- Just Eat Takeaway (T5W TH) +6.3%
- Just Eat Takeaway, Amazon Enter Into Commercial Agreement in US
- Michelin (MCHA TH) +2.5%
- Michelin Raised to Overweight at Barclays; PT 35 euros
- ArcelorMittal (ARRD TH) +2%
- Fortum (FOT TH) +1.9%
- Philips (PHI1 TH) +1.9%
- Veolia (VVD TH) +1.7%
- Anglo American (NGLB TH) +1.7%
- STMicroelectronics (SGM TH) +1.6%
- Watch ASML, Chip Stocks as US Pushes for More Industry Curbs
- Renault (RNL TH) +1.6%
- Rio Tinto (RIO1 TH) -0.8%
- Glencore (8GC TH) -0.9%
- Watch European Mining Stocks as Iron Ore and Base Metals Decline
- Bechtle (BC8 TH) -0.9%
- Telefonica (TNE5 TH) -0.9%
- SCA (SCA TH) -1.4%
- Maersk (DP4B TH) -1.5%
- Faurecia SE (FAU TH) -2.3%
- Faurecia SE Cut to Underweight at Barclays; PT 15 euros
DAX:
- Zalando (ZAL TH) +1.7%
- Deutsche Bank (DBK TH) +1.7%
- Daimler Truck (DTG TH) +1.5%
- Porsche SE (PAH3 TH) +1.5%
- MTU Aero (MTX TH) +1.5%
- Linde (LIN TH) +0.5%
- HeidelbergCement (HEI TH) +0.1%
- HeidelbergCement Cut to Underperform at Oddo BHF; PT 45 euros
- SAP (SAP TH) -0.5%
- SAP Cut to Equal-Weight at Barclays; PT 102 euros
MDAX:
- Thyssenkrupp (TKA TH) +1.9%
- Uniper (UN01 TH) +1.6%
- German Energy Giant Uniper Put on Negative Credit Watch by S&P
- ProSieben (PSM TH) +1.5%
- Commerzbank (CBK TH) +1.5%
- Fraport (FRA TH) +1.5%
- RTL (RRTL TH) -0.5%
- Bechtle (BC8 TH) -0.5%
SDAX:
- PVA TePla (TPE TH) +3.2%
- Ceconomy (CEC TH) +2.8%
- Heidelberger Druck (HDD TH) +2.7%
- AUTO1 (AG1 TH) +2.5%
- SAF-Holland SE (SFQ TH) +1.8%
- Suedzucker (SZU TH) -1.7%
Supreme Court EPA ruling puts regulators in handcuffs
Conservatives are rejoicing now but, if scandals result, the backlash could be severe
At first glance, the principle behind last week’s US Supreme Court decision preventing the Environmental Protection Agency from regulating carbon emissions seems perfectly sensible.
While federal agencies are empowered to regulate specific sectors, the court said, unelected bureaucrats cannot rush into new areas and pump out whatever costly rules they want. On “major questions”, Chief Justice John Roberts wrote in West Virginia vs. EPA, “the agency must point to ‘clear congressional authorisation’ for the power it claims.”
It all sounds as American as apple pie, or the separation of powers, and it might have made sense in earlier times. But the country’s angrily divided politics have changed the equation. For decades, Congress has been unable to write new laws except in the most serious situations. Think about how many school shootings it took to shame legislators into passing even modest gun restrictions.
Requiring legislative authorisation for regulation that addresses “major questions” is tantamount to shelving it. That means the US government’s ability to address novel policy issues has been badly hamstrung.
Even worse, the decision is likely to become a club to beat back ordinary rulemaking at a swath of federal agencies. Conservative politicians and business groups including the US Chamber of Commerce have been trying for years to get the courts to reduce the power of what they call the “administrative state”. They have already seized on the “major questions” language as a way to challenge the administration’s efforts to impose almost any new regulation.
The Securities and Exchange Commission is specifically empowered to supervise markets and corporate filings, but that will not head off lawsuits trying to prevent it from regulating cryptocurrencies and disclosures related to climate change. Similarly, efforts by the Federal Trade Commission to strengthen antitrust rules are likely to be attacked on the grounds that they lack Congressional approval.
Even if the new regulations survive, the lawsuits could delay their implementation by several years. “This new doctrine really adds uncertainty. What are the courts going to consider a major question? It creates an opening for lots of challenges and inconsistent judicial decision-making,” says Gillian Metzger, a Columbia University expert on constitutional and administrative law.
Though fossil fuel companies and conservative business groups have hailed the EPA decision as a victory, they should be careful of celebrating too much. Uncertainty makes it hard for businesses to plan and regulators who are blocked from making new rules often try to change practices by bringing enforcement cases instead.
This method is harder to predict and gives industry less chance to influence policy. Last December’s $200mn fine of JPMorgan Chase for failing to properly control staff use of personal devices has set all of Wall Street scrambling to review their employees’ texting and write new policies even without formal SEC rulemaking.
Over the long term, unbridled deregulation tends to be followed by scandals that send the pendulum swinging back the other way. A 1990s effort to speed up the approval of new prescription medicines left US patients dangerously vulnerable when drugs such as the painkiller Vioxx turned out to have major side effects. The SEC’s hands off approach in the late 1990s was followed by financial scandals that prompted the Sarbanes-Oxley accountability law. Bank deregulation helped fuel the 2008 financial crisis, spurring the Dodd-Frank reform law, which further empowered the agencies conservatives detest.
Markets are already enduring a painful downturn. If the EPA prevents regulators from addressing abuses such as dodgy special purpose acquisition vehicles and deceptive cryptocurrencies, the political backlash could be significant. Do financial services companies really want to poke that bear?
The Supreme Court decision also puts big investors in the hot seat on climate change. Reducing carbon emissions is vital but expensive. Many companies, focused on quarterly earnings, simply will not do it unless someone holds their feet to the fire. The results could be catastrophic both for long-term profits and the planet as a whole.
Big US asset managers have been walking a fine line. While encouraging companies to go green, they also insist that they do not want to become “the environmental police”. But with Congress divided and the EPA and SEC hobbled, there may be no one else to do it.
Finance’s big tech problem
A growing dependency on cloud computing could spell danger, warns BIS
The Bank of International Settlements thinks Big Tech has become too big to fail.
In a paper published on Tuesday, the central banker’s central bank argues that a growing reliance among financial institutions on cloud computing software supplied by a handful of companies could have “systemic implications for the financial system”.
The market for cloud computing software walks and quacks like an oligopoly, with Amazon Web Services, Microsoft Azure, Google Cloud and Alibaba Cloud accounting for around 70 per cent of global revenues.
Around eight in ten financial institutions worldwide now use some form of public cloud, whether to boost computing capacity, better detect fraud or scale up security.
Results are far from guaranteed, however. A hacker who gained access to a Shanghai police database with personal data on 1bn people said, per the FT’s report on Tuesday, that the information had been retrieved from a private cloud service provided by Alibaba.
Reiterating previous warnings from the Bank of England and others, BIS says that finance’s growing dependency on cloud computing “is forming single points of failure, and hence creating new forms of concentration risk at the technology services level.”
The BIS paper draws from a separate study by the European Securities and Markets Authority released in May, in which authors Carolina Asensio, Antoine Bouveret and Alexander Harris explain:
Given the limited number of [cloud service providers] that can meet the high standards of resiliency requirements that financial institutions demand, it is plausible that a sufficiently large number of them become dependent on a small number of CSPs. This implies that operational incidents may become more correlated among those financial institutions that outsource critical or important functions to a common CSP. Even though cloud computing may yield increased data security and operational resilience at firm level, it could also increase the risk of simultaneous incidents among several firms and lead to potential negative outcomes for financial stability (Danielsson and Macrae, 2019; FSB, 2019). Concentration risk in this context is thus a form of systemic risk
What would happen, for example, if a leading CSP suddenly went bankrupt?
Cyber attacks, too, pose an obvious threat. The 2020 SolarWinds hack on Microsoft’s cloud service is a case in point. Simply inserting “a few benign-looking lines of code” into Microsoft’s operating system allowed hackers to “operate unfettered” across compromised networks, the company admitted at the time.
The Federal Reserve Bank of New York said last year that a cyber attack impairing a bank’s ability to send payments would quickly ripple through the wider system (emphasis our own):
“If a number of small or midsize banks are connected through a shared vulnerability, such as a significant service provider, this could result in the transmission of a shock throughout the network. Similarly, banks with a relatively small amount of assets but large payment flows also have the potential to impair the system”
To protect against such intrusions, the European Securities and Markets Authority recommends that financial institutions use multiple CSPs for each service they provide. Multi-cloud solutions “may significantly reduce systemic risk,” it says. But . . .
. . . . this will only happen, however, if the different CSPs or groups of resources have low common vulnerabilities (i.e. can reasonably be treated as independent) and if the services in question are rapidly portable between them. In reality, the first of these assumptions (independence of CSP outages) may not hold in certain circumstances, especially within a single cloud provider, while the second assumption (back-up portability) may not hold especially for back-up strategies that use different providers.
Policymakers intent on outsourcing highly sensitive data to whichever CSP offers most should take note.
Stocks dipped in Asia on Wednesday as fears of an economic downturn lingered over financial markets, leaving the dollar hovering at the highest level in more than two years. Falls in Japan, China and Hong Kong hit Asian shares. US futureswavered after a volatile Wall Street session saw equities close up but with little conviction that global shares can escape the clutches of a bear market anytime soon. The prevailing worries about recession amid a campaign of monetary tightening to fight high inflation spurred a plunge in oil to under $100 a barrel on Tuesday. It struggled to retake that level in Asian trading. Treasuries slipped, leaving the US 10-year yield just above 2.80%. A dollar gauge was firm and the yen edged up amid the ongoing caution in markets. Bitcoin suffered another swoon, retreating below $20,000. Slivers of comfort such as the possible rowing back of some US tariffs on Chinese goods are proving no match for the dour mood in markets. A looming energy crisis in Europe amid Russia’s war in Ukraine and threats to company earnings from a slowing US economy are among the risks investors face. The odds of a US recession in the next year are now 38%, according to latest forecasts from Bloomberg Economics. Bond traders are penciling in a policy turnaround by the Federal Reserve, with current hawkishness giving way to interest-rate cuts in the middle of 2023. Elsewhere, the pound trimmed losses sparked by turmoil in British politics. Boris Johnson’s premiership is on the brink after the resignation of two of the most senior Cabinet members, but he’s digging in as UK prime minister. In China, Shanghai launched mass testing for Covid in nine districts after detecting cases the past two days, fueling concerns that the financial hub may once again find itself locked down in pursuit of Covid Zero. US After Hours KRNT -20.8% falls on weak guidance; BOC +3.5% higher on M&A news
Nikkei -1.4% Hang Seng -1.84% CSI -1.46% Shanghai -1.45% Shenzen -1.14%
Eur$ 1.0266 CNH 6.7083 CNY 6.7053 JPY 135.31 GBP 1.1965 CHF 0.9677 RUB 63.8043 TRY 17.0105 WTI$ 99.77 +0.29% Gold 1,770.80 +0.34% BTC 19,876 -2.76% ETH 1,123.35 -2.60%
S&P -0.39% Nasdaq -0.36% EuroStoxx +1.22% FTSE +1.09% Dax +1.12% SMI +0.52%
Macro :
- Copper Shares Fall as Metal Hits 19-Month Low on Recession Fears
- Tiger Global Posts June Gain, Paring This Year’s Drop to 50.1%
- Crypto Broker Voyager Seeks Bankruptcy as Mogul’s Lifeline Fails
Keep an eye on :
- AC FP : Accor to Be Structured Around Two Divisions Starting October 1
- AF FP : Air France-KLM Buys 200 CFM LEAP-1A Engines for Airbus Fleet
- ASML NA : US Pushes for ASML to Stop Selling Chipmaking Gear to China
- AGL IM : Dufry-Autogrill Has Consolidation Talks Doing the Rounds Again
- CS FP : European Life Insurers to Reap Rewards From Interest Rates Rise
- BIM FP : Boehringer, Evotec, BioMerieux Form EU40M Antibiotics JV
- BNP FP : CFTC Orders BNP Paribas to Pay $6M for Swap Related Violations-
- COFB BB : Care-Ion Places 532,226 Cofinimmo Shares: Terms
- DUFN SW : Dufry-Autogrill Has Consolidation Talks Doing the Rounds Again
- EQNR NO : Norway Unions Agree to End Energy Strike as Soon as Possible
- EVT GY : Boehringer, Evotec, BioMerieux Form EU40M Antibiotics JV
- HOLN SW : Holcim to Buy Privately Held Cantillana; No Terms Disclosed
- ICAD FP : Icade Buys 6 Healthcare Facilities in Spain for EU60 Million
- LR FP : Legrand Gets Statement of Objections From Competition Authority
- MOY GR : Mynaric: L3Harris Subscribes to New Shares for EU27.3675/Share
- OXY US : Buffett Keeps Snapping Up Occidental When Stock Drops Below $60
- RXL FP : Rexel Gets Statement of Objections From Competition Authority
- ROG SW : Roche Granted FDA Priority Review to Genentech’s Mosunetuzumab
- SU FP : Schneider Electric Gets a Statement of Objections
- STR AV : Strabag Says Board Member Bull’s Withdrawal Challenged in Court
- TE FP : TechnipFMC Wins Equinor Brazil Contract Worth More Than $1b
- TIT IM : Telecom Italia Seeks Network Valuation of at Least EU25b: Rtrs
>>> Up
* Continental Raised to Equal-Weight at Barclays; PT 70 euros
* Dechra Pharma Raised to Add at Numis; PT 4,000 pence
* Ion Beam Raised to Hold at ING; PT 18 euros
* Michelin Raised to Overweight at Barclays; PT 35 euros
* Rosenbauer Raised to Buy at Baader Helvea; PT 42 euros
* Sage Raised to Equal-Weight at Barclays; PT 720 pence
* Sainsbury Raised to Market Perform at Bernstein; PT 210 pence
>>> Down
* Aalberts Cut to Neutral at Oddo BHF; PT 40 euros
* Ashmore PT Cut to 170 pence from 200 pence at Berenberg
* Faurecia SE Cut to Underweight at Barclays; PT 15 euros
* HeidelbergCement Cut to Underperform at Oddo BHF; PT 45 euros
* Intertek Cut to Hold at Jefferies; PT 4,700 pence
* Nordex Cut to Hold at Stifel; PT 9 euros
* Profoto Holding Cut to Hold at Handelsbanken
* SAP Cut to Equal-Weight at Barclays; PT 102 euros
* SAP ADRs Cut to Equal-Weight at Barclays; PT $108
* Software AG Cut to Underweight at Barclays; PT 30 euros
* Swatch Cut to Hold at Stifel; PT 250 Swiss francs
* Titan Cement Cut to Neutral at Oddo BHF; PT 12 euros
* Valeo Cut to Equal-Weight at Barclays; PT 20 euros
* Wienerberger Cut to Underperform at Oddo BHF; PT 20 euros
>>> Initiation
* Ambea Rated New Buy at Berenberg; PT 75 kronor
>>> Call
* Ambea New Buy at Berenberg, Demographic Trends to Spur Demand
* Ashmore PT Cut to Street-Low at Berenberg as Problems Persist
* Intertek Cut on China Exposure, Prefer Bureau Veritas: Jefferies
* Sainsbury Upgraded at Bernstein With Bad News Now Priced In
* SEB a ‘Bulletproof Growth Story,’ Initiated Buy at Berenberg
Wednesday Morning Papers Summary
LA REPUBBLICA
-Under the weight of disputes and vetoes, the Italian government coalition is faltering. The M5S Movement, one of the government’s pillars, demands a so-called ‘superbonus’, the name of an income subsidy for all Italians: "Without the superbonus we will leave the government majority," said the M5S. Today the m5S leader, Giuseppe Conte, will meet Prime Minister Draghi. This is the latest episode of a broken majority, which has indeed already broken.
-The Italian Prime Minister Draghi met Turkish President Erdogan in an effort to strengthen Italo-Turkish bilateral relations with Washington’s blessing – in view of building diplomatic strength to tackle the Ukrainian crisis. Draghi and Erdogan have reportedly also made an attempt to overcome the disputes over Libya: both Rome and Ankara now see Libya’s stabilization as the priority.
FRANKFURTER ALLGEMEINE ZEITUNG
-Ukraine wants to join the industrialized countries organization OECD. Prime Minister Denys Schmyhal announced on Tuesday that he had submitted a corresponding application on behalf of the country. Ukraine's membership in the Organization for Economic Co-operation and Development (OECD) is "one of the cornerstones of successful reconstruction and development" of Ukraine, he said. Even before the war, Ukraine was considered one of the poorest countries in Europe in terms of per-capita income.
-The EU Parliament will decide whether investments in certain gas and nuclear power plants should be considered sustainable in the EU energy taxonomy. An absolute majority of 353 of the 705 MPs is needed to stop the regulation. The majority of the Greens, Social Democrats and Left Party announced that they would vote against the taxonomy. Europe still gets most of its gas from Russia. German Green MEP Michael Bloss warned: "Putin would be the big winner." The EPP group is divided. Should MEPs reject the plans, the EU Commission would either have to withdraw or amend the regulation.
HANDELSBLATT
-Western products continue to enter Russia, even as many companies have formally withdrawn from the country. Russia has legalized so-called parallel imports of more than 50 product groups. This is what is called imports without the consent of the manufacturer, which are usually processed via third countries that have not imposed any sanctions. A corresponding law of the State Duma from the end of June is valid until the end of the year. Russia had already created the legal basis in March with a regulation. Many German manufacturers are also on the list of products approved in this way: cars and spare parts from Mercedes Benz, VW, Tesla, ZF or Continental, household appliances from Miele and Philips, smartphones from Apple and Samsung, adhesives from Henkel or products used for the operation of production systems or trains are required, such as those produced by Siemens or Bosch.
-According to financial circles, the federal government is preparing to buy into Germany’s main gas trading company Uniper, which has fallen into crisis due to high energy prices. It has been suggested that the German federal government could subscribe to a package of new shares of up to 25% at a nominal value of EUR 1.70 per share certificate in a capital increase. That would correspond to some EUR150M.
In addition, according to circles, a silent participation by the federal government is under discussion, an equity instrument without voting rights. This could have a volume of between three and five billion euros.
IL SOLE 24 ORE
Grain diplomacy, with the aim of unlocking ports on the Black Sea to avert a dramatic food crisis. Together with the search for a new thrust of bilateral relations, to be achieved by balancing the common interests in the reconciliation process in Libya and building a more coordinated management of migrant flows. Ten years after the last summit in Rome, in 2012, Mario Draghi reached Ankara together with half the government to relaunch bilateral relations between Italy and Turkey, while the Russian invasion of Ukraine upset the geopolitical scenario and rewrote the international balance . At the opening of the joint press conference organized at the end of the meeting, the Turkish president offered the Prime Minister his condolences for the deceased from the Marmolada. The intergornative summit between Italy and Turkey "indicates the common will to strengthen collaboration: Italy and Turkey are partners, allied friends", underlined Draghi.
-The market is increasingly convinced that both Europe and the United States will go into recession. But they will do so at different times and probably with different intensities: Europe will get there sooner and perhaps harder, due to the gas crisis that is hitting in the short term. The United States later, given the Federal Reserve's aggressive policy to defeat inflation.
-Latvian Defense Minister Artis Pabriks said last night that the Baltic state will restore compulsory military service, following mounting tension with neighboring Russia over Moscow's war in Ukraine. “Latvia's current military system has reached its limit. In the meantime, we have no reason to think that Russia will change its behavior,” Pabriks told reporters. Latvia had revoked its compulsory military service a few years after joining the NATO defense alliance. Since 2007, the EU member army has been made up of career soldiers, along with National Guard volunteers who serve part-time in the infantry on weekends. The country of less than two million people, which borders both Belarus and Russia, currently has only 7. 500 active duty soldiers and members of the National Guard, supported by 1,500 NATO soldiers. Pabriks said compulsory military service will apply to men and take effect next year, with several options available to meet the requirements.
LES ECHOS
-Panic over oil prices. This July 5 is a black day for black gold. The American WTI closed the session down more than 8%, falling below the threshold of $100/bbl, its lowest since May 11. Brent, which serves as a benchmark in Europe, fell 9.45% to $102.77/bbl. “Obviously, the trajectory of oil has completely reversed, explained to Agence France Presse Phil Flynn, senior account manager at Price Futures Group. There are a lot of concerns about a possible recession and also about the fact that China has imposed tests for Covid-19, en masse, ”underlines the analyst.
-Had the Minister of the Economy had intentionally tried to alienate farmers, he could not have gone about it any other way. The announcements made by Bruno Le Maire on Monday about his intention to relaunch the policy of promotions and slashed prices in supermarket stalls to address the problem of French purchasing power have had an effect on farmers equivalent to that of acid on open wounds. The FNSEA and the Young Farmers saw in it the return to a recent past of prices which do not cover their production costs - the inflation of energy, fertilizers and plastics having considerably weighed them down.
ABC
-The Bay of Palma de Mallorca, one of Spain’s most important tourist destinations in the summer, has lost 37% of its Posidonia meadows because for three decades all governments dumped wastewater into the sea while failing to invest sufficient resources in treatment plants.
The complaint of an individual in 2018 reopened this case and will put the person most responsible for the discharges in the previous legislature, the ultra-left environmentalist Neus Truyol, on the bench. She could face a conviction of four years in prison for alleged environmental crimes.
-Drugs designed to treat attention deficit hyperactivity disorder (ADHD) could also successfully treat key aspects of Alzheimer's disease, according to an analysis published in the Journal of Neurology Neurosurgery & Psychiatry. These preliminary data, the study authors say, appear to warrant clinical trials of noradrenergic drugs, which include antidepressants and drugs to treat high blood pressure and ADHD. Researchers at Imperial College London explain that noradrenergic drugs target the neurotransmitter norepinephrine, also called norepinephrine, which is released by a network of specialized noradrenergic neurons. This network is critical for arousal and many cognitive processes, including attention, learning, memory, preparing for action, and suppressing inappropriate behavior.