), qui regroupe le calcul de haute performance et la cybersécurité. Véritables joyaux du groupe, ces deux dernières nécessitent d’importants moyens pour grandir, tant en recherche et développement, en marketing qu’en acquisitions.

Atos: tensions au sommet sur l’avenir stratégique de la pépite technologique : https://www.lefigaro.fr/secteur/high-tech/tensions-au-sommet-sur-l-avenir-strategique-d-atos-20220610

Or, selon certaines sources proches du dossier, et c’est ce qui sème le trouble chez des analystes financiers, Tech Foundation accueillerait aussi «certains éléments» des deux autres activités, pour lui donner une certaine attractivité. Car Atos, qui n’a jusqu’ici pas réussi à trouver des repreneurs intéressés, n’aurait pas abandonné l’idée de céder cette partie qui le handicape quand il le pourra. Pour la rendre encore plus attrayante, certaines charges pourraient être allégées par le jeu d’une nouvelle répartition entre les trois pôles actuels.

Rodolphe Belmer va devoir convaincre les investisseurs des avantages à court et moyen terme de ces choix stratégiques, qui permettent de conserver «l’intégrité et l’indépendance» d’Atos, selon les souhaits du conseil d’administration, mais au prix d’un affaiblissement des pôles Digital et BDS. Atos s’est refusé lundi à tout commentaire. Cette incertitude, entretenue par de multiples spéculations ces dernières semaines autour l’avenir du groupe, déplaît fortement aux investisseurs.

Bertrand Meunier: «Atos va accélérer sa mutation numérique» : https://www.lefigaro.fr/secteur/high-tech/bertrand-meunier-atos-va-accelerer-sa-mutation-numerique-20211020

«Une fois que vous dites que “je veux vendre, c’est non stratégique”, il faut que cela se concrétise rapidement, sinon vous finissez par penser qu’il n’y a pas d’acheteur», soulignait lundi un analyste financier. De son côté, la Société générale s’interrogeait dans une note aux clients sur les divergences de vues au sommet. «Cela pourrait réduire la crédibilité du DG et remettre en cause son autorité en interne, le forçant à faire des choses auxquelles il ne croit pas, ce qui n’est jamais une bonne chose, à notre avis.»

State-owned development bank KfW to provide subsidiary of Russian gas giant with a €5bn-10bn loan

Berlin is putting together a multibillion euro rescue package for Gazprom Germania, the subsidiary of the Russian gas giant that was taken over by the German authorities last month, according to people familiar with the matter.

As part of the bailout, Germany’s state-owned development bank KfW would provide Gazprom Germania a €5bn-10bn loan, the people said, while emphasising that talks were ongoing.

Using taxpayers’ money to bail out a company that is still officially owned by Gazprom, the Kremlin-controlled energy company, could prove controversial in Germany.

But the unit plays an important role in Germany’s energy supply, and as such officials consider it is in the national interest to restore it to financial health.

The German government seized control of Gazprom Germania and its subsidiaries in early April, placing them under the trusteeship of the Bundesnetzagentur, the federal energy regulator.

The move was triggered by a change in the entity’s ownership structure that violated Germany’s strict law on foreign investment in critical infrastructure.

Gazprom Germania owns a number of gas storage facilities in Germany, including the country’s largest, Rehden; the gas distribution company, Wingas, which supplies major industrial consumers in Germany; and a UK trading division GM&T.

Russia struck back against the seizure of control of Gazprom Germania in May by reducing the volumes of gas it supplies to the company, forcing it to buy gas in the spot market instead, often at higher prices.

That, officials say, risked destabilising its finances, which would in turn harm its ability to meet its supply obligations to customers in Germany. These include some of the country’s biggest industrial companies, as well as municipally-owned utilities.

A spokesman for the Bundesnetzagentur said all state agencies were “working intensively to ensure that [Gazprom Germania] can continue to operate”. Asked about the loan, he said the BNA would not comment on speculation. The German government declined to comment, as did the KfW.

This month Gazprom Germania appointed Egbert Laege, a former Boston Consulting Group executive, as chief executive. In an email announcing the move Laege thanked his predecessor Igor Fedorov “for his services to the GPG Group” and wished him “all the best for the future”.

The decision to bail out Gazprom Germania is expected to enable GM&T to restart deals. GM&T is a major trader of gas, liquefied natural gas and power, buying from sources including Norway and the North Sea and selling worldwide.

It also buys the gas for Gazprom Energy, which supplies about a fifth of all non-household gas in the UK to roughly 30,000 commercial customers, including shops, pubs, NHS trusts and local authorities, along with two-thirds of the UK’s heavy energy users — crucial industries that produce goods from glass and ceramics to fertilisers, paper and steel.

Before the German takeover, the UK government had been on standby to take over GM&T and Gazprom Energy amid fears that one or both could collapse.

Gazprom Energy had also been considering a rebrand as it sought to distance itself from its Russian owners after the invasion of Ukraine. It is not expecting to revert to Russian ownership, two people close to the company have said.

GM&T and Gazprom Energy had not replied to requests for comment at the time of publication.