TheChek News Flow

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Macro :

- US Set to Block Russian Debt Payments, Raising Odds of Default

- Commodities Underweights Penalize Active EU Portfolio Managers

Keep an eye on :

- ABN NA : ABN AMRO 1Q Profit Meets Estimates

- AF FP : CMA CGM to Take Air France-KLM Stake in Air Cargo Partnership

- ALO FP : Alstom Consortium Wins EU2.6B Tel Aviv Rail Systems Project

- ARAMCO AB : Saudi Aramco Is Said to Weigh IPO of Trading Unit Amid Boom

- BEFB BB : Befimmo 1Q Adjusted EPS EU0.62 Vs. EU0.69 Y/y

- BRBY LN : Burberry FY Adjusted Operating Profit Meets Estimates

- CTM SS : Catena Media 1Q Adjusted Ebitda EU25.6M Vs. EU25.0M Y/y

- CBK GY : UniCredit Unit Mulled Approach to Commerzbank in Early 2022: FT

- DAE SW : Daetwyler Sees FY Ebit Margin 13% to 16%

- DMP GY : Dermapharm 1Q Adjusted Ebitda EU75.1M Vs. EU63.7M Y/y

- EDF FP : EDF May Repair Some Nuclear Reactors by Year-End, Watchdog Says

- ELI BB : Elia Doesn’t Foresee Direct Impact of War in Ukraine on Its Ops

- ELIOR FP : Elior Group 2Q Revenue Beats Estimates

- ELIOR FP : Elior Is in Final Stages of Picking New CEO: Gault

- ENX FP : Euronext 1Q Ebitda Beats Estimates

- ENX FP : Euronext Upgrades 2022 Cost Guidance as Earnings Beat Estimates

- ENX FP : Euronext 1Q Results Good, Open Up Prospect for More M&A: Citi

- COL SM : Inmobiliaria Colonial 1Q Ebitda EU58M Vs. EU55M Y/y

- LGEN LN : L&G New £4b Investment With West Midlands Combined Authority

- LOGN SW : Logitech Jumps as UBS Upgrades to Buy, Says Selloff Overdone

- MB IM : ECB May Bar Del Vecchio Raising Mediobanca Stake: MF

- RKT LN : Abbott, Gerber, Reckitt Officials Called to May 25 House Hearing

- RNO FP : Renault CEO Seeks to Ease Nissan, Mitsubishi Fears Over EV Split

- SGRE SM : Siemens Energy Is Said to Plan Buyout Offer for Siemens Gamesa

- SIGN SW : SIG Raises ~EU204M in Share Placement Priced at CHF19.40/Shr

- GLE FP : SocGen’s Survivor CEO Oudea Is Stepping Down After 15-Year Reign

- TSLA US : Musk Has a Bigger Problem Than Bots: A Huge Twitter Debt Burden

- TRUEB SS : Truecaller Holder Atomico UK Partners Offers Up to 21m Shares

- TUI1 GY : TUI's Equity Raise Helps Clean Up Pandemic Financing Mess: React UniCredit’s Workaholic Boss Bounces Back After $54 Million Win

- UCG IM :

Commission wants to raise money by selling €20bn worth of surplus carbon allowances

Carbon cash cow

Brussels is never short of ideas on how to raise extra funds and is proving quite creative with its most recent one: selling surplus carbon emissions permits to raise €20bn that could, inter alia, cover some of Hungary’s energy transition costs (and thus unblock the sixth Russia sanctions package), write Andy Bounds in Brussels and Alice Hancock in London.

Yet a less desirable side-effect of this plan is that by lowering the carbon price and making it cheaper to burn fossil fuels, it will risk thwarting the bloc’s climate policies, which aim at reducing carbon emissions by at least 55% by 2030, compared to 1990 levels.

The conundrum wasn’t lost on Luxembourg energy minister Claude Turmes: “The most important is how to keep on track on climate change in a moment where you have this huge security-of-supply issue?”

While the commission is considering a measure that would delay the application of its Fit for 55 package, the European parliament is going in the opposite direction when it comes to carbon allowances. Members of its environment committee approved — by a margin of 49 to 33 votes — to phase out free carbon emissions allowances for heavy industry by 2030. That is six years sooner than the commission proposed.

In addition, MEPs voted to accelerate the introduction of the carbon border adjustment mechanism (CBAM), a way of charging companies importing into the EU for their carbon emissions.

Eurofer, which represents European steel producers, said that the “disruptive vote” by the parliament’s environment committee put 30,000 jobs under threat and endangered €31bn in investments that would go into low carbon projects. Cepi, the paper and pulp industry body, said the proposals would make it “very challenging” for the sector to decarbonise.

CBAM and the end of free allowances under the EU’s emissions trading system are one of the most contested areas of Brussels’ efforts to decarbonise. Industrial executives also argue that plans for CBAM do not yet account for exports from the EU, making European industry wildly uncompetitive compared to global peers with lower and less expensive environmental regulations.

Industry groups may soon rejoice at the commission’s carbon-allowance selling plans, which would drive down the price of carbon and make it easier for them to adjust.

Tesla CEO’s comments add to questions about whether he is committed to concluding a $44 billion deal struck during a selloff in tech stocks

Elon Musk said his $44 billion purchase of Twitter Inc. TWTR 2.49%▲ can’t move forward until the company is clearer about how many of its accounts are fake, casting fresh doubt on his planned takeover of the social-media company.

Mr. Musk’s latest comments add to questions about whether he is committed to concluding a deal that was struck amid a steep selloff in technology stocks. Last week, he said the deal was “on hold” over concerns about fake accounts on the platform—a problem that has long dogged social-media companies.

In a tweet early Tuesday, Mr. Musk said that Twitter’s chief executive had refused to show proof that less than 5% of Twitter’s accounts were fake. “This deal cannot move forward until he does,” he said.

Mr. Musk said his offer was based on Twitter’s filings with the Securities and Exchange Commission being accurate, and added: “20% fake/spam accounts, while 4 times what Twitter claims, could be *much* higher.”

Mr. Musk’s tweet was in response to an article covering his own estimate, made at a conference a day earlier, in which he estimated that fake users make up at least 20% of all Twitter accounts. Mr. Musk’s figure roughly matches one in a new report from a market-research firm, SparkToro. The firm says it includes in its figures automated accounts that could be considered legitimate, such as ones that post a feed of news headlines.

In securities filings, Twitter has long estimated that false or spam accounts represent less than 5% of its total number of active users, but has also said that the actual number “could be higher than we have estimated.”

In a statement Tuesday, Twitter said it “is committed to completing the transaction on the agreed price and terms as promptly as practicable.”

Twitter’s board said in a separate statement that Mr. Musk agreed to pay $54.20 a share for Twitter. “We believe this agreement is in the best interest of all shareholders,” it said. “We intend to close the transaction and enforce the merger agreement.”

On Monday, Twitter Chief Executive Officer Parag Agrawal defended his company’s efforts to fight spam.

“First, let me state the obvious: spam harms the experience for real people on Twitter, and therefore can harm our business,” Mr. Agrawal said as part of a series of posts on Monday. “As such, we are strongly incentivized to detect and remove as much spam as we possibly can, every single day. Anyone who suggests otherwise is just wrong.”

He said Twitter suspends more than half a million spam accounts a day and locks millions of accounts suspected of being fake weekly if they can’t be verified by humans.

Last week, Mr. Musk, the CEO of Tesla Inc., said he would try to verify Twitter’s numbers and said others should do the same. Mr. Agrawal suggested that external estimates of spam accounts wouldn’t be accurate.

“Unfortunately, we don’t believe that this specific estimation can be performed externally, given the critical need to use both public and private information [which we can’t share],” Mr. Agrawal said Monday. “Externally, it’s not even possible to know which accounts are counted as mDAUs on any given day,” he added, referring to monetizable daily active users.

Mr. Musk responded with a number of tweets, with one showing a poop emoji.

Twitter, in a regulatory filing early Tuesday that detailed how the deal came together, said that Mr. Musk had raised the prospect of a takeover early on in discussions with its board, well before his stake in the firm became public.

Mr. Musk initiated outreach on March 26, according to the filing, separately contacting Jack Dorsey, Twitter’s former CEO and current board member, and another director, Egon Durban, co-CEO of private-equity firm Silver Lake.

That led to a meeting the next day with Mr. Agrawal and Bret Taylor, Twitter’s chairman, in which they discussed Mr. Musk potentially joining the board. Mr. Musk also said he was considering taking Twitter private or starting a rival service, according to the filing.

That meeting came more than a week before Mr. Musk first publicly disclosed his Twitter stake, on April 4, when it had grown to around 9.2% of the company’s stock. He declared himself a passive investor, signaling he had no intention to change or influence control of the company. The disclosure, which came days after a required filing deadline, is now subject to a Securities and Exchange Commission probe.

Mr. Musk on April 9 said he wouldn’t join the board, and instead planned to make an offer to take the company private, which led to a deal on April 25 for him to buy the company.

Tuesday’s filing, which runs to 235 pages, contains no mention of discussions between Mr. Musk and Twitter officials about fake, spam or bot accounts.

Twitter stock closed up 2.49% at $38.32, leaving shares still well below the $54.20 a share at which Mr. Musk had agreed to buy the company, and below where Twitter’s shares traded before Mr. Musk first disclosed that he took a stake in the company on April 4.

Mr. Musk’s insistence on the issue of fake accounts has raised speculation that he may try to renegotiate or walk away from the purchase—though he has already signed an agreement and waived detailed due diligence on the deal. Mr. Musk and Twitter would each owe the other $1 billion if either walks away from the deal in certain circumstances, according to securities filings, but such a clause wouldn’t preclude a renegotiation—or a lawsuit.

Some outside analyses have found that Twitter may have more fake accounts than it discloses—though they use different methodology than Twitter and include accounts that the company excludes from its estimates.

SparkToro says its analysis of a representative sample of active Twitter accounts found that 19% fit what it calls a conservative definition of fake or spam accounts.

But SparkToro specifies that its definition of fake accounts includes all accounts that don’t regularly have a human composing their tweets, which are common on Twitter for sending such information as news updates, inspirational quotes and stock-price changes. Twitter offers tools for developers to build automated bots.

World’s biggest economies battle to dominate advanced processing power that will effect defence and climate modelling

The US is about to vault into a new era of supercomputing, with a once in a decade leap forward in processing power that will have a big effect on fields ranging from climate change research to nuclear weapons testing.

But the national swagger usually prompted by such breakthroughs is likely to be muted. China passed this milestone first and is already well on the way to building an entire generation of advanced supercomputers beyond anything yet in use elsewhere.

What makes the advances all the more remarkable, according to US experts in the field, is that China’s achievement was made with local technology, after Washington blocked access to the American hardware long considered to be critical to such systems.

The build-up in China’s supercomputing program, which dates back more than two decades, has led to a “stunning situation” where the country now leads the world, said Jack Dongarra, a US supercomputing expert.

The most advanced supercomputers are used to improve simulations of highly complex systems, for instance creating better models of climate change or the effects of nuclear blasts. But their secret use in classified areas, such as defeating encryption, is likely to also make them key tools in national security, according to Nicholas Higham, professor of mathematics at the University of Manchester.

China already had more supercomputers on the Top 500 list of the world’s most powerful computers than any other country — 186 compared with 123 in the US. Now, by beating the US to the next big breakthrough in the field and planning a spate of such machines, it is in a position to seize the high ground of computing for years to come.

The Chinese breakthrough has come in the race to build so-called exascale supercomputers, systems that can handle 10 to the power of 18 calculations per second. That makes them a thousand times faster than the first of the petaflop systems that preceded them more than a decade ago.

In recent months, work has been under way at the US Department of Energy’s Oak Ridge national laboratory in Tennessee to assemble and test the first of three exascale systems planned in the country. If the inevitable “bugs” are ironed out, the arrival of exascale computing in the US could be confirmed at the end of May with the publication of the twice-yearly Top 500 listing, according to Dongarra who maintains the list.

By contrast, China’s first exascale system has been running for more than a year and has since been joined by a second, according to a recent presentation by David Kahaner, director of the Asian Technology Information Program, whose research is widely cited as the most authoritative.

China has not officially disclosed that it has two exascale systems. But their existence was confirmed late last year when scientific research run using the machines was entered for the Gordon Bell prize, with one paper taking top honours in the international supercomputing competition.

The country with the most advanced supercomputers has a clear advantage in national defence over its adversaries, said Horst Simon, who until recently was deputy director of the US energy department’s Lawrence Berkeley national laboratory.

China’s decision not to officially confirm its supercomputing breakthrough is a departure from decades of history in the field, where scientists usually talk openly about their achievements and countries have been quick to claim bragging rights to the top machines. The secrecy may have been to prevent further retaliation from the US, according to experts.

Washington imposed targeted sanctions against five Chinese organisations involved in supercomputing in 2019, then followed up a year ago with another round against seven more groups. The second wave was put in place the month after China’s first exascale system had been fired up.

A previous Chinese effort to break the exascale barrier had relied on technology from US chipmaker AMD, leaving it vulnerable to US trade restrictions. In contrast, its current two exascale systems are based on domestic chip designs. The local developers of the chips used in the two giant new systems — Tianjin Phytium Information Technology and Shanghai High-Performance Integrated Circuit Design Center — were both on last year’s US sanctions list.

“I think it’s quite impressive that they were able to put in place a system based on their own technology over a very short period of time,” said Dongarra. He added that it was unclear whether the chips were manufactured in mainland China — which is still years behind in matching the world’s most advanced chip fabs — or in Taiwan.

China has been building a domestic industry around supercomputing for years, first shocking its main rivals in the US and Japan in 2000 when it unveiled what was then the world’s fastest machine. But the dawn of the exascale computing era could be a chance to grab a clearer lead.

While the US has three exascale systems in the works, China’s goal is to have 10 systems by 2025, according to Kahaner. His research shows Chinese companies are now more focused on domestic competition than on what their international rivals are doing. As a gap opens up between the two nations, the US should consider loosening its sanctions against China’s leading national supercomputing centre at Wuxi in the hope of “a deeper glimpse into these [Chinese] systems”, according to Kahaner.

Despite China’s lead in hardware, Kahaner and others point to the breadth of US capabilities as a strength, particularly when it comes to software. Half of the $3.2bn cost of the US energy department’s three exascale computers stems from a decade-long effort to write programs to run on the new computing architecture. Also, Chinese research in advanced mathematics seldom shows up in fields related to supercomputers, said Higham.

Regarding his call for greater collaboration between China and the US, Kahaner said: “Access to new systems allows experimentation, which benefits all parties. To the maximum extent possible, consistent with security and fair/balanced competition, more access is better.”

But with China yet to publicly acknowledge its new supercomputing prowess and the US still pressing for sanctions against China to try to limit its rise as a tech power, that may remain a distant hope.

Bank of America survey shows increased allocations to cash and sharp fall in tech company exposures

Cash holdings among global fund managers have risen to their highest level since the 9/11 terrorist attacks in the US in a shift that reflects large investors’ worries about the deteriorating outlook for stock markets.

Cash balances have swelled to 6.1 per cent on average across the portfolios of global asset allocators according to Bank of America, which canvassed views from 288 investment professionals that together oversee assets of $833bn for pensions plans, insurance companies, asset managers and hedge funds.

The shift into cash — which is typically in vogue during periods of heightened risk aversion — coincides with a significant weakening in expectations about corporate earnings. A net 66 per cent of fund managers in May said they expected global profits to weaken, a low comparable to other crisis periods including the 2008 implosion of Lehman Brothers and after the dotcom bubble bust in 2000.

Michael Hartnett, chief investment strategist at Bank of America, said that sentiment among investors was now “extremely bearish” with a net 13 per cent of fund managers swinging to a “underweight” position in equities compared with a net 6 per cent “overweight” in April.

“There has been a lot of damage to investors’ psychology and this is the result,” said Hartnett.

Wall Street analysts have been revising up their US corporate earnings forecasts for this year since January and Hartnett said that a small piece of good news might result in a temporary market rally. But he also cautioned that the “ultimate low” for equities had not yet been reached with the MSCI All Country World index, a global benchmark, down almost 17 per cent in dollar terms since the start of the year.

The US Nasdaq Composite has dropped by almost a quarter since the start of the year, sinking into a bear market as investors have shifted away from previously highly rated tech companies.

Global fund managers have held a consistently “overweight” exposure to technology stocks for the last 14 years but the allocation plummeted to a net 12 per cent “underweight” in May.

“This represents the biggest ‘short’ in tech since August 2006,” said Hartnett.

Goldman Sachs is holding an “overweight” position in cash and on Monday downgraded equities to a “neutral” position on a three-month view.

Christian Mueller-Glissmann, a strategist with Goldman in London, said that investors would need to see a “convincing peak” in inflation — which is running at a 40-year high in the US — before risk appetite could stabilise.

“Stocks are now negatively correlated with inflation expectations, suggesting investors are much more worried about inflation risks and their impact on equities,” said Mueller-Glissmann.

Richard Dunbar, head of multi-asset research at Abrdn, the Edinburgh-based asset manager, said that high and persistent levels of inflation were fuelling doubts over whether the Federal Reserve should avoid pushing the US economy into a recession in order to restore price stability.

“Investors are not yet pricing in a US recession but there is increasing pessimism about the Fed’s ability to ‘thread the needle’ with monetary policy to achieve a soft landing for the US economy,” said Dunbar.

Scientists are trying to understand the cause of neurological effects and whether symptoms will be long-lasting

The cognitive impairment caused by severe Covid-19 is comparable with the decline that takes place between the ages of 50 and 70, according to a recent study by Cambridge university and Imperial College London.

Researchers said the degeneration was equivalent to losing 10 IQ points. The findings, published earlier this month, were the latest in a series of studies that suggest Covid-19 has an impact on the brain.

The lasting impact of Covid-19 on the millions who have contracted it is still being assessed more than two years into the pandemic, with few areas of uncertainty as urgent and unsettling as the potentially enduring effects on the brain.

Scientists are examining the precise mechanisms causing neurological effects and whether symptoms will prove to be temporary, or the heaviest health burdens may still lie in the future.

Amid a growing body of anecdotal evidence, Alzheimer’s Disease International, a federation of dementia associations suggested in September that the degenerative effect of coronavirus could fuel the “pandemic of dementia”. The World Health Organization estimates that the number of people living with dementia, currently some 55mn, will rise to around 80mn by 2030 as the elderly population grows.

A study from Oxford university researchers published in March found tissue damage and shrinkage in parts of the brain related to smell in people who had only mild bouts of Covid-19. Researchers, who analysed nearly 800 brain scans from the UK Biobank — one of the world’s largest biomedical databases — found a reduction in whole brain size compared with people who were not infected and, on average, greater cognitive decline.

Loss of the sense of smell, which people began noting in the early days of the pandemic, may have been caused by damage to the olfactory nerve which extends into the brain and conveys this function, according to a study published in JAMA Neurology last month.

Dr S. Andrew Josephson, chair of neurology at the University of California, San Francisco, and editor in chief of JAMA Neurology, said people with even mild Covid described symptoms, such as mental fatigue, that might be related to the brain. “We’re seeing more and more studies that show changes in the brain that may be associated with it,” he said.

Difficulties with memory, language and concentration are among a broad range of symptoms that fall under the umbrella term “long Covid”. Defined as suffering symptoms for 12 weeks or more after a Covid-19 diagnosis, medical experts have estimated it affects more than 100mn people.

Other experts agreed that superficially worrying findings may not be as concerning as they first appeared.

“The majority of patients we’re seeing clinically have . . . a disorder of concentration and the ability to direct your thinking,” said Alan Carson, consultant neuropsychiatrist at Edinburgh university. “It’s very unpleasant, but it’s not a permanent neurodegenerative state — it’s treatable.”

Serena Spudich, professor of neurology at the Yale School of Medicine, said it was not clear how much changes in the brain are specific to Covid, nor their significance. “People may lose some grey matter and it may have little real-life meaning”, she said.

Research into the connection between Covid-19 and dementia is in its early stages. Scientists said it was theoretically possible that the disease could affect the brain in a similar way to some other viruses.

A US study in 2020 found that people with HIV had a 50 per cent higher risk of developing dementia. If Sars-Cov-2 travelled “along brain pathways in a manner similar to HIV then it is possible Covid infection may increase the risk of Alzheimer’s disease”, reflected Dennis Chan, who is leading a study on cognitive impairment in long Covid funded by the UK’s National Institute for Health and Care Research.

Other scientists said the belief that the virus could travel into the wider central nervous system via the olfactory nerve now seemed flawed. “It’s proved incredibly difficult to infect the brain with coronavirus,” said Carson.

Josephson said researchers are analysing spinal fluid samples from living patients in search of “unusual antibodies or inflammatory cells” that could shed new light on long Covid.

Discouraging precedents from history had not so far been repeated, experts suggested.

Clinicians feared the pandemic “would be associated with an encephalitic Parkinson’s that had been described after Spanish Flu”, said Anna Cervantes-Arslanian, a neurologist at Boston University School of Medicine.

But a study she led found only 0.5 per cent of people with severe Covid-19 had meningitis or encephalitis. Around 10 per cent had altered brain function or structure, according to the research published in April in the journal Critical Care Explorations.

Researchers led by Chan are using MRI scans to understand the causes of Covid’s effects on memory, thinking speed and decision making. He said his team would also trial cognitive rehabilitation techniques used to treat memory problems after a stroke, such as setting tasks to increase mental focus.

Other scientists are looking at the possibility of new pharmaceutical treatments. Studies are under way to examine changes in tissues and organs that cause, or are caused by, Covid-19 in order to trial treatments.

Josephson said it remained unclear whether impacts on the brain were caused by an overactive immune system or the reverse. However, he said if this could not be quickly established it may be best to go ahead with trialling drugs that modify the immune system, either by decreasing or enhancing it, to help those whose symptoms suggest cognitive impairment.

But disentangling Covid’s impact from other elements only indirectly associated with the virus remains a puzzle-in-progress for researchers.

“Covid’s effects on the brain are real — some people have very discrete, defined conditions and some have things that we don’t understand quite as well,” said Spudich. “The problem is that there are so many other social factors, pressures, stresses related to these pandemic times that it definitely muddies the waters.”