Portugal Bids To Boost Green Energy With First Hydrogen Auction

por Michael Kern

Oilprice.com / 2023-03-27 19:055


On Monday morning, Portugal announced that it would launch a pioneering auction for rights to sell hydrogen for injection into its natural gas grid in the second half of this year. This will be the first auction in Europe and is part of the country's efforts to reduce greenhouse gas emissions.

The Portuguese government has set ambitious targets to reduce emissions by 2030 and is now looking to green hydrogen to meet those goals. Hydrogen can be produced from renewable sources such as wind and solar energy, and when injected into the natural gas grid, it can replace fossil fuels like coal and natural gas.

The auction will be managed by a new body called Gás Natural de Portugal (GNP), which will buy renewable hydrogen and biomethane at auction and then sell it on to gas companies. The aim is to increase the amount of green hydrogen in the natural gas grid from 1% today to 10% by 2030.

"This is an important step towards achieving our climate objectives," said Gabriel Sousa, GNP's representative in Lisbon. "We are confident that this auction will help us reach our goal of reducing emissions while also providing economic benefits for businesses."

The Portuguese government has already taken steps towards increasing the use of green hydrogen, including investing in research and development projects related to electrolysis technology, which produces hydrogen from water using electricity. 

It has also launched initiatives such as H2Global to facilitate imports of renewable ammonia, e-methanol and sustainable aviation fuel through auctions.

However, some limitations are associated with blending hydrogen into the European gas grid. For example, due to safety concerns, there is a limit on how much hydrogen can be blended into existing pipelines without risking explosions or other accidents.

In addition, there currently need to be regulations or standards in place governing how much hydrogen should be blended into the grid or how it should be stored safely.

Despite these challenges, Portugal remains committed to reducing emissions through the increased use of green hydrogen. The upcoming auction is expected to provide an essential boost for businesses involved in producing renewable fuels while also helping Portugal meet its climate targets.

By Michael Kern for Oilprice.com

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How two weather balloons led Mexico to ban solar geoengineering

Reuters / 2023-03-27 19:3213
2023-03-27T18:16:59Z
On an April day, the founder of a U.S. startup called Make Sunsets stood outside a camper van in Mexico's Baja California and released two weather balloons containing sulfur dioxide into the air, letting them float towards the stratosphere.

Entrepreneur Luke Iseman said the sulfur dioxide in the balloons would deflect sunlight and cool the atmosphere, a controversial climate strategy known as solar geoengineering. Mexico said the launch violated its national sovereignty.

Iseman, 39, said he does not know what happened to the balloons. But the unauthorized release, which became public in January, has already had an impact: setting off a series of responses that could set the rules for future study of geoengineering, especially by private companies, in Mexico and around the world.

The Mexican government told Reuters it is now actively drafting "new regulations and standards" to prohibit solar geoengineering inside the country. Mexico also plans to rally other countries to ban the climate strategy, a senior government official told Reuters.

While the Mexican government announced its intention to ban solar geoengineering in January, its current actions and plans to discuss geoengineering bans with other countries have not been previously reported.

"Progress is being made... to prepare the new regulations and norms on geoengineering, that is, to advance an official Mexican standard that prohibits said activity in the national territory," Mexico's environment ministry said in a written statement to Reuters.

The backlash from Mexico arrives as growing numbers of scientists and policy makers are urging further study of solar geoengineering, recognizing that emissions cuts alone will not limit dangerous climate change and that additional innovations may be needed.

Climate policy experts said Mexico is in a position to help set the rules for future geoengineering research.

"A country like Mexico could start pulling together other countries and say: 'Let's work on this together and see how we can ban it together or make it happen properly together,'" said Janos Pasztor, executive director of the Carnegie Climate Governance Initiative (C2G), which advises on governance of solar geoengineering and other climate-altering technologies.

The Mexican environment ministry statement said it would explore using the Convention on Biological Diversity's call for a moratorium on "climate-related geoengineering activities" to enforce its ban.

Agustin Avila, a senior environment ministry official, told Reuters Mexico will also try to find common ground with other countries on geoengineering at the COP global climate summit in the United Arab Emirates this year.

The Mexican government said Make Sunsets' balloon launch highlighted the ethical problems of allowing private companies to conduct geoengineering events.

"Why is this company, located in the United States, coming to do experiments in Mexico and not in the United States?" said Avila.

Iseman told Reuters in an email he chose Mexico because "most researchers report that particles launched into the stratosphere near the tropics will create more cooling by staying up longer." Also, he had a truck and camper in Baja and thinks the region is beautiful, he wrote.

David Keith, a professor of applied physics and public policy at Harvard University who has dedicated much of his research to solar geoengineering, called Iseman's launch a "stunt."

Iseman has a background in business, not science, but said he consulted with climate scientists. Other innovative startups were ridiculed in their early days, he said. "If the 'responsible experts' were solving the problem, we wouldn't have to," he said in an email.

Until Mexico's dispute with Make Sunsets, solar geoengineering had been gaining attention from policy makers and scientists as a possible solution to climate change, and limited research funding.

The strategy, also known as Solar Radiation Management, seeks to mimic the natural cooling effects of volcanic eruptions when ash clouds reflect back enough sunlight to reduce the warming of the earth by using planes or balloons to disperse tiny particles in the stratosphere.

Last month, 60 scientists including former NASA climate scientist James Hansen signed a letter in support of further research.

The Degrees Initiative, a UK-based non-government group, awarded $900,000 for research into the impacts of solar geoengineering on weather patterns, wildlife and glaciers to scientists from Chile, India, Nigeria and other countries.

The U.N. Environment Program in late February also recommended further study of geoengineering.

Yet some scientists remain opposed to further research, arguing that large-scale interventions in the atmosphere risk triggering extreme and unpredictable weather changes, including major droughts that would severely impact agriculture and food supply.

In 2021, the Swedish government grounded a Harvard-led study by Frank Keutsch and Keith, which planned to spray calcium carbonate dust into the atmosphere to deflect sunlight after indigenous Saami people accused researchers of lacking respect for "Mother Earth."

Frances Beinecke, a veteran environmental activist and board member of the Climate Overshoot Commission, a think tank focused on developing strategies to reduce the risk of overshooting 1.5 C in warming, said the Make Sunsets episode underscores the urgency of developing a regulatory framework that would allow further study of geoengineering and set safe and equitable rules for its use.

"The Mexico example illustrated to us that it's not only governance to consider whether or not to utilize it, but you need governance in the research phase," she said. "People can't just go all over the world and launch field experiments without some kind of oversight."

Iseman said he would welcome clearer regulation but that the international community is moving "too slowly."

Mexico has not set a date for implementing its ban, a spokeswoman for the environmental ministry said.

And it's unclear what effect a ban might have. Keith argues a ban is unenforceable. "You can't write legislation that says you can't put sulfur in the stratosphere since every commercial flight does that," he told Reuters.

Others note that a ban on geoengineering on Mexico's territory would offer no protection from the planet-scale impact of future experiments by any of its neighbors.

"It could happen literally next door. In terms of impacts on the world, it's the same," Pasztor said

Meanwhile, Make Sunsets said in a Feb. 21 blog post it had performed three additional launches near Reno, Nevada.

The National Oceanic and Atmospheric Administration (NOAA) said Make Sunsets did not report the launches. "The Weather Modification Act requires that any activity performed with the intention of producing artificial changes in the composition, behavior, or dynamics of the atmosphere be reported to the NOAA Weather Program Office before the commencement of such project or activity," NOAA told Reuters.

Iseman said he did seek clearance from the Federal Aviation Authority, but did not disclose the balloons contained sulfur dioxide. "As far as I can tell, there isn't any rule that would require us to do so - or even anyone who it would be relevant to notify," he said.

(This story has been corrected to say that David Keith was involved in the Harvard study, not lead it, in paragraph 23)

Related Galleries:
Luke Iseman launches a balloon in Baja California, Mexico, April 11, 2022. Luke Iseman/Handout via REUTERS

Clouds are seen on the horizon, in Playas Tijuana, Baja California, Mexico March 8, 2023. REUTERS/Jorge Duenes

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European diesel futures down 55% as Asian imports ease supply pinch

Nikkei Asian Review / 2023-03-27 19:55


A car is filled with diesel fuel at a Shell petrol station in Berlin, Germany. Diesel accounts for half of the demand for refined petroleum products in the European Union.   © Reuters
SHINICHI ARAKAWA, Nikkei staff writerMarch 28, 2023 03:28 JST | Europe

TOKYO -- Diesel futures in Europe have plummeted from an all-time high in March 2022 as increased imports from Asia and the Middle East have alleviated concerns of a supply shortage from the Russian oil embargo.

Some countries that have significantly expanded their exports to Europe, such as India, have continued to buy Russian oil on the cheap, raising concerns that some of them are refining that oil and exporting it as their own, effectively bypassing the embargo.

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Schwab's $7 Trillion Empire Built on Low Rates Is Showing Cracks

Yahoo! Finance: Top Stories / 2023-03-27 20:282


(Bloomberg) -- On the surface, Charles Schwab Corp. being swept up in the worst US banking crisis since 2008 makes little sense.

Most Read from Bloomberg

The firm, a half-century mainstay in the brokerage industry, isn't overexposed to crypto like Silvergate Capital and Signature Bank, nor to startups and venture capital, which felled Silicon Valley Bank. Fewer than 20% of Schwab's depositors exceed the FDIC's $250,000 insurance cap, compared with about 90% at SVB. And with 34 million accounts, a phalanx of financial advisers and more than $7 trillion of assets across all of its businesses, it towers over regional institutions.

Yet the questions around Schwab won't go away.

Rather, as the crisis drags on, investors are starting to unearth risks that have been hiding in plain sight. Unrealized losses on the Westlake, Texas-based firm's balance sheet, loaded with long-dated bonds, ballooned to more than $29 billion last year. At the same time, higher interest rates are encouraging customers to move their cash out of certain accounts that underpin Schwab's business and bolster its bottom line.

It's another indication that the Federal Reserve's rapid policy tightening caught the financial world flat-footed after decades of declining rates. Schwab shares have lost more than a quarter of their value since March 8, with some Wall Street analysts expecting earnings to suffer.

"In hindsight, they arguably could have had more prudent investment choices," said Morningstar analyst Michael Wong.

Chief Executive Officer Walt Bettinger and the brokerage's founder and namesake, billionaire Charles Schwab, have said the firm is healthy and prepared to withstand the broader turmoil.

The business is "misunderstood," and it's "misleading" to focus on paper losses, which the company may never have to incur, they said last week in a statement.

"There would be a sufficient amount of liquidity right there to cover if 100% of our bank's deposits ran off," Bettinger told the Wall Street Journal in an interview published Thursday, adding that the firm could borrow from the Federal Home Loan Bank and issue certificates of deposit to address any funding shortfall.

Through a representative, Bettinger declined to comment for this story. A Schwab spokesperson declined to comment beyond the Thursday statement.

The broader crisis showed signs of easing on Monday, after First Citizens BancShares Inc. agreed to buy SVB, buoying shares of financial firms including Schwab, which was up 3.1% at 2:29 p.m. in New York. The stock is still down 42% from its peak in February 2022, a month before the Fed started raising interest rates.

Unusual Operation

Schwab is unusual among peers. It operates one of the largest US banks, grafted on to the biggest publicly traded brokerage. Both divisions are sensitive to interest-rate fluctuations.

Like SVB, Schwab gobbled up longer-dated bonds at low yields in 2020 and 2021. That meant paper losses mounted in a short period as the Fed began boosting rates to stamp out inflation.

Three years ago, Schwab's main bank had no unrealized losses on long-term debt that it planned to hold until maturity. By last March, the firm had more than $5 billion of such paper losses — a figure that climbed to more than $13 billion at year-end.

It shifted $189 billion of agency mortgage-backed securities from "available-for-sale" to "held-to-maturity" on its balance sheet last year, a move that effectively shields those unrealized losses from impacting stockholder equity.

"They basically saw higher interest rates coming," Stephen Ryan, an accounting professor at New York University's Stern School of Business, said in a phone interview. "They didn't know how long they would last or how big they would be, but they protected the equity by making the transfer."

The rules governing such balance sheet moves are stringent. It means Schwab plans to hold more than $150 billion worth of debt to maturity with a weighted-average yield of 1.74%. The lion's share of the securities — $114 billion at the end of 2022 — won't mature for more than a decade.

The benchmark 10-year Treasury yield now: 3.5%.

Cash Business

Schwab's other headache from higher interest rates stems from cash.

At the root of Schwab's income is idle client money. The firm "sweeps" cash deposits from brokerage accounts to its bank, where it can reinvest in higher-yielding products. The difference between what Schwab earns and what it pays out in interest to customers is its net interest income, among the most important metrics for a bank.

Net interest income accounted for 51% of Schwab's total net revenue last year.

"Schwab's counting on inertia," said Allan Roth, founder of Wealth Logic, a financial-planning firm.

After a year of rapidly rising rates, there's greater incentive to avoid being stagnant with cash. While many money-market funds are paying more than 4% interest, Schwab's sweep accounts offer just 0.45%.

While it's an open question just how much money customers could move away from its sweep vehicles, Schwab's management acknowledged this behavior picked up last year.

"As a result of rapidly increasing short-term interest rates in 2022, the company saw an increase in the pace at which clients moved certain cash balances" into higher-yielding alternatives, Schwab said in its annual report. "As these outflows have continued, they have outpaced excess cash on hand and cash generated by maturities and pay-downs on our investment portfolios."

In their statement, Bettinger and Schwab wrote that "client deposits may move, but they are not leaving the firm."

FHLB Borrowing

To plug the gap, the brokerage's banking units borrowed $12.4 billion from the FHLB system through the end of 2022, and had the capacity to borrow $68.6 billion, according to an annual report filed with regulators.

Schwab borrowed an additional $13 billion from the FHLB so far this year, the filing showed.

Analysts have been weighing these factors, with Barclays Plc and Morningstar lowering their price targets for Schwab shares in recent weeks.

Bettinger and Schwab said that the firm's long history and conservatism will help customers navigate the current cycle, as they have for more than 50 years.

"We remain confident in our client-centric approach, the performance of our business, and the long-term stability of our company," they wrote in last week's statement. "We are different than other banks."

--With assistance from Silla Brush, Miles Weiss and Noah Buhayar.

Most Read from Bloomberg Businessweek

©2023 Bloomberg L.P.

Enclosures

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2023 GICS Classification Change: Impact on S&P 500 Earnings

por Tajinder Dhillon

Earnings | Lipper Alpha Insight | Thomson Reuters / 2023-03-27 20:28

Effective Monday March 20th, 2023, 14 constituents in the S&P 500 have been impacted by a GICS Classification change which was originally announced in December 2022.

As shown in Exhibit 1, 14 constituents across two sectors will move into three new sectors (level 1).  The largest change will be within Information Technology, where eight constituents will move to the Financials sector, followed by three constituents moving into the Industrials sector.  From a market cap perspective, Visa and Mastercard will be the largest change who now rank as the 3rd and 4th largest constituent in the Financials sector and move into a newly created sub-industry (level 4) titled 'Transaction & Payment Processing Services'.

The other sector impacted is Consumer Discretionary, which will see Target Corp, Dollar General Corp, and Dollar Tree Inc all move into the Consumer Staples sector and 'Consumer Staples Merchandise Retail' sub-industry.  Target Corp now ranks as the 9th largest constituent in the Consumer Staples sector.

Exhibit 1: GICS Classification Impact on S&P 500 (click image to view full screen)


As we enter 2023 Q1 earnings season in April, we look at the impact on both y/y earnings growth and earnings weight by sector using data from March 17th (old classification) and March 24th (new classification).  Y/Y growth rates saw a minimal impact for both 2023 Q1 and full-year 2023, and instead, we see a more notable change in the earnings weight at a sector level.

As shown in Exhibit 2, Financials will see the largest increase in earnings weight next quarter, rising from 17.6% to 19.7% (+2.1 ppt) due to Visa Inc and Mastercard Inc, followed by Industrials (+0.3 ppt), which will be offset by the decline in Information Technology (-2.6 ppt).

Consumer Staples will see its earnings weight rise moderately (+0.4 ppt) which will be offset by Consumer Discretionary (-0.3 ppt).

We also include an additional graph showing the same data but for full-year 2023 estimates.  We note Financials has an earnings weight of 19.7% post-classification, far greater than its current market-cap weight of 12.9%, which indicates some form of value being offered.  Conversely, Information Technology has its earnings weight reduced to 18.9%, far less than its market-cap weight of 26.1%, which partially contributes to the premium paid for companies in this sector.

Exhibit 2: 2023 Q1 and 2023 Earnings Weight Impact





A closer look at the newly formed sub-industry within Financials
Financials was most impacted by the classification change, and we dive further into this sector by looking at the newly created sub-industry in more detail.

The Transaction & Payment Processing Services (TPPS) sub-industry will consist of eight constituents (mostly coming from the legacy Data Processing & Outsourced Services sub-industry) including Fidelity National Information Services Inc, Fiserv Inc, Global Payments Inc, Mastercard Inc, PayPal Holdings Inc, Visa Inc, Fleetcor Technologies Inc, and Jack Henry & Associates Inc.  The remaining constituents in this legacy sub-industry now move to Industrials which includes Automatic Data Processing Inc, Paychex Inc, and Broadridge Financial Solutions Inc.

As a group, TPPS widely outperformed its benchmark sector (Financials) and the broader index in 2022 Q4, with an earnings growth rate of 12.7% compared to a growth rate of -8.9% for Financials and -3.2% for the S&P 500.  We note a similar observation when looking at full-year 2022, with TPPS delivering a 15.3% earnings growth rate in comparison to -13.2% for Financials and 4.8% for the broader index.

Based on analyst expectations, TPPS is expected to marginally outperform the broader sector and strongly outperform the broader index in 2023 Q1.

TPPS is also expected to significantly outperform the S&P 500 on a full-year 2023 basis due to strong expected y/y growth rates from Visa Inc, Mastercard Inc, and PayPal Holdings.

Exhibit 3: Earnings Growth Rate for Transaction & Payment Processing Services Sub-Industry



From a valuation perspective, many companies in TPPS trade at a substantial premium to its parent sector.  TPPS as a group trade at a forward P/E of 21.1x in comparison to 12.6x for Financials and 17.9x for the S&P 500.  This results in the Financial sector seeing its forward P/E rise from 11.7x to 12.6x which becomes more 'growthy'.

Exhibit 4: Forward P/E for S&P 500 Sectors



We conclude by looking at the forward net profit margin for each sector, which sees Financials being the largest beneficiary of the classification change with a +1.1 ppt improvement (18.9% today vs. 17.8% prior), which is offset by a -0.7 ppt decline in Information Technology.

The improvement in net profit margins can be explained by Visa Inc and Mastercard Inc which has a current forward 12-month net profit margin estimate of 54.6% and 46.6% respectively, far greater than the traditional banks of JPMorgan Chase (27.1%), Bank of America (27.2%), Citigroup Inc (14.9%) and Wells Fargo Inc (23.0%).

Exhibit 5: Forward Net Profit Margin for S&P 500 Sectors



Conclusion
The GICS classification change resulted in 14 constituents moving into new sectors.  Financials saw the largest change, with 8 of these constituents move from Information Technology into Financials.

Financials also saw a newly created sub-industry which comprises of payment processors including Visa Inc and Mastercard Inc.  Financials will have a marginal increase in its earnings weight, forward P/E ratio, and forward net profit margin based on current analyst estimates.

 

Refinitiv Workspace is a complete solution for research and analytics. It places the most comprehensive market information, news, analytics and trading tools available into a desktop.

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6 big deal reports: First Republic Bank deal proving 'elusive' | Pro Recap
por Investing.com

Investing.com: Stock Market News / 2023-03-26 21:436

Investing.com -- Here is your Pro Recap of the biggest M&A headlines you may have missed this past week.

First Republic Bank deal 'remains elusive': report
The beleaguered First Republic Bank (NYSE:) is being advised by JPMorgan (NYSE:) on strategic alternatives, including a capital raise, CNBC reported early last week. But Fox Business' Charlie Gasparino later tweeted that a deal "remains elusive," as a sale is proving difficult without more "govt backstop" despite "possible interest" from former Treasury Secretary Steven Mnuchin's private equity firm, Liberty Capital.

Still, Bloomberg reported over the weekend that U.S. authorities may expand an emergency lending facility that could give First Republic more time to shore up its balance sheet.

According to media reports, JPMorgan chief Jamie Dimon is leading these effort to secure a "club deal" here. Earlier, a Wall Street Journal report said big banks are discussing converting the $30 billion deposited into the bank the prior week into a capital infusion.

First Republic shares lost another one-third of their value last week after falling off a cliff earlier this month, down some 90% for March, amid contagion fears in the sector after Silicon Valley Bank's collapse.

Shares closed Friday at $12.36.

InvestingPro users always know first. Get news like this in real time.

Signature Bank assets bought by NYCB subsidiary
Deposits and loans of Signature Bank (NASDAQ:), the recently collapsed NYC-based lender, are getting picked up by Flagstar Bank, a subsidiary of New York Community Bancorp (NYSE:).

Under the terms of the agreement, Flagstar would acquire $12.9B of Signature Bank's loans at a discount of $2.7B, substantially all of its deposits, as well as 40 former SBNY branches, soon to be rebranded as Flagstar.

The deal excludes Signet, Signature's crypto-focused subsidiary, as well as ~$60B of loans and $4 billion of deposits, as the agency still seeks buyers and considers alternatives for these.

Shortly before its widely publicized collapse, Signature had assets of $110.3B.

Microsoft-Activision deal gets positive news from UK regulatory body
The UK's Competition and Markets Authority (CMA) said the new evidence showed that the proposed $69 billion Microsoft (NASDAQ:)-Activision (NASDAQ:) merger "will not result in a substantial lessening of competition in console gaming in the UK."

"Having considered the additional evidence provided, we have now provisionally concluded that the merger will not result in a substantial lessening of competition in console gaming services because the cost to Microsoft of withholding Call of Duty from PlayStation would outweigh any gains from taking such action," Martin Coleman, chair of the independent panel of experts conducting this investigation, said.

Earlier this week, the decision on the deal was pushed back to May 22 from April 25 by the European Commission.

Activision shares popped more than 6% last week to $84.39, while Microsoft gained 1.2% to $280.57.

BlackBerry to sell "non-core" patents and patent applications for up to $900 million
BlackBerry (NYSE:) said last week that it agreed to unload "substantially all of its non-core patents and patent applications" to Malikie Innovations, a subsidiary of Key Patent Innovations, "for a combination of cash at closing and potential future royalties in the aggregate amount of up to $900 million."

The agreement terms say BlackBerry will receive $170M upon closing, and another $30M no later than the third anniversary of closing, as well as a cut of the profits generated from the patents.

Shares gained 4% to $3.84 for the week.

BridgeBio Pharma said to attract interest from pharmaceutical companies: report
BridgeBio Pharma (NASDAQ:) is attracting takeover interest from bigger drug companies, according to a report from Bloomberg, citing people familiar with the matter.

Some large pharma companies are studying a potential acquisition of the firm. Deliberations are ongoing.

Shares leapt nearly 9% for the week to $14.90.

Extra Space Storage weighing offer for Life Storage: report
Extra Space Storage (NYSE:) is considering an offer for Life Storage (NYSE:), according to Bloomberg, citing people familiar with the matter. Extra Space Storage is working with an adviser on the potential bid.

Life Storage rejected an offer from Public Storage (NYSE:) in February.

Vlad Schepkov and Senad Karaahmetovic contributed to this report.

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Volkswagen Unveils the $25,000 Car That Tesla Doesn't Have

por Luc Olinga

The Street: Stock Market / 2023-03-25 16:2330
German auto giant announces low-cost electric vehicle for less than 25,000 euros.

Volkswagen is re-entering the race for EVs. 

The German car giant lost its title as the world's largest automaker in terms of sales last year to Japanese arch-rival Toyota  (TYIDY) . 

In the electric vehicle market, the Wolfsburg, Germany-based company has been outpaced by Tesla  (TSLA) - Get Free Report and Chinese rivals like BYD. 

But where others would have surrendered, Volkswagen  (VWAGY) - Get Free Report has sought out its rivals' weak point and has found it. It is a question of hitting the more than 80% of consumers who do not have the financial means to acquire an electric vehicle. The models currently offered are unaffordable, even with public subsidies such as the federal tax credit of $7,500 in effect in the United States since January.

On Mar. 1, investors and consumers were hoping that Tesla, whose battery charging network is one of the largest in the world, was going to unveil a Model 2, that is to say, a low-cost vehicle at $25,000.

On that day, the Austin, Texas-based automaker revealed no new passenger vehicles. The last time Tesla unveiled a new passenger vehicle was in November 2019 and it was the highly anticipated Cybertruck, its very first pickup truck. 

Since then, there has been nothing, and the wait has been long. A Model 2 could have enabled Elon Musk's group to reach a large consumer segment in Western countries and to conquer emerging countries. Musk and Tesla would have delivered a blow to their rivals. 

The ID.2all Concept
But by not unveiling an affordable vehicle, they left a void and an opportunity for the competition. Volkswagen has just rushed in to seize the opportunity.

The German juggernaut has just unveiled a low-cost electric vehicle, priced at less than 25,000 euros ($26,400). The group presented this concept car, called the ID. 2all, on Mar. 15. The version that will be available to the public, will be produced from 2025, the company said.

The ID. 2all will have a range of up to 450 km (280 miles) and features like the company's driver-assistance Travel Assist, and an infotainment system. The front-wheel drive will have some similarities to Polo's, Golf's and Beetle's design.

The production version will be based on the company's modular electric drive (MEB) platform, of which it will be the first electric vehicle with a front-wheel drive, Volkswagen said.

"We are transforming the company rapidly and fundamentally – with the clear objective of making Volkswagen a genuine Love Brand," said Thomas Schäfer, CEO of Volkswagen Passenger Cars. "The ID. 2all shows where we want to take the brand. We want to be close to the customer and offer top technology in combination with fantastic design."

"We are implementing the transformation at pace to bring electric mobility to the masses."

VW media page

Ten New EVs by 2026
Producing an electric vehicle for the masses is one of the biggest challenges for automakers, as the cost of the raw materials needed to develop the battery remains high. Tesla's cheapest vehicle right now is the Model 3 sedan, which starts at $42,990 and comes with a battery that has a range of 272 miles.

There are other cheaper electric vehicles like the Chevrolet Bolt EV from General Motors  (GM) - Get Free Report and the Nissan  (NSANY)  Leaf. The Bolt EV has a base price starting at $26,500, while the Leaf has a manufacturer's suggested retail price of $28,040.

Volkswagen's electric vehicle portfolio currently includes the ID.3 sedan, the ID.4 and ID.5 SUVs and the minibus ID. Buzz. The automaker wants to launch ten new electric models by 2026, including the new ID.3, the ID. Buzz with a long wheelbase and the ID.7 this year. This will be followed by a compact electric SUV in 2026, the company said.

The company is also working on a possible electric vehicle for less than 20,000 euros, which would be a new frontier.

"This will give the car manufacturer the widest range of electric vehicles compared with its competitors, and the company is aiming to achieve an electric car share of 80% in Europe," Volkswagen said.

Enclosures

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It Wasn't Just Credit Suisse. Switzerland Itself Needed Rescuing.

Yahoo! Finance: Top Stories / 2023-03-22 22:2636


ZURICH—The chairman of Switzerland's largest bank received an urgent call last week. On the other end were three top Swiss officials who delivered an ultimatum dressed up as a proposal. UBS Group AG UBS -3.09% needed to rescue its failing rival, Credit Suisse CS -5.48% Group AG.

For any country, it would be a financial emergency. For Switzerland, the stakes verged on existential. Its economic model and national identity, cultivated over centuries, were built on safeguarding the world's wealth. It wasn't just about a bank. Switzerland itself needed rescuing.

It was Thursday, barely 24 hours into an escalating banking crisis and Credit Suisse was hemorrhaging deposits. The 167-year-old national institution appeared days away from bankruptcy. To keep it alive until the weekend, the central bank was about to quadruple a credit line of more than $50 billion. U.S. and U.K. regulators called their Swiss counterparts to make sure they didn't let Credit Suisse bring down global markets.

Finance Minister Karin Keller-Sutter, central bank head Thomas Jordan and financial regulator Marlene Amstad had dialed Colm Kelleher, the UBS chairman, to present two options that were really only one: Buy Credit Suisse without a chance to fully understand its vast and complicated balance sheet—or let it fold in a protracted unraveling that UBS's own executives worried could shatter Switzerland's credibility as a global banking center.

Over WhatsApp, Swiss diplomats asked each other nervously whether they should move their deposits from Credit Suisse. 

After a series of frantic calls and government-orchestrated meetings in Bern, UBS agreed to swallow Credit Suisse for $3.2 billion. To seal the deal, the government, which had vowed after the 2008 crisis never again to use public money to save a bank, hastily used emergency laws to do exactly that.

"Credit Suisse is not only a Swiss company. It is part of the Swiss identity," said Thierry Burkart, head of the right-wing Liberals party, the country's third largest. "The bankruptcy of a global Swiss bank would have had an immediate effect everywhere. There would be long and hard reputational damage for Switzerland," he said. 


Photo: peter klaunzer/epa/Shutterstock
The swift demise of Switzerland's second-largest lender has rattled financial markets, and added a global dimension to a banking crisis that broke out on the West coast of the U.S. with the failure of Silicon Valley Bank. 

It is still far from clear whether the Swiss have fully contained the damage. Having two world-class banks was seen as a fail-safe to maintain Switzerland's position in world markets. The forced marriage has left it with one and has shaken ordinary Swiss people and their faith in the country's economic and political model.

"If Swiss banking means one huge bank, what if something goes wrong with that?" said Mark Pieth, a former head of the Organization for Economic Cooperation and Development's bribery division who is now at the Basel Institute on Governance. "Then the entire country and its financial stability is at stake. It's very un-Swiss." 

The central bank and finance ministry, as well as Finma, the top financial regulator in Switzerland, didn't comment beyond their previous public statements. Bankers and Swiss officials involved in the talks, as well as Swiss and other Western diplomats, provided details of the rescue. 

This Alpine nation has seen itself as a special case in Europe: a neutral broker and soberly governed democracy whose banks offer a discreet safe haven to far-flung investors and the world's wealthy. Its banking system is five times the size of its gross domestic product and larger than in most economies. UBS combined with Credit Suisse has a balance sheet twice the size of the Swiss economy.

Swiss bank UBS agreed to take over its longtime rival Credit Suisse as authorities seek to halt a dangerous decline in confidence in the global banking system. WSJ's Patricia Kowsmann explains how the deal unfolded and what might come next. Photo: Hannah McKay/Reuters
For years, Swiss exceptionalism has been chipped away. After 2008, the U.S. enacted laws requiring Swiss banks to transfer information about American clients to the Internal Revenue Service, a hammer blow to its banking secrecy. 

Relations with the European Union, whose biggest powers surround the landlocked Alpine nation, are strained after Switzerland walked away from yearslong talks to bind it more closely to the trading bloc. 

It is struggling to defend its 200-year-old policy of neutrality in the face of Russia's war with Ukraine. Moscow last year put Switzerland on its "Unfriendly Countries List" after the landlocked nation, pressured by its larger neighbors and the Biden administration, joined European Union sanctions against Vladimir Putin and his closest allies. 

By the same token, the country has refused to grant permission for Germany, Spain or Denmark to export Swiss military equipment into Ukraine, prompting a debate over whether Switzerland's attachment to neutrality is damaging its reputation in Europe. 

The country—once the indispensable meeting ground where great powers negotiated the end of conflicts—has been sidelined as a mediator in the Ukraine conflict by Turkey. Decades of economic and diplomatic ties to Russia have gone cold in Moscow yet become liabilities within the West. 


Photo: Pascal Mora/Bloomberg News
"We have now a dilemma, a big challenge for Switzerland to be recognized as a strategic partner," said former Swiss President Micheline Calmy-Rey. "For the time being it is not, and we are in shock."

The U.S. ambassador last week said Switzerland was facing its most serious crisis since World War II. Foreign investors burned by Credit Suisse's demise are rethinking their willingness to invest.

"Everything here was avoidable. We were told last week that everything was fine," said Roger Köppel, editor of the weekly magazine Die Weltwoche and member of the right-wing Swiss People's Party. "Reality is back and is hitting Switzerland very hard."

Credit Suisse's founder, Alfred Escher, was an industrial godfather of modern Switzerland. The businessman and politician used the lender to underwrite Switzerland's rail lines, tunneling through the Alps to connect the mountain-encircled nation with the rest of Europe. 

Stretching back to Nazi gold, Credit Suisse had harbored money for suspect clients alongside an A-list roster of billionaires, sovereign-wealth funds and families. In a 2014 settlement with the U.S. Justice Department, the bank paid $2.6 billion and admitted its bankers had hand delivered cash and destroyed documents to help Americans hide untaxed wealth. 

A banker in London took bribes to make loans in Mozambique. Another forged client signatures and lost them hundreds of millions of dollars. More recently, in 2021, Credit Suisse lost more than $5 billion when family office Archegos Capital Management collapsed, marking the start of its tumble into UBS.

Through the scandals, Swiss banks, and even Credit Suisse, still retained their image as fortresses for the rich.

The latest Credit Suisse management team included several who joined from UBS, including Chairman Axel Lehmann and Chief Executive Ulrich Körner. They made fresh pledges to clean up and saw returning Credit Suisse to health as a form of national service, people familiar with their thinking said.


Photo: Wassilios Aswestopoulos/NurPhoto/Getty Images
Even after raising $4 billion capital late last year for a deeper restructuring, Credit Suisse traded at just 20% of its book value. Customers pulled $120 billion from the bank last fall during an internet frenzy over the bank's health. 

Not far from Credit Suisse in central Zurich, executives at UBS prepared just in case they were called on to help. For years, UBS executives and management consultants had mapped out scenarios and what UBS would require from the government, as a precaution. 

UBS owed the government. It had been Switzerland's problem child before. 

The result of a merger in the late 1990s between Swiss Bank Corp. and Union Bank of Switzerland, UBS grew rapidly in the banking boom of the 2000s, opening a trading floor bigger than a football field in Stamford, Conn. It needed a Swiss government bailout in the 2008 financial crisis for losses on toxic securities. Chastened, it pulled back from trading and focused on managing wealth. 

The Credit Suisse chairman and CEO had feared the call from Swiss authorities.

The bank's stock had gone into free fall after the chairman of the bank's biggest investor, Saudi National Bank, speaking in a television interview at a finance conference in Riyadh, said it wouldn't invest more in Credit Suisse: "Absolutely not," he said, citing rules on bank ownership, since Saudi National Bank already owned 9.9%. 

What the market heard was that Credit Suisse's largest shareholder wouldn't back it. Mr. Lehmann, at the same Riyadh conference, rushed back to Zurich. Credit Suisse appealed to the Swiss National Bank and Finma to calm the markets with a message of support.

That Wednesday night, Credit Suisse received a more-than $50 billion liquidity line from the central bank, and the regulators said it met Swiss capital and liquidity requirements. 

Credit Suisse customers kept pulling deposits Thursday. Authorities moved to make more than $150 billion in additional liquidity available to the bank, Ms. Keller-Sutter, the finance minister, said. The government didn't disclose the move, hoping to keep Credit Suisse alive until the weekend, when a permanent solution could be found. 

Stung by having to rescue UBS before, Swiss authorities had a plan to handle big banks if they fell under stress. To avoid tapping taxpayer money, the country's financial regulator would swiftly impose losses as needed on shareholders and bondholders. 


Photo: fabrice coffrini/Agence France-Presse/Getty Images
That solution was discarded for Credit Suisse, as authorities feared it would cause panic among bank investors around the world, Mr. Jordan, the central bank governor, said Sunday.

UBS Chairman Colm Kelleher got his call Thursday from the Swiss officials, a tripartite representing Finma, the Swiss National Bank and the finance minister. The message was clear: UBS would take over Credit Suisse, or the latter would go bankrupt, potentially bringing down UBS and other banks in the fallout. 

Irish-born Mr. Kelleher joined UBS as chairman in April, after a long career at Morgan Stanley, including as chief financial officer in the 2008 financial crisis. His team swung into action, helped by a blueprint developed under former UBS Chairman Axel Weber on what a combined UBS-Credit Suisse could look like. 

The UBS and Credit Suisse chairmen and CEOs had a quick meeting with the finance minister Friday at UBS, where they were told they would sign a deal by Sunday.

Credit Suisse's large shareholders in the Gulf, including Saudi National Bank, worried they were about to lose their entire investment. They called Swiss officials, including the central bank governor and government ministers, and wrote letters, arguing that their rights were at risk of being trampled on, and that they might be able to come up with a better deal.

What do you think comes next for Swiss banking? Join the conversation below.

On Saturday evening, Mr. Kelleher took a break from dinner to call Mr. Lehmann with a $1 billion offer. It was less than Saudi National Bank's investment for one-tenth of the bank in November, a deal Mr. Lehmann brokered.

On the Credit Suisse side, executives fretted whether they could get a deal through their shareholders. A quarter of the shares were held by a trio of Gulf investors. The government had a solution. It passed a law that allowed a deal to pass without a shareholder vote. A government official read out the new law to Credit Suisse executives, without giving them it in writing, according to people familiar with the matter. 

Sunday morning, the Gulf shareholders Qatar Investment Authority and Olayan Group, and the Saudi Public Investment Fund, part-owner of Saudi National Bank, made a last-ditch proposal to Credit Suisse's board. They would inject around $5 billion, keep the stable Swiss bank and sell off other parts over time. 


Photo: fabrice coffrini/Agence France-Presse/Getty Images
Mr. Lehmann put a call into the Swiss finance minister. UBS is the only option, he was told, and the line went dead. 

Swiss officials from the get-go would only consider a Swiss option to save Credit Suisse, people familiar with the matter said. They shot-down an informal approach from U.S. asset management giant BlackRock, Inc. to get involved, these people said. 

Credit Suisse's board dug in its heels on the low price. With the announcement hours away, Swiss officials told UBS to try harder. 

Late Sunday afternoon, UBS agreed to lift its offer and pay a little over $3 billion—less than half Credit Suisse's market value on Friday. Crucially, Swiss regulators would write off $17 billion on the riskiest type of Credit Suisse bonds. The market for these bonds, commonly issued by European banks, was severely hit Monday. UBS would also get a more than $200 billion liquidity line from the central bank, and a government guarantee of over $9 billion against some potential losses. 

To get the deal done, the government waived antitrust laws on the grounds that financial stability was at stake.

"Any other solution would really have triggered a financial crisis," said Ms. Keller-Sutter, the finance minister. 

At a Sunday news conference announcing the deal, Mr. Kelleher said UBS buying Credit Suisse was in the best interest of Switzerland.

—Ben Dummett, Julie Steinberg and Summer Said contributed to this article.

Write to Margot Patrick at margot.patrick@wsj.com, Patricia Kowsmann at patricia.kowsmann@wsj.com, Drew Hinshaw at drew.hinshaw@wsj.com and Joe Parkinson at joe.parkinson@wsj.com

Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8

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Enviado de Outlook para Android

Jeremy Scott exits Moschino after a decade of cheeky, pop culture fashion

CNN.com - Top Stories / 2023-03-20 20:18

Written by Jacqui Palumbo, CNN

Moschino creative director Jeremy Scott is stepping down from his role at the Italian luxury fashion house after a decade of irreverent, pop culture-infused collections, according to a statement from the label released Monday.

"These past ten years at Moschino have been a wonderful celebration of creativity and imagination," Scott said in the news release. "I am so proud of the legacy I am leaving behind."


Moschino sends puppets down the runway for Milan Fashion Week

During his tenure, Scott was known for theatrical productions, over-the-top styling and a playful take on the zeitgeist presented on the runway, through looks such as Marie Antoinette-inspired mini pannier skirts, paper doll motifs and evening gowns incorporating inflatable pool toys. He also partnered with H&M for a collaboration that prompted massive lines and eye-watering resale prices, with Mattel on a highly sought-after Barbie capsule collection and with The Sims to create a line of virtual clothes.

After Moschino's show last fall, Scott told CNN: "There's so much negativity that we have to process, but we must hold space for joy." Credit: Victor Boyko/Getty Images

Scott was the third designer to lead Moschino, carrying on the legacy of Franco Moschino, who founded the label in 1983 with pop art, camp and playful irony influencing his ready-to-wear collections. After his death in 1994, the label's reins went to Rossella Jardini, who helmed the fashion house for some two decades — updating Moschino's eccentric style for the 2000s and dressing pop icons including Madonna and Lady Gaga — before Scott joined in 2013.


Scott walking the runway following his final presentation with Moschino in Feburary. Credit: Estrop/Getty Images

Scott's splashy debut for Moschino in 2014 focused on American consumerism, weaving the branding of McDonald's, Hershey's and Budweiser, along with the face of Spongebob Squarepants, into pieces shown on the runway. From this and other early collections, Scott's reimaginings of Moschino accessories as everyday branded items — from Happy Meal handbags to cleaning spray bottle phone cases — were a particular hit.

His final Moschino collection, shown at Milan Fashion Week in February, was more subdued than past seasons, however, with models wearing skirt suits, knits, chunky gold jewelry and sky-high mohawks.

Moschino's themed shows included a paper doll motif for the spring 2017 season. Credit: Tristan Fewings/Getty Images

Though Scott has dressed a number of A-List celebrities while leading Moschino, his designs were particularly unmatched where high drama was needed, for occasions like the Super Bowl half-time show (for which he produced looks for Katy Perry in 2015) or the Met Gala red carpet. For the latter event, Scott dressed Cardi B in an ethereal pearl-encrusted dress and headpiece in 2018, dressed Perry as a chandelier in 2019 and sent Megan Thee Stallion in a mythological-themed feather-and-armor gown in 2022.
Earlier this month, he dressed Angela Bassett and Tessa Thompson, among other stars, for the Oscars and Vanity Fair after-party.

A visual history of space-age fashion

When pandemic restrictions kept designers off of runways in recent years, Moschino led the charge in creative workarounds, devising high-production short films instead. One featured a tiny marionette show with real (scaled-down) spring-summer 2021 looks — as well as puppet attendees such as Anna Wintour — and another featured vignettes acted out on a rotating set by stars such as Dita von Teese, Precious Lee and Hailey Bieber.
An exclusive look behind the scenes of a star-studded fashion film

The films felt fitting for Scott, who already treated Moschino's runways like a stage or cinema set — and once even built smoke machines into his gowns.

"When I'm doing a show I'm really creating a character, so I really want to put (the models) in that mood, like I think a director would an actress," Scott told CNN in 2016. "It's really important for me to speak to them and talk to them about it, and that's why the models do look so different in my shows.
Scott led Moschino alongside his own eponymous label, though he has not presented new collections independently since 2019. Scott has yet to announce his next steps — including whether he'll take his label off the backburner — but his aesthetic is sure to remain unmistakeable.

"I think it's important that people have fun when they come to my shows," he told CNN in 2016. "It's what people expect from me."

Enviado de Outlook para Android

"This Is It!" - Von Greyerz Warns "The Financial System Is Terminally Broken"
por Tyler Durden

Zero Hedge / 2023-03-20 11:51407
"This Is It!" - Von Greyerz Warns "The Financial System Is Terminally Broken"
Authored by Egon von Greyerz via GoldSwitzerland.com,

The financial system is terminally broken, toast, kaput!
Anyone who doesn't see what it happening will soon lose a major part of their assets either through bank failure, currency debasement or the collapse of all bubble assets like stocks, property and bonds by 75-100%. Many bonds will become worthless.

Wealth preservation in physical gold is now absolutely critical. Obviously it must be stored outside a broken financial system. More later in this article.

The solidity of the banking system is based on confidence. With the fractal banking system, highly leveraged banks only have a fraction of the money available if all depositors ask for their money back. So when confidence evaporates, so do the balance sheets of the banks and depositors realise that the whole system is just a black hole.


And this is exactly what is about to happen. 

For anyone who believes that this is just a problem with a few smaller US banks and one big one (Credit Suisse), they must think again.

RE CREDIT SUISSE SEE 'STOP PRESS' AT THE END OF THE ARTICLE.
THE BANKS ARE FALLING LIKE DOMINOS, INCLUDING CREDIT SUISSE TONIGHT
Yes, Silicon Valley Bank (16th biggest US bank) is gone after an idiotic and irresponsible  policy to invest short term customer deposits in long term US Treasuries at the bottom of the interest rate cycle. Even worse, they then valued the bonds at maturity rather than market, to avoid taking a loss. Clearly a management that didn't have a clue about risk. SVB's demise is the second biggest failure of a US bank. 

Yes, Signature Bank (29th biggest) is gone due to a run on deposits. 

And yes, First Republic Bank had to be supported by US lenders and the Fed by a $30 billion loan due to a run on deposits. But this won't stop the rot as depositors attack the next bank and the next one and the next one……….

And yes, the Swiss second largest bank Credit Suisse (CS) is terminally ill after a number of poor investments over the years combined with poor management that has come and gone virtually every year.. I wrote an important article about the coming demise of CS 2 years ago here: "ARCHEGOS & CREDIT SUISSE – TIP OF THE ICEBERG."

The situation at CS is so dire that a solution needs to be found before Monday's (March 20) opening. The bank cannot survive in its present form. [ZH: a 'solution' was found... for now]

A failure for Credit Suisse would not just rock the Swiss financial system but have severe global repercussions. A merger with UBS is one solution. But UBS had to be bailed out in 2008 and doesn't want to be weakened again by Credit Suisse without state guarantees and support from the Swiss National Bank (SNB). The SNB injected CHF50 billion into CS last week but the share price still went to a new low.



No one should believe that a state subsidised takeover of Credit Suisse by UBS will solve the problem. No, it will just be rearranging the deck chairs on the titanic and making the problem bigger rather than smaller. So rather than a lifebuoy, UBS will have a massive lead weight to carry which will guarantee its demise as the banking system collapses. And the Swiss government will take on assets which will be unrealisable. 

Still, it is likely that by the end of the present weekend a deal will be announced with UBS being offered a deal they can't refuse by taking over the good assets and the SNB/Government nurturing the bad assets of Credit Suisse in a rescue vehicle.

The SNB is of course in a mess itself, having lost $143 billion in 2022. The SNB balance sheet is bigger than Swiss GDP and consists of currency speculation and US tech stocks. This central bank is the world's biggest hedge fund and the least successful. 

Just to put a balanced view on Switzerland. It has the best political system in the world with direct democracy. It also has low Federal debt and normally no budget deficits. It is also the safest country in the world.

SWISS BANKING SYSTEM TOO BIG TO SAVE
But the Swiss banking system is very unsound, just like the rest of the world's. A central bank which is bigger than the country's GDP is extremely unsound. And a banking system which is 5x Swiss GDP makes it too big to save. 

Although the Fed and ECB are much smaller in relation to their countries' GDP than the SNB, these two central banks will soon discover that their assets of around $8 trillion each are grossly overvalued. 

With a global banking system on the verge of a systemic failure, Central Bankers and bankers have been working around the clock this weekend to temporarily avoid the inevitable collapse of the bankrupt financial system. 

BIGGEST MONEY PRINTING IN HISTORY COMING
As I pointed out above, the main Central Banks would also be bankrupt if they valued their assets honestly. But they have a wonderful source of money that they will tap to save the system. 

Yes, I am of course talking about money printing. 

We will in coming months and years see the most massive avalanche of money printing that has ever hit the world.

For anyone who believes that we are just seeing another bank run that will quickly evaporate, they will need to take a shower in ice cold Alpine water. 

What we are witnessing is not just a temporary drama that will be sorted out by "the all powerful and resourceful" central banks. 

THE DEATH OF MONEY
No, instead what we are seeing is the end phase of this financial era which started with the formation of the Fed in 1913 and in the next few years, or much sooner, will end with the death of money.

But the Death of Money doesn't just mean that the dollar (and most currencies) will make their final move to ZERO, having already declined 98% since 1971. 

Currency debasement is not the cause but the effect of the banking Cabal taking control of the money for their own benefit. As Mayer Amschel Rothschild said in the late 1700s: "Let me issue and control a nation's money and I care not who makes the laws".

Sadly, as this Cassandra (me) has written about since the beginning of the century, the Death of Money is not just all currencies going to ZERO as they have throughout history. 

No, the Death of Money means a total and final collapse of this financial system. 

Cassandra was a priestess in Greek mythology who was given the gift of predicting major events accurately but also given the curse that no one would  believe her predictions. 

No depositor must believe that the FDIC (Federal Deposit Insurance Corp) in the US or similar vehicles in other countries will save their deposits. All these organisations are massively undercapitalised and in the end it will be the governments in all countries which step in. 

We know of course, that the government has no money. They just print whatever they need. That leaves ordinary people taking the final burden of all this money printing. 

But ordinary people will have no money either. Yes a few rich people will be taxed heavily to cover bank deficits and losses. Still, that will be a drop in the ocean. Instead ordinary people will be impoverished with little income, no government handouts, no pension and money which is worthless. 

The above is sadly the cycle that all economic eras go through. The issue this time is that the problem is global and of a magnitude never seen before in history. 

Regrettably a rotten and bankrupt financial system needs to go through a cleansing period which the world will now experience. There cannot be sound growth and sound values until the current corrupt and debt infested system implodes. Only then can the world grow soundly again. 

The transition will sadly be dramatic with a lot of suffering for most people. But there is no other way. We won't just see poverty, famine but also many human tragedies. The risk of social unrest or civil war is very high plus the risk of a global war.

Central banks had of course hoped that their Digital Currencies (CBDC) would be ready to save them (but not the world) from the present debacle by totally controlling people's spending. But in my view they will be to late. And since CBDCs are just another form of Fiat money, it would just exacerbate the problem with an even more severe outcome at the end. Still, it won't prevent them from trying.

MARKET VALUE OF US BANKING ASSETS $2 TRILLION LOWER THAN BOOK VALUE
A paper issued by 4 US academics in finance, illustrates the $2 trillion black hole in the US banking system: 

"Monetary Tightening and U.S. Bank Fragility in 2023: Mark-to-Market Losses and Uninsured Depositor Runs?"

March 13, 2023 

Erica Jiang, Gregor Matvos, Tomasz Piskorski, and Amit Seru 

CONCLUSION

"We provide a simple analysis of U.S. banks' asset exposure to a recent rise in the interest rates with implications for financial stability. The U.S. banking system's market value of assets is $2 trillion lower than suggested by their book value of assets. We show that these losses, combined with a large share of uninsured deposits at some U.S. banks can impair their stability. Even if only half of uninsured depositors decide to withdraw, almost 190 banks are at a potential risk of impairment to even insured depositors, with potentially $300 billion of insured deposits at risk. If uninsured deposit withdrawals cause even small fire sales, substantially more banks are at risk. Overall, these calculations suggest that recent declines in bank asset values significantly increased the fragility of the US banking system to uninsured depositors runs." 

What is crucial to understand is that the $2 trillion "loss" is only due to higher interest rates. When the US economy comes under pressure, the loan books of the banks will deteriorate dramatically and bad debts increase exponentially. With total assets of US commercial banks at $23 trillion, I would be surprised if 50% is repaid or recoverable in the coming crisis. 

The above risks are just for the US financial system. The global system will be no better with the EU under massive pressure partly due to US led sanctions of Russia. Virtually every major economy in the world is in a dire position. 

Lets just look at the debt pyramid which I have discussed in many articles LINK

In 1971, when Nixon closed the gold window, global debt was $4 trillion. With gold backing no currency, this became a free for all to print unlimited amounts of money. And thus by 2000 debt had grown 25x to $100t. In 2006, when the Great Financial Crisis started, global debt was $120 trillion. By 2021 it had grown 75x from 1971 to $300 trillion. 



The red column shows global debt at $3 quadrillion sometime between 2025 and 2030. 

This assumes that the shadow banking system plus outstanding derivatives of currently probably around $2 quadrillion will need to be saved by central banks in a money printing bonanza. This will obviously lead to hyperinflation and thereafter to a depressionary implosion.

I know this sounds sensational but still a very likely scenario at the end of the biggest credit bubble in history. 

GOLD – CRITICAL WEALTH PRESERVATION 
I have been standing on a soapbox for over 20 years, warning the world about the coming financial crisis and the importance of physical gold for wealth preservation purposes. In 2002 we invested important funds into physical gold with the purpose of holding it for the foreseeable future.

Between 2002 and 2011 gold went from $300 to $1,900. Since then gold corrected and then went sideways as stocks and the asset markets surged backed by massive credit expansion. 

With gold currently around $1990, there is not much gain since 2011. Still since 2002 gold is up 7x. Due to the temporarily stronger dollar, gold's gains measured in dollars are much smaller than in Euros, Pounds or Yen. But that will soon change. 

In the final section of the article "WILL NUCLEAR WAR, DEBT COLLAPSE OR ENERGY DEPLETION FINISH THE WORLD?", I outlined the importance of owning physical gold to store it in a safe jurisdiction away from kleptocratic governments.

"2023 is likely to be the year of gold. Both fundamentally and technically gold looks like it will make major up moves this year." 

And at the end of this article, I explain the importance of how and where gold should be held:"PREPARE FOR 10 YEARS OF GLOBAL DESTRUCTION."

"So my own preference would be to own physical gold and silver that only I have direct control of and can withdraw or sell with very short notice. 

It is also important to deal with a company that can move your metals at very short notice if the security or geopolitical situation would necessitate it."

In February 2019 I wrote about what I called the Gold Maginot Line which had held for 6 years below $1,350. This is typical for gold. Having gone from $250 in 1999 to $1,900 in 2011, it then spent 8 years in a correction. At the time I forecast that the Maginot Line would soon break which it did and swiftly moved to $2,000 by August 2020. We have now had another period of consolidation since then and the next move above $2,000 and towards $3,000 is imminent. 



Just to remind ourselves what happens to your money and gold during a hyperinflationary period, here is a photo from China's hyperinflation in 1949 as people try to get their 40 grammes (just over one ounce) that they were allocated by the government. At some point in the next few years, there will be a panic in the West to buy gold at any price. 



So as I have been urging investors for over 20 years, please get your gold NOW while it is still available. 

STOP PRESS
Intense discussions are right now going on here in Switzerland between UBS, Credit Suisse, the regulator FINMA, the Swiss National Bank – SNB – and the Swiss Government. The Fed, the bank of England and the ECB are also involved. 

The latest rumour is that UBS will buy Credit Suisse for CHF900 million ($1 billion). The shares of CS closed at a market cap of CHF8 billion on Friday. The deal would clearly involve backing from the SNB and the Swiss government which would have to take on major liabilities. 

The December 2022 book value of CS was CHF42 billion, as with all banks massively overstated. 

The deal isn't done at this point, 5.30pm Swiss time, but the whole banking world knows that without a deal, there will be global contagion starting tomorrow Monday the 20th. 

Even if a provisional deal will be done by Monday's open, the financial system has now been permanently injured with an open wound which won't heal. 

The problem will just move on to the next bank, and the next and the next….

Hold on to your seats but buy gold first.
Tyler Durden Mon, 03/20/2023 - 07:20

Enviado do meu Galaxy

Failed Signature Bank Finds a Buyer
por Ellen Chang

The Street: Stock Market / 2023-03-20 12:416
The 40 branches of Signature Bank were acquired by a subsidiary of New York Community Bancorp on March 19.

Signature Bank in New York, the third bank to fail in March, was acquired by Flagstar Bank, the FDIC said on Sunday.

The New York bank was taken over by a federal regulator on March 12 after the New York State Department of Financial Services closed the bank, only two days after Silicon Valley Bank was shut down by the FDIC.

DONT MISS: UBS-Credit Suisse Merger May Lead to Massive Layoffs

Flagstar, a subsidiary of New York Community Bancorp  (NYCB) - Get Free Report, acquired the former 40 branches of Signature Bank. 

The acquisition includes the purchase of $38.4 billion of Signature Bridge Bank, N.A.'s assets, including loans of $12.9 billion purchased at a discount of $2.7 billion. 

The bridge bank's $60 billion in loans will remain in the receivership for disposition by the FDIC at a later date.

The deal did not include approximately $4 billion of deposits related to the former Signature Bank's digital banking business, the FDIC said.

The deposits from the digital banking business will be provided "directly to customers whose accounts are associated with the digital banking business," the FDIC said.

Investigations
The former former Signature Bank had total deposits of $88.6 billion and total assets of $110.4 billion as of December 31, 2022.

The FDIC received common stock of New York Community Bancorp that has a "potential value of up to $300 million."

The failure of Signature Bank to its Deposit Insurance Fund is approximately $2.5 billion, the FDIC estimates. The exact cost will be determined when the FDIC terminates the receivership. 

The FDIC had named Greg D. Carmichael as CEO of Signature Bridge Bank, N.A. He recently served as president and CEO of Fifth Third Bancorp.

Signature Bank branched out into the cryptocurrency industry unlike other banks who stayed away from the virtual currencies.

The bank's involvement with its customers in the crypto industry was being investigated by prosecutors in the U.S. before it was shut down by regulators, sources told Bloomberg.

The investigators in Washington and Manhattan from the Justice Department were looking into whether Signature Bank had looked into if its clients were conducting money laundering, the article said.

Banks are required to follow steps to determine if they know their customers, such as examining who an account holder is. They are also required to look into the types of transactions made by customers and if they resemble any kind of criminal wrongdoing.

Sources told Bloomberg that the Securities and Exchange Commission was also investigating Signature Bank. 

The collapse of Signature Bank followed the failure of Silicon Valley Bank. 

SVB's parent company, SVB Financial, filing for bankruptcy protection on March 17. The bank's assets were not included in the filing. The Chapter 11 filing is the largest bankruptcy for a bank since Washington Mutual filed in 2008.

SVB was the second-largest bank failure in U.S. history and has shaken many investors. It was the result of a bank run, caused by the firm's announcement that it failed to raise the additional capital to increase liquidity.

The bank made investments into long-dated government securities, including Treasury securities. When depositors demanded their funds, the bank sold the securities, taking a $1.8 billion loss. The Santa Clara, Calif., bank then attempted to raise $2.25 billion in capital by issuing new common and convertible preferred shares to cover the shortfall.

Depositors made a run on the bank, withdrawing their cash and transferring it into other banks.

Enviado do meu Galaxy

Swiss regulators broke the rules of the game
por Peter Garnry

Saxo News & Research - Articles, Videos and Trade Views / 2023-03-20 13:28

The takeover design of Credit Suisse over the weekend broke the rules of the game sending shock waves through bank bonds this morning. There could be lasting damage to European banks from this.
Credit Suisse takeover design sends shock waves through AT1 bonds

The Swiss government's shotgun wedding of UBS and Credit Suisse with shareholders of Credit Suisse receiving one share in UBS for 22.48 shares in Credit Suisse valuing the bank at roughly $2.8bn. While shareholders were left with something on the table the additional tier 1 (AT1) capital holders were wiped out on their outstanding notional value of CHF 16bn breaking with precedence in prior bailouts. The move also goes against the capital structure order as AT1 capital sits above equity which means that it should always be shareholders that absorb all losses before they flow to AT1 capital holders.

Markets did not like the takeover design sending AT1 bonds down as much as 17.5% at their intraday lows. In order to stem further confidence loss, EU banking regulators reiterated that common equity tier 1 (CET1) capital still takes losses before AT1 capital holders. This announcement has calmed the market with AT1 bonds rallying 8% off their lows.

The two biggest ETFs tracking CoCos (a part of the tier 1 capital structure) and all AT1 bonds

Source: Bloomberg

As we still do not know the longer term consequences of the SVB bailout, which included the full guarantee of uninsured deposits, we also do not know the longer term consequences of the Credit Suisse bailout. Last night's event could create lasting damage to the AT1 capital market and thus long-term funding and cost of capital for European banks. In any case, the risk blow to banks the past two weeks will mean that risk-taking in the system will go down and thus cost of capital will go up for the economy.

What is AT1 capital?

The AT1 bonds framework was created after the Great Financial Crisis under the new Basel III rules as a new layer of capital to function as shock absorbers in case of banking stress and failures. The figure below shows a simplified capital structure of a financial institution and here it can be seen that AT1 bonds have the highest risk after the common equity tier 1 capital holders (shareholders).

One of the key criteria for an AT1 bond is that it is a perpetual, meaning that the bond does not expire, to ensure that it is permanent capital. Some of these AT1 bonds come with equity conversion in the case a bank's leverage ratio dips below a certain threshold. These AT1 bonds are called contingent convertible bonds, or 'CoCos', and correspond to around 40% of the outstanding AT1 bonds. The AT1 market size is around $254bn with most bonds denominated with banks representing 97% of the issues and European banks representing 80% of the AT1 universe.


Source: VanEck


Source: Lazard Asset Management

One of the reasons why European banks have been the main issuer of AT1 bonds is that the return profile on common equity has been so disastrous that it has not been a viable capital source unless a bank has been willing to issue capital at a high cost of capital. AT1 bonds have functioned as a bridge and vehicle to create tier 1 capital. Investors have been keen on investing in AT1 bonds, and especially in global systemically important banks because there has been this implicit idea that governments would only allow shareholders to loss everything. The risk-reward ratio has thus been seen as quite good for AT1 bondholders. As the return chart from Lazard Asset Management shows is that the capital structure return profile has been distorted. Bank equity, as the most risky part of the capital structure, should have yielded a higher return than AT1 bonds but it did not, indicating that the European banking system is structurally unsound from an investor point of view.

For those that want to educate themselves even more on AT1 capital we can recommend these two short notes from Lazard Asset management:

Focus on the AT1 Market – Part 1

Focus on the AT1 Market – Part 2

It should be noted, that in May 2022, Fitch Ratings wrote a note about the existential crisis in Europe over AT1 bonds as European supervisors are leading discussions about a capital stack redesign with a focus on common equity tier 1 capital. In other words, the EU regulators are acknowledging that the current system is not optimal. But how to get increase the emphasis on common equity tier 1 capital when European banks' return on equity is so low relative to the cost of equity?

European banks have the highest risk

Under the Basel III framework banks' leverage ratio is defined as the capital measure (tier 1 capital) over exposure measure (risk-weighted assets). The total regulatory capital includes tier 1 (CET1 + AT1) and tier 2 capital and most be minimum 8% implying a maximum leverage of 12x, but this is under assumption of course that the risk-weighting framework is set correctly and work linearly across all risk scenarios; we would argue that it is not the case and thus the system has an implicit hidden risk.


Source: Bank for International Settlements

The whole Basel III framework is built on the layered regulatory capital and then a risk-weighted approach to the assets on the balance sheet. Government bonds have the lowest risk weighting under the current framework and it makes sense. But when you add an interest rate shock and held-to-maturity accounting, which only works under the assumption of stable liabilities, then regulators add a highly non-linear risk to the system. Because as we saw with SVB and other banks, the risk-weighting was clearly too low relative to a situation with unstable liabilities. This is the key risk in the banking system. If the wider population finds the utility value of deposits too low to other alternatives such as short-term government bonds, gold, Bitcoin, equities etc. then the banking system could easily extend its decline in aggregate deposits which will deplete banks of its cheapest funding source and potentially increase the pressure on forced asset sale.

We have updated our banking monitor with Canadian banks and also added the AT1 capital so our clients can see which banks have the most outstanding notional of AT1 capital. In addition we computed the lower bound on leverage by dividend the tier 1 capital with the total assets. This is naturally the most conservative risk measure on banks as it sets all assets to the same risk. Under this assumption it becomes quite clear that US banks are better capitalised than European and Canadian banks.



Peter Garnry
Head of Equity Strategy
Saxo Bank
Topics: Equities Central Banks Financials Credit Suisse Group Europe European Union (EU) Switzerland

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UBS Seeks Government Backstop As It Rushes To Finalize Credit Suisse Takeover Deal As Soon As Tonight

por Tyler Durden

Zero Hedge / 2023-03-18 17:00177
UBS Seeks Government Backstop As It Rushes To Finalize Credit Suisse Takeover Deal As Soon As Tonight
So much can change in just 48 hours.

Late on Thursday, just hours after the SNB had launched the first (of many) bailout attempts of Swiss banking giant Credit Suisse, Bloomberg blasted the following headline:

*UBS, CREDIT SUISSE SAID TO OPPOSE IDEA OF A FORCED COMBINATION
This lack of enthusiasm by UBS to acquire its struggling rival of course forced the Swiss National Bank to front CS a CHF50 billion credit line to hold it over for the next four days amid a furious bank run, one which we said would be woefully insufficient to restore confidence in the collapsing lender, and which we probably used up in just a few hours.

Then, late on Friday, both banks "unexpectedly" changed their minds and we got the following 180 degree U-Turn report from the FT:

*UBS IN TALKS TO ACQUIRE ALL OR PART OF CREDIT SUISSE: FT
So a deal is inevitable after all... but as always, there is a footnote one which we predicted yesterday when we said that a deal would only happen if the acquiring bank - in this case UBS - got a full central bank backstop.

bank megamerger weekend, with lots of central bank backstops https://t.co/pobOLTtFJM

— zerohedge (@zerohedge) March 17, 2023
That now appears to be the case with Bloomberg, Reuters and the WSJ all reporting that UBS is asking the Swiss government for a backstop to cover future risks if it were to buy Credit Suisse Group AG, after the Swiss National Bank and regulator Finma have told international counterparts that they regard a deal with UBS as the only option to arrest a collapse in confidence in Credit Suisse. The FT reported that deposit outflows from the bank topped CHF10bn ($10.8bn) a day late last week as fears for its health mounted.

According to the reports, UBS is discussing scenarios in which the government would take on certain legal costs and potential losses in any deal. Credit Suisse set aside SFr1.2bn in legal provisions in 2022 and warned that as yet unresolved lawsuits and regulatory probes could add another SFr1.2bn.

UBS also wants to be allowed to phase in any demands it would face under global rules on capital for the world's biggest banks.

The backroom negotiations are taking place as the largest Swiss bank is exploring an urgent acquisition of all or parts of its smaller rival at the urging of regulators to halt a crisis of confidence, one which local authorities hope will be concluded on Saturday

Under one likely scenario, the deal would involve UBS acquiring Credit Suisse to obtain its wealth and asset management units, while possibly divesting the investment banking division, which has become the laughing stock on Wall Street after being one of the most iconic groups less than two decades ago. Talks are also still ongoing on the fate of Credit Suisse's profitable Swiss universal bank.

According to the FT, the boards of the two banks are meeting this weekend as Credit Suisse's regulators in the US, the UK and Switzerland are considering the legal structure of a deal and several concessions that UBS has sought.

UBS wants to be allowed to phase in any demands it would face under global rules on capital for the world's biggest banks. Additionally, UBS has requested some form of indemnity or government agreement to cover future legal costs, one of the people said.

* * *

The time scale for agreement is fluid, according to Bloomberg which notes that the goal is for an announcement of a deal between the two banks by Sunday evening at the latest, while the Financial Times reported that a deal could emerge as soon as Saturday evening.

UBS executives had been opposed to an arranged combination with its rival because they wanted to focus on their own wealth management-centric strategy and were reluctant to take on risks related to Credit Suisse, Bloomberg reported earlier this week.  Credit Suisse had 1.2 billion Swiss francs ($1.3 billion) in legal provisions at the end of 2022 and disclosed that it saw reasonably possible losses adding another 1.2 billion francs to that total, with several lawsuits and regulatory probes outstanding, according to Bloomberg Intelligence.

Credit Suisse has been unprofitable over the course of the last decade and has racked up billions in legal losses, while also suffering a historic bank run.


As we reported yesterday, the bank run spike late last week, and FT sources said deposit outflows from the bank topped Sfr10bn ($10.8bn) a day late last week as fears for its health mounted.

A government-brokered deal would address a rout in Credit Suisse that sent shock waves across the global financial system this week when panicked investors dumped its shares and bonds following the collapse of several smaller US lenders. A liquidity backstop by the Swiss central bank this week briefly arrested the declines, but the market drama carries the risk that clients or counterparties would continue fleeing, with potential ramifications for the broader industry.

The prospective takeover reflects the sharp divergence in the two banks' fortunes. Over the past three years, UBS shares have gained about 120% while those of its smaller rival have plunged roughly 70%.

The former has a market capitalisation of $56.6bn, while Credit Suisse closed trading on Friday with a value of $8bn. In 2022, UBS generated $7.6bn of profit, whereas Credit Suisse made a $7.9bn loss, effectively wiping out the entire previous decade's earnings.

* * *

Swiss regulators told their US and UK counterparts on Friday evening that merging the two banks was "plan A" to arrest a collapse in investor confidence in Credit Suisse, one of the people said. There is no guarantee a deal, which would need to be approved by UBS shareholders, will be reached the FT warned.

Negotiators have given Credit Suisse the code name Cedar and UBS is referred to as Ulmus, according to people briefed on the matter.

The fact that the SNB and Finma favour a Swiss solution has deterred other potential bidders. Earlier today the FT reported that BlackRock had drawn up a rival approach, evaluated a number of options and talked to other potential investors, but in the end withdrew from the process.

A full merger between UBS and Credit Suisse - whose headquarters face each other across Zurich's central Paradeplatz square, would be an historic event for the nation and global finance and would create one of the biggest global systemically important financial institutions in Europe. UBS has $1.1tn total assets on its balance sheet and Credit Suisse has $575bn. However, such a large deal may prove too unwieldy to execute.

The Financial Times has previously reported that other options under consideration include breaking up Credit Suisse and raising funds via a public offering of its ringfenced Swiss division, with the wealth and asset management units being sold to UBS or other bidders.

UBS has been on high alert for an emergency rescue call from the Swiss government after investors grew wary of Credit Suisse's most recent restructuring. Last year, chief executive Ulrich Körner announced a plan to cut 9,000 jobs and spin off much of its investment bank into a new entity called First Boston, run by former board member Michael Klein.

Tyler Durden Sat, 03/18/2023 - 12:39

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Credit Suisse's Fate Rests in the Hands of These Power Players

Yahoo! Finance: Top Stories / 2023-03-18 19:22



(Bloomberg) --

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A politician, an economist, and a mathematician are among the select group of power players who will determine the future of what was once Switzerland's pre-eminent financial institution.

After a crisis of investor confidence, Credit Suisse Group AG is locked in emergency talks this weekend that are likely to end in the breakup of the 166-year-old bank. Longtime rival UBS Group AG is in negotiations with regulators about which parts of the firm it may acquire.

It's a dramatic fall from grace for a titan of Switzerland's all-powerful banking industry. The people at the epicenter are a small band of figures drawn from politics and finance. Here are some of the key players:

Karin Keller-Sutter, 59, has been Switzerland's finance minister for less than three months. A member of the country's pro-business liberals, she has been part of the seven-member government since 2019 and active in politics for 30 years. Before being elected to the government, she was on the board of insurer Baloise Holding AG and president of the Swiss Retail Federation.

Urban Angehrn, born in 1965, has been leading Finma, the Swiss financial regulator, since November 2021. He worked for 14 years at Zurich Insurance and previously as head of strategy at Winterthur's asset management division. Before that, he spent 11 years in derivatives marketing at Credit Suisse First Boston and JPMorgan Chase & Co. He earned a Masters degree in physics from ETH Zurich before completing a PhD in mathematics from Harvard.

Thomas Jordan, 60, has been chairman of the Swiss National Bank since April 2012. During his time, he has led the central bank through a phase of ultra-expansive monetary-policy, with the world's lowest interest rate and currency interventions to stop the franc — a haven in times of market stress — from strengthening. The SNB started raising rates in June and ended negative rates in September. Jordan studied economics and business at the University of Bern. He has been at the SNB since 1997.

UBS's chairman knows a crisis. Colm Kelleher, who took his current role less than a year ago, was Morgan Stanley's chief financial officer during the financial crisis of 2008. The 65-year-old helped orchestrate an emergency investment from Japan's Mitsubishi UFJ Financial Group Inc. that, along with state assistance, kept the US bank afloat. He then helped oversee Morgan Stanley's investment bank as it sought to win back clients lost in the panic. He retired from the firm in 2019 and joined UBS with the goal of replicating the success of Morgan Stanley's strategy of scaling up in wealth management to win over investors.

UBS Group AG Chief Executive Officer Ralph Hamers, 56, cuts a somewhat unusual figure among top executives at Swiss banks, with his preference for open-necked shirts and business buzzwords. His arrival at UBS from Dutch lender ING Groep NV in 2020 was clouded by a legal battle over his role in a money laundering scandal. Since taking over in Zurich, he has been buoyed by robust results — though his strategy of making UBS a more digital bank was dealt a blow when he was forced to abandon his acquisition of Wealthfront, a US robo-adviser.

Credit Suisse Group AG Chairman Axel Lehmann knows both addresses on Paradeplatz well, having served as chief operating officer at UBS and president of its Swiss bank. The 63-year-old was appointed as a safer, more local pair of hands after Antonio Horta-Osorio was forced to depart following a scandal over Covid-era quarantine breaks. Lehmann has since made forceful efforts to shore up confidence in Credit Suisse — including a controversial episode late last year when he claimed that outflows of client assets from the bank had "basically stopped." The bank's subsequent admission that they hadn't saw Lehmann briefly the subject of a regulatory probe, which was later dropped.

Another ex-UBS decision-maker, Chief Executive Officer Ulrich Koerner started his second stint at Credit Suisse in 2021 as head of the asset management unit before taking over the top job from Thomas Gottstein last year. The 60-year-old has the reputation of a ruthless cost-cutter, and the bank has claimed its effort to shed jobs since its October reboot is ahead of plan. The German-Swiss citizen ran Credit Suisse's domestic bank in the early 2000s, having begun his career at McKinsey & Co. Inc.

--With assistance from Bastian Benrath.

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