Bloomberg

(Bloomberg) — Russian President Vladimir Putin, in Beijing for the opening of the Winter Olympics, met with Chinese President Xi Jinping to exchange views and pledge a bilateral friendship with “no forbidden zones.”  

Russia’s foreign minister brushed off U.S. claims that Moscow plans to release a graphic, fake video purporting to show a Ukrainian attack on Russia or Russian-speaking people, as a way to justify an invasion. 

Moscow has repeatedly denied that it plans to attack Ukraine, while the U.K. and U.S. say it has massed almost 130,000 troops close to the border. Russia has decried the use of NATO forces near Russia’s frontiers. 

Key Developments

• Putin’s Financial Fortress Blunts Impact of Threatened Sanctions
• Putin Courts China’s Xi for Help in Showdown With the West
• Russia Signs Energy Deals With China as Relations With West Sour
• Ukraine Briefing Spurs Greater Urgency on Sanctions in Congress
• What we know so far about potential U.S.-EU sanctions on Russia
• Where military forces are assembling around Russia and Ukraine

All times CET

Baltic Leaders Show Common Front on Energy Security (2:46 p.m.) 

NATO’s Baltic members have gas reserves and a liquid natural gas terminal, making them resilient to any potential shutoff of supplies by Russia, Latvian Prime Minister Krisjanis Karins said at a press conference with his Estonian and Lithuanian counterparts. 

The three prime ministers discussed energy security at their meeting in Riga, the Latvian capital. Estonian Prime Minister Kaja Kallas said she wasn’t convinced Russia would hold off using gas supplies as a weapon.

Russia Funneling Fuel, Hardware, Drones to Donbas, Kyiv Says (1:55 p.m.) 

Ukrainian intelligence services indicated that Russia continues to supply Kremlin-backed militants and Russian military personnel in the separatist-controlled areas in the eastern Donbas region, the Defense Ministry in Kyiv said in a statement.

Russian authorities dispatched 9,000 tons of fuel, several tanks, armored vehicles, self-propelled artillery units, Russian-made drones and other weapons by rail and road to Donetsk and Luhansk on Ukraine’s eastern border, the ministry said.

U.K. Backs U.S. Claim of Fake Video (1 p.m.)

U.K. Prime Minister Boris Johnson’s office said U.S. claims that Russia plans to make a graphic video of a Ukrainian attack to justify an invasion were “credible and extremely concerning.” 

“We’ve conducted our own analysis on this intelligence and share the US’s conclusion,” Johnson spokesman Max Blain told reporters at a regular briefing. The U.K. is “considering options for further military deployments to support NATO’s eastern flank”, Blain added. 

“We have high confidence Russia is planning to engineer a pretext blaming Ukraine for the attack in order to justify a Russian incursion into Ukraine,” Blain said. Russian Foreign Minister Sergei Lavrov earlier called the U.S. allegations “delusional.” 

Finland Bemoans EU Inaction (12:55 p.m.) 

Finland’s President Sauli Niinisto said the European Union must recognize that when its members are pulled into the Russia-Ukraine fray, it is also affected. 

Speaking to reporters in Helsinki, Niinisto referred to Russia’s demand that NATO agree not to expand eastward, which would effectively close the door to the military alliance for Finland and Sweden — although neither Nordic country has applied to join NATO. The EU’s lack of response on the subject stands in contrast to the solidarity that typically emerges quickly during financial crises, Niinisto said. 

NATO Chief to Depart After Central Bank Appointment (11:51 a.m.) 

Jens Stoltenberg, secretary general of the NATO military alliance, has been appointed governor of Norway’s central bank and will take up the post later this year.  

NATO chief since 2014, Stoltenberg has pledged to serve out his term, which ends Oct. 1. The U.S. and Germany were among countries that had asked Stoltenberg, who’s leading the alliance’s talks with Russia over its military buildup near Ukraine, to stay on, Norwegian newspapers had reported.

Kremlin Says No Basis for Putin-Zelenskiy Meeting (11:40 a.m. CET)

There’s no basis yet for a meeting between Putin and Ukrainian President Volodymyr Zelenskiy on the tensions, Kremlin spokesman Dmitry Peskov said. 

“For this there needs to be an understanding of what will come out of it and what will be discussed, and there isn’t one yet,” Peskov said on a conference call. The same goes for another so-called Normandy summit that would include the leaders of France and Germany to discuss eastern Ukraine, he said. 

Turkish President Recep Tayyip Erdogan reiterated his offer to mediate between the two sides but Peskov said any visit by Putin to Turkey would be focused on bilateral issues. 

Putin, Xi See ‘No Forbidden Zones’ (11:17 a.m.) 

Putin and Xi see no limits to the Russia-China friendship and “no forbidden zones” in cooperation between their countries, the two leaders said in a joint statement after talks in Beijing — their first face-to-face meeting since 2019.  

China “treats with understanding and supports” Russia’s demands for binding security guarantees from the U.S. and NATO, and the two states oppose further expansion of the military alliance, according to the statement.

The pair also said in the statement that Russia opposes Taiwan’s independence in any form. The two leaders described the “new type” of relations between Moscow and Beijing as superior to the Cold War-era blocs.

YouTube Blocks Separatist Accounts (10:55 a.m.)

YouTube blocked several accounts associated with separatists in two eastern Ukraine regions, Tass reported, citing media representatives of the self-proclaimed republics. 

The Luhanskinformcenter in the unrecognized Russian-backed Luhansk People’s Republic and the Ministry of Information in the Donetsk People’s Republic were among the channels affected, Tass said. 

The moves could expose Alphabet’s Google, which owns YouTube, to new criticism in Russia, where it’s under increasing pressure from the government. The company is facing potentially huge fines for blocking a Russian TV channel’s account on the video service and in December was hit with a $95 million penalty for not removing content. 

Russia Blamed for German Energy Cyber Attack (11:00 a.m.)

A Russia-linked cybercrime gang was allegedly responsible for ransomware attacks that took down a swath of Germany’s fuel-distribution system this week. Hackers using “Black Cat” ransomware infected computers at Mabanaft GmbH and Oiltanking GmbH Group, say people familiar with an investigation of the breaches.

While there’s no confirmed link to the Russian state, the attacks come as the U.S., U.K. and others warn of the risk of cyberattacks as part of a campaign to put pressure on Europe for its support of Ukraine. 

Lavrov Calls U.S. Claim of Fake Video ‘Delusional’ (10:10 a.m.)

Foreign Minister Sergei Lavrov dismissed claims by the U.S. that Russia plans to produce a graphic propaganda video that purports to show a terrorist attack on Russian-speaking people.

“I read on the internet that the State Department made some statements that Russia is allegedly preparing a fake video with an apparent attack by Ukrainian soldiers on Donbas,” Lavrov said in a clip posted by Ren TV. “This kind of fantasy is delusional in my opinion, and they are more and more of them every day.”

U.S. officials warned previously that Moscow may be planning a false flag event that would create a justification for sending troops into Ukraine, and have said it used similar tactics when it occupied Crimea and fought a war with Georgia.

Carlsberg CEO Downplays Impact on Business (9:30 a.m.)

The Danish brewer Carlsberg A/S said its business won’t be hit too hard by a possible Russia-Ukraine conflict. Carlsberg gets less than 8% of its profit from the two countries, CEO Cees ‘t Hart said in a Bloomberg Television interview. A decade ago, eastern Europe accounted for almost half of the company’s earnings. 

Putin, Xi Meet; Russia will Supply Gas From Far East (9:13 a.m.) 

In their first in-person meeting since 2019, Putin told China’s Xi that Russia will supply 10 billion cubic meters of gas per year to China from the Far East under a new contract. 

During the summit, timed to show solidarity on the sidelines of the Winter Olympics, Putin said conditions between the two countries were of an “unprecedented nature and an example of a dignified relationship.” 

EU Warned of New Russian Cyber Threat (8:40 a.m.) 

European Union institutions were warned Thursday of a new Russian-backed cyber threat that’s been running credential harvesting activity since mid-2021, according to an alert seen by Bloomberg News. 

The alert says it’s possible the capabilities will be used for cyberespionage purposes. No institutions have been targeted yet. The alert didn’t mention Ukraine. 

The group, known as Reuse Team or Callisto, has been involved in state-sponsored espionage and criminal activity since the early 2000s, the alert said. The group has recently targeted an EU body and was involved in a campaign that targeted a European ministry of foreign affairs in 2020. It has gathered intelligence related to foreign policy in Eastern Europe and the South Caucasus, according to a 2017 report by F-Secure, a cyber security research firm. 

Gazprom Reliability in Doubt, Von Der Leyen Says (8:31 a.m.) 

Gazprom is abiding by its contracts with the EU but unlike other suppliers isn’t shipping more gas than planned to Europe, and that’s casting doubt on its reliability, European Commission President Ursula von der Leyen said in an interview with Les Echos and Handelsblatt.

Gazprom’s behavior is “weird,” and Russia is using gas deliveries as a way to put pressure on Europe, she said.

Von der Leyen also described the EU’s sanctions package in the event of a Russian invasion of Ukraine, which includes including shutting Moscow off from foreign capital, and controlling exports of critical goods to Russia needed in areas such as artificial intelligence, weapons, quantum computing, lasers and space technologies.

Macron to Visit Russia, Ukraine Next Week (8:21 a.m.) 

French President Emmanuel Macron will travel to Moscow on Monday and Ukraine on Tuesday, an Elysee official said, as he continues an active diplomatic role in the crisis. 

The trips will follow three calls in the past week between Macron and Vladimir Putin to discuss the Ukrainian situation.    

U.S. Lawmakers Briefed by Top Security Team (11:00 p.m.) 

U.S. lawmakers are rushing to draft a new round of potential sanctions on Russia intended as a deterrent to any aggression against Ukraine. The sense of urgency in Congress escalated following day-long briefings Thursday by top national security officials. 

Negotiations had been slowed as Democrats and the Biden administration resisted Republican efforts to impose more sanctions on Russia now. Both sides agree on the need for more punishing penalties should Russia invade Ukraine, which the Kremlin denies it plans to do. 

More stories like this are available on bloomberg.com

©2022 Bloomberg L.P.

(Bloomberg) — There are a dizzying number of candidates running in this Sunday’s presidential election in Costa Rica. Some 25 in all at last count.

They include school teachers, doctors, lawyers, a farmer and an evangelical singer, and, of course, career politicians. But one of them in particular, 44-year-old Jose Maria Villalta, has triggered trepidation among the moneyed class in the capital city of San Jose. 

That’s because Villalta is a socialist cut out of the same mold of Gabriel Boric, the candidate who just won the presidency in Chile promising to overhaul the country’s free-market economy. His political party, the Broad Front, even shares the same name as Boric’s. 

Villalta isn’t in first place in polls — that spot belongs to former President Jose Maria Figueres — but with the backing of about 8% of Costa Ricans, he has a shot at qualifying for the second-round runoff between the top two finishers on Sunday. And for wealthy Costa Ricans who’ve watched political change sweep through a region battered by the pandemic, that possibility is unnerving.

Read More: Election Favorite Says Costa Rica’s Growth Problem Can Be Fixed

“If he reaches government, capital flight and economic crisis would become a reality,” said Gerardo Corrales, a former bank CEO of BAC San Jose. 

A congressman and former student protest leader, Villalta once called his ideology “Socialism a la Tica.” (Tica is a slang term for Costa Rican.) He opposed the free trade agreement with the U.S., the ending of a state monopoly on telecommunications, and the current program with the International Monetary Fund. Last year, he was the only member of congress to vote against a motion condemning government repression in Cuba. 

Villalta’s press office didn’t reply to an email seeking comment. 

According to his 260-page manifesto, Villalta wants Costa Rica to transition into an economy “made up of a large number of private companies that are cooperatively owned and managed.” He has called for taxes on extraordinary profits made by financial companies, large inheritances and “hot money” capital flows. He also says he would regulate the prices of medicines. 

There is at least one piece of economic orthodoxy in his platform: a pledge to make government spending both fair and “sustainable.”

To become president he will have to overcome establishment candidates such as Figueres, who promises to speed up economic growth with a wave of foreign investment, and evangelical singer Fabricio Alvarado, who accused Villalta of promoting “the same ideas that ruined other Latin American nations.” 

Polls in Costa Rica will open at 6 a.m. on Sunday. If no candidate wins more than 40%, the runoff will be held on April 3.

More stories like this are available on bloomberg.com

©2022 Bloomberg L.P.

(Bloomberg) — A Russia-linked cybercrime gang was allegedly responsible for ransomware attacks that took down a swath of Germany’s fuel-distribution system this week and hindered payments at some filling stations.

Hackers using a strain of ransomware known as “Black Cat” infected computers at Mabanaft GmbH and Oiltanking GmbH Group, according to two people familiar with an investigation into the breaches.

Ransomware is a type of malicious software that encrypts files on victims’ computers, rendering them inaccessible until a ransom is paid. It’s not known how much money the Black Cat gang has demanded from the firms.

The hackers behind Black Cat appear to be related to the DarkSide ransomware gang, according to Brett Callow, a threat analyst at the cybersecurity firm Emsisoft. DarkSide was accused of the attack on Colonial Pipeline Co. last year, shutting down the largest gasoline pipeline in the U.S. for several days in May.

Other energy-storage companies, including Evos Group, have also suffered IT problems in recent days, at facilities spanning Malta, Belgium and the Netherlands. The precise cause of the disruption at Evos is currently unclear. On Thursday, the firm said the source was still being investigated.

The attacks come amid heightened tensions in the region as Russian troops are massed on the Ukrainian border, raising fears of an imminent ground attack. Such an attack could imperil Russian fuel supplies to Germany and other parts of Europe. Russian President Vladimir Putin has repeatedly denied he plans to invade.

Mabanaft, which distributes large amounts of fuel across Germany, said on Tuesday that its computer systems had been breached and its operations disrupted. Oiltanking GmbH Group, which operates terminals internationally, confirmed that its systems were also affected by the cyberattack. Both companies are owned by the Hamburg-based fuel group Marquard & Bahls AG.

A spokesperson for the companies declined to comment on the ransomware. The companies discovered they had been “the victim of a cyber incident” on January 29 and were working with specialists to investigate, the spokesperson said. They were hoping to resume normal operations by early next week, according to the people.

The prosecutor’s office in Hamburg said it had opened an investigation into the breach but hadn’t yet identified a suspect. “At the moment no information concerning the perpetrator behind the attack can be provided,” said Liddy Oechtering, a spokeswoman for the prosecutor’s office. “So far the investigations are directed against unknown.”

The German newspaper Handelsblatt previously reported that the hackers used the Black Cat ransomware, citing a report from Germany’s Federal Office for Information Security. The two people familiar with the investigation confirmed that account to Bloomberg News.

Black Cat’s ransomware code is written in Russian and is known for its “sophistication and innovation,” according to a report published in January by researchers at Unit 42, a cybersecurity team at Palo Alto Networks. The gang, which has been active since November 2021, has recruited “affiliates” on cybercrime forums who effectively rent out the ransomware to hack companies and organizations, according to the report.

Doel Santos, a threat intelligence analyst for Unit 42, said that hackers using Black Cat’s ransomware, which is also known as ALPHV, had been “very active” since December. They were targeting a wide range of industries, including construction and engineering, retail, transportation, commercial services, insurance, machinery, professional services, telecommunication, auto components and pharmaceuticals, he said. The gang has focused its extortion efforts on companies and organizations in countries including the U.S., Germany, France, Spain, Philippines, and the Netherlands, the Unit 42 report found. 

“What’s unusual is that for a new group they are very skilled,” said Allan Liska, a senior threat analyst at the cybersecurity firm Recorded Future Inc. “The methodology is the same across all of these ransomware groups. But Black Cat moves around networks quickly. They get the data quickly, and they are not afraid to go after big targets.” Liska added that people involved in the gang appeared to be native Russian speakers, as indicated by their posts on Russian-language cybercrime forums.

Liska called the timing of the attacks suspicious but said it wasn’t yet clear whether there was any link to the tensions in Ukraine. 

Callow, from Emsisoft, said he believed Black Cat was likely the latest incarnation of the prolific ransomware groups BlackMatter and DarkSide.

After the Colonial Pipeline attack drew widespread condemnation and pressure from law enforcement, DarkSide rebranded under a different name, BlackMatter, a common tactic by ransomware gangs when they come under intense scrutiny. 

But BlackMatter didn’t last long either, Callow said, in part because Emsisoft discovered a vulnerability in its ransomware that helped victims recover their files without paying any ransom.

The organizers of the group hired new developers and rebranded again, under the name Black Cat, Callow said.

Callow said that the new Black Cat ransomware was more sophisticated and didn’t include the same errors in its code as ransomware strains deployed by previous incarnations of the gang.

Authorities in Germany have described the hacks this week as serious, but played down the level of disruption to the country’s fuel supplies. A spokesman for the country’s Federal Office for Information Security said that 233 gasoline filling stations, largely in northern Germany, had been affected, only 1.7% of the country’s total. At some of those stations it wasn’t possible to pay by credit card, the spokesman said.

 

(Updates with additional detail in 12th paragraph. A previous version of this story corrected spelling of company name in second paragraph.)

More stories like this are available on bloomberg.com

©2022 Bloomberg L.P.

(Bloomberg) — The House is forging ahead Friday on a bill that would invest tens of billions in the U.S. tech sector, but Republican objections that it’s too weak on China threaten what Democrats hoped would be a quick election-year win. 

The bill started as a bipartisan push to bolster U.S. manufacturing and research, and ease the dependence on China for semiconductors, but it became mired in long-standing partisanship over U.S. policy on China. 

It’s expected to pass largely along party lines and a final bill — negotiated with the Senate, where Republicans wield filibuster power — could be months away. China opposed the Senate’s own version of the bill, passed in June with bipartisan support, with Beijing arguing the U.S. should not make China an “imaginary enemy.” 

How Supply Chains Broke, Sparking Global Shortages: QuickTake

China’s rising economic power and global influence have been a focus for three successive presidential administrations and the subject of bipartisan angst in Congress, but the two parties’ tactics have differed widely. Former President Barack Obama emphasized engagement and building relationships in the Pacific region while former President Donald Trump used tariffs and tough rhetoric even as he deployed personal diplomacy with Chinese leader Xi Jinping. 

President Joe Biden, focused on his domestic agenda and the ongoing pandemic, hasn’t written its China trade policy yet. Last month, he said he’d like to lift Trump-era tariffs but “we’re not there yet.” 

The lingering partisan friction has been on display during the debate on the House bill.

Democrats have emphasized the bill’s domestic benefits, including $45 billion over six years for a new Supply Chains for Critical Manufacturing Industries Fund and $52 billion over five years to support semiconductor production. 

The bill also authorizes $8.8 billion this year for Energy Department research and development programs, with that amount increasing each year through fiscal 2026. And it authorizes as $8 billion to help developing countries address climate change over the next two years and another $2 billion annually to help developing countries deploy clean energy technologies, expand zero-emission vehicles, promote sustainable land use, and adapt to the effects of climate change.

BGOV Bill Summary: H.R. 4521, U.S.-China Competition Package (1)

Republicans — even those whose districts stand to gain from the infusion of semiconductor money — say they’ll vote against the bill, pointing to what they consider a “slush fund” for climate funding. 

They also argue the bill does too little to keep U.S. technology out of the hands of the Chinese military or taxpayer money from supporting China’s own green energy industry. 

Representative Michael McCaul, a Texas Republican who has a Samsung Electronics Co. plant in his district, sponsored the provision aiding the U.S. chip industry but said he is a “hard No” on the bill.

“The administration came out with their statement of administration policy and they left the word ‘China’ out of their anti-China bill,” McCaul said, referring to White House support for the House legislation. “I think that speaks volumes about the lack of content when it comes to countering the malign influence.”

Republicans, in a message retweeted Thursday by GOP leader Kevin McCarthy, said the bill became a “backup plan” for Biden’s stalled economic agenda. 

McCaul said he’s talked with Senate GOP leader Mitch McConnell and others about changing the bill “so we can take some of this really bad stuff out.” 

Democrats underscore the House measure includes at least parts of 63 bills that Republican have co-sponsored. And of those, they say, 29 have previously passed the House with a bipartisan vote.

“This is a magnificent piece of work,” Speaker Nancy Pelosi said Thursday. House Foreign Affairs Chairman Gregory Meeks, a New York Democrat, said the bill would “revitalize America’s industrial base” and “force China to play by the rules on the world stage.”

Pelosi and her lieutenants worked quickly to write the bill under pressure from the Biden administration, industry and a group of 25 moderate House Democrats facing tough re-election bids.

Commerce Secretary Gina Raimondo, after meeting with House Democrats on Wednesday, dismissed talk that a final two-chamber agreement and passage of a U.S.-China Competition bill might not occur until Memorial Day. She suggested it is Republicans who are playing politics.

“We ought to be able to have a swift, efficient conference process, reconciling the differences,” Raimondo said.  

More stories like this are available on bloomberg.com

©2022 Bloomberg L.P.

(Bloomberg) — The House is forging ahead Friday on a bill that would invest tens of billions in the U.S. tech sector, but Republican objections that it’s too weak on China threaten what Democrats hoped would be a quick election-year win. 

The bill started as a bipartisan push to bolster U.S. manufacturing and research, and ease the dependence on China for semiconductors, but it became mired in long-standing partisanship over U.S. policy on China. 

It’s expected to pass largely along party lines and a final bill — negotiated with the Senate, where Republicans wield filibuster power — could be months away. China opposed the Senate’s own version of the bill, passed in June with bipartisan support, with Beijing arguing the U.S. should not make China an “imaginary enemy.” 

How Supply Chains Broke, Sparking Global Shortages: QuickTake

China’s rising economic power and global influence have been a focus for three successive presidential administrations and the subject of bipartisan angst in Congress, but the two parties’ tactics have differed widely. Former President Barack Obama emphasized engagement and building relationships in the Pacific region while former President Donald Trump used tariffs and tough rhetoric even as he deployed personal diplomacy with Chinese leader Xi Jinping. 

President Joe Biden, focused on his domestic agenda and the ongoing pandemic, hasn’t written its China trade policy yet. Last month, he said he’d like to lift Trump-era tariffs but “we’re not there yet.” 

The lingering partisan friction has been on display during the debate on the House bill.

Democrats have emphasized the bill’s domestic benefits, including $45 billion over six years for a new Supply Chains for Critical Manufacturing Industries Fund and $52 billion over five years to support semiconductor production. 

The bill also authorizes $8.8 billion this year for Energy Department research and development programs, with that amount increasing each year through fiscal 2026. And it authorizes as $8 billion to help developing countries address climate change over the next two years and another $2 billion annually to help developing countries deploy clean energy technologies, expand zero-emission vehicles, promote sustainable land use, and adapt to the effects of climate change.

BGOV Bill Summary: H.R. 4521, U.S.-China Competition Package (1)

Republicans — even those whose districts stand to gain from the infusion of semiconductor money — say they’ll vote against the bill, pointing to what they consider a “slush fund” for climate funding. 

They also argue the bill does too little to keep U.S. technology out of the hands of the Chinese military or taxpayer money from supporting China’s own green energy industry. 

Representative Michael McCaul, a Texas Republican who has a Samsung Electronics Co. plant in his district, sponsored the provision aiding the U.S. chip industry but said he is a “hard No” on the bill.

“The administration came out with their statement of administration policy and they left the word ‘China’ out of their anti-China bill,” McCaul said, referring to White House support for the House legislation. “I think that speaks volumes about the lack of content when it comes to countering the malign influence.”

Republicans, in a message retweeted Thursday by GOP leader Kevin McCarthy, said the bill became a “backup plan” for Biden’s stalled economic agenda. 

McCaul said he’s talked with Senate GOP leader Mitch McConnell and others about changing the bill “so we can take some of this really bad stuff out.” 

Democrats underscore the House measure includes at least parts of 63 bills that Republican have co-sponsored. And of those, they say, 29 have previously passed the House with a bipartisan vote.

“This is a magnificent piece of work,” Speaker Nancy Pelosi said Thursday. House Foreign Affairs Chairman Gregory Meeks, a New York Democrat, said the bill would “revitalize America’s industrial base” and “force China to play by the rules on the world stage.”

Pelosi and her lieutenants worked quickly to write the bill under pressure from the Biden administration, industry and a group of 25 moderate House Democrats facing tough re-election bids.

Commerce Secretary Gina Raimondo, after meeting with House Democrats on Wednesday, dismissed talk that a final two-chamber agreement and passage of a U.S.-China Competition bill might not occur until Memorial Day. She suggested it is Republicans who are playing politics.

“We ought to be able to have a swift, efficient conference process, reconciling the differences,” Raimondo said.  

More stories like this are available on bloomberg.com

©2022 Bloomberg L.P.

(Bloomberg) — U.S. equity futures pared bullish gains from Amazon.com Inc. earnings ahead of the U.S. payrolls report, which could show a loss in jobs.

Contracts on the S&P 500 were little changed while the Nasdaq 100 held on to a 0.8% gain after rising as much as 2.3%. Amazon trimmed its premarket gains, driven by a price hike for Prime memberships. Meanwhile, Europe’s Stoxx 600 fell the most in a week as rate-hike bets reduced risk appetite. Treasuries gained and the dollar headed for its worst week since 2020.

Traders will be focused on wage growth in Friday’s official jobs report from the U.S. as a gauge of the health of the economy and the potential for a further surge in inflation.

The looming jobs report “is a reminder that expectations for Fed policy are the key influence on this market right now,” wrote Tom Essaye, a former Merrill Lynch trader who founded The Sevens Report newsletter. A hot inflation print next week would “rekindle hawkish Fed concerns,” he added.

It’s been a volatile week in markets as investors were jolted by weak numbers at U.S. tech giants including Facebook owner Meta Platforms Inc., which wiped more than $250 billion from its market value on Thursday. Positive earnings from Amazon helped lift sentiment, however, with the online marketplace and tech company set to increase its market cap by $184 billion if its premarket gains hold in the regular session.

“Now we’re seeing a little bit of FOMO — all of a sudden, everyone’s seeing the numbers are good, ‘I’ve got to get my exposure back,’ and that’s what we’re seeing in the after-market moves right now,” Alon Rosin, Oppenheimer & Co.’s head of institutional equity derivatives, said by phone.

Dip buyers have hoped a stronger earnings season would keep equities attractive and counter some concerns about tighter monetary policy in the face of higher inflation. Of the 272 companies in the S&P 500 that have reported results, 82% have met or beaten estimate, with profits coming in 8.8% above projected levels.

Yet, signs of stubborn price pressures increased after data showed U.S. gasoline prices surged to the highest in more than seven years. Crude oil extended a fresh seven-year high in early trading with banks including Goldman Sachs Group Inc. forecasting Brent will reach $100 a barrel.

“We are getting late in the cycle. The market is becoming more selective,” wrote Wells Fargo’s Chris Harvey. “The tide will no longer lift all boats and the market will become less and less forgiving in our view. Going forward, we feel investors will need to cut loses quickly and to focus on margins rather than the top or bottom line.”

Hawkish comments from European Central Bank President Christine Lagarde and a Bank of England interest-rate hike underlined risks from inflation. While a selloff in the region’s bonds eased Friday, the mood in the stock market turned sour. Europe’s Stoxx 600 fell 1% as rate-hike bets reduced risk appetite. Makers of cars and parts were the worst-performing industry group, while gains for technology shares surrendered gains.

For more market analysis, read our MLIV blog.

What to watch this week:

• U.S. payrolls report for January, Friday
• Winter Olympics kick off in China, Russia’s President Vladimir Putin due to attend opening ceremony, Friday

Some of the main moves in markets:

Stocks

• Futures on the S&P 500 were little changed as of 8:24 a.m. New York time
• Futures on the Nasdaq 100 rose 0.8%
• Futures on the Dow Jones Industrial Average fell 0.3%
• The Stoxx Europe 600 fell 1%
• The MSCI World index was little changed

Currencies

• The Bloomberg Dollar Spot Index was little changed
• The euro rose 0.2% to $1.1464
• The British pound fell 0.4% to $1.3547
• The Japanese yen was little changed at 114.89 per dollar

Bonds

• The yield on 10-year Treasuries declined two basis points to 1.81%
• Germany’s 10-year yield advanced three basis points to 0.17%
• Britain’s 10-year yield declined two basis points to 1.35%

Commodities

• West Texas Intermediate crude rose 1.9% to $91.98 a barrel
• Gold futures rose 0.6% to $1,814.10 an ounce

More stories like this are available on bloomberg.com

©2022 Bloomberg L.P.

(Bloomberg) — All but a handful of investors in a blank-check firm that’s taking a Middle Eastern music-streaming business public have chosen to exit their holdings, the latest sign of the trouble hitting an industry that took Wall Street by storm last year.

Anghami, a rival to Spotify Technology SA, is due to start trading on the Nasdaq on Friday, a first for an Arab technology company. Its debut will come a day after Spotify’s shares tumbled in the U.S. after disclosing a slowdown in growth, following a month of controversy involving podcast host Joe Rogan. 

Holders of 9.8 million of the 10 million shares in Vistas Media Acquisition Company Inc., the special-purpose acquisition company — or SPAC — behind Anghami’s share launch have opted to return them for cash, according to a filing. The Abu Dhabi-based firm took the development in stride.

“Of course this is something that has been happening lately, but we’re good with the funding that we have in place now,” Anghami Chief Executive Officer Eddy Maroun said in a Bloomberg TV interview ahead of the share launch Friday. “We were well-prepared with a solid PIPE to compensate for this.”

Still, the redemptions underscore the waning sentiment toward SPACs as new listings get pulled and share prices slump. After a record number of transactions in 2021, investors are heading for the exits, with the average redemption rate jumping to 75% in January, the highest in 12 months and up from 14% a year ago, according to data from Boardroom Alpha. 

The merger included a $40 million PIPE — private investment in public equity — from UAE financial firm Shuaa Capital and the SPAC sponsor, Vistas Media Capital. About 98% of Anghami’s shareholders voted in favor of the business combination. Investors who redeem shares in a SPAC still keep the warrants attached to a deal, allowing them to profit if the merger goes well.

Anghami remains focused on growth and believes profitability will follow, according to Maroun. The company is looking to move beyond the music streaming business with plans to start creating original content and introducing new initiatives including offline concerts, he said.

Stockholm-based Spotify’s shares retreated 17% on Thursday to their lowest level since May 2020. The company’s first-quarter outlook  for total users and paid subscribers were shy of Wall Street forecasts.

Blank-check firms raised a record $162 billion in the U.S. alone last year, exploding in popularity in the midst of the pandemic as markets were flooded with cash and stocks hit records. But increased regulatory scrutiny, poor share performance and investor fatigue have caused the market to cool.

Just 27 SPACs have priced in the U.S. this year, raising $5.7 billion, compared with $36 billion by 116 firms a year ago, according to data compiled by Bloomberg. Seventeen SPAC offerings have been shelved so far in 2022, a record for the sector. 

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©2022 Bloomberg L.P.

(Bloomberg) — A mixed performance in equity-index futures signaled a volatile day for the U.S. markets as concerns over inflation and monetary tightening offset earnings optimism driven by Amazon.com Inc. The dollar headed for the worst week since November 2020.

Contracts on the Nasdaq 100 Index rose 1%, after earlier gains of as much as 2.3%. Amazon gained 13% in premarket trading after announcing a price hike for Prime memberships. Futures on the Dow Jones Industrial Average and Russell 200 gauges fell, while those on S&P 500 added 0.2%. Oil was on course for a seventh weekly advance.

Friday’s volatility adds to the $251 billion wipeout for Facebook owner Meta Platforms Inc. on Thursday that sparked a global technology rout and pulled down U.S. indexes. While the overall earnings picture in the world’s largest economy remains robust, concerns over Federal Reserve tightening linger. Signs stubborn inflation increased after data showed U.S. gasoline prices surged to the highest in more than seven years.

 

 

 

Amazon’s posted premarket gains of 13%, implying an increase of $184 billion in its market capitalization if the stock rises by the same extent during regular trading hours. 

While Meta’s sluggish numbers dominated the headlines on Thursday, the flurry of earnings releases showed they may be an exception rather than the rule. Of the 272 companies in the S&P 500 that have reported results, 82% have met or beaten estimates. Profits are coming in at 8.8% above projected levels.

Still, volatility has become the hallmark of global markets this year. Investors are trying to come to grips with less favorable monetary conditions and a moderating global recovery amid stubborn inflation. The CBOE Volatility Index increased for a third day Friday, hovering just below 26.

“The first half this year we are now experiencing a rates shock,” Tracy Chen, portfolio manager at Brandywine Global Investment Management, said on Bloomberg Television. “If the Fed and BOE and other emerging-market central banks are too aggressive in hiking interest rates, potentially we are going to face kind of a recession risk in the second half, or at least more slowdown in the economy.”

 

 

 

Hawkish comments from European Central Bank President Christine Lagarde and a Bank of England interest-rate hike underlined risks from inflation. While a selloff in the region’s bonds eased, the mood in the stock market turned sour.

Europe’s Stoxx 600 fell 1% as rate-hike bets reduced risk appetite. Makers of cars and parts were the worst-performing industry group, while gains for technology shares surrendered gains.

Treasuries advanced, with the 10-year rate shedding one basis point. The dollar was marginally lower, heading for a 1.4% decline this week.

Investors also awaited Friday’s official jobs report from the U.S., where they focused on wage growth to gauge the health of the economy and the potential for a further surge in inflation.

The looming jobs report “is a reminder that expectations for Fed policy are the key influence on this market right now,” wrote Tom Essaye, a former Merrill Lynch trader who founded The Sevens Report newsletter. A hot inflation print next week would “rekindle hawkish Fed concerns,” he added.

Earlier, An Asia-Pacific equity gauge pushed higher partly on a 3% jump in Hong Kong, which was catching up with global markets after reopening from a holiday. 

West Texas Intermediate hit a fresh seven-year high and traded above $92 a barrel. Brent has surged 19% this year and banks including Goldman Sachs Group Inc. forecast it’ll reach $100.

For more market analysis, read our MLIV blog.

What to watch this week:

• U.S. payrolls report for January, Friday
• Winter Olympics kick off in China, Russia’s President Vladimir Putin due to attend opening ceremony, Friday

Some of the main moves in markets:

Stocks

• Futures on the S&P 500 rose 0.2% as of 7:56 a.m. New York time
• Futures on the Nasdaq 100 rose 1%
• Futures on the Dow Jones Industrial Average were little changed
• The Stoxx Europe 600 fell 0.9%
• The MSCI World index was little changed

Currencies

• The Bloomberg Dollar Spot Index was little changed
• The euro rose 0.3% to $1.1470
• The British pound fell 0.3% to $1.3563
• The Japanese yen was little changed at 114.91 per dollar

Bonds

• The yield on 10-year Treasuries declined one basis point to 1.82%
• Germany’s 10-year yield advanced four basis points to 0.18%
• Britain’s 10-year yield was little changed at 1.36%

Commodities

• West Texas Intermediate crude rose 2.2% to $92.28 a barrel
• Gold futures rose 0.4% to $1,812.20 an ounce

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©2022 Bloomberg L.P.

(Bloomberg) — The biggest test of Texas’s newly fortified power grid arrives Friday morning, when electricity demand is forecast to surge as waking residents crank up heaters in the sub-freezing cold. 

Shortly before sunrise in Dallas, it was 20 degrees Fahrenheit (-7 degrees Celsius). Midland, in the oil- and gas-rich Permian basin, was 10. Highs will only be in the 30s.

“That’s a solid 20 degrees below average,” said Marc Chenard, a meteorologist at the U.S. Weather Prediction Center.

Those temperatures aren’t as extreme as last year’s deep freeze that trigged sprawling blackouts and left more than 200 people dead. But they’re enough to push demand for power to close to record levels in the state. Texas’s system is expected to pass the trial. But success isn’t guaranteed. Critics have warned for months that grid managers and utilities haven’t done enough to winterize the system, while Governor Greg Abbott and other politicians have tried to reassure Texans the state is ready. 

Outages struck only a few pockets of the sprawling state by early Friday, with about 17,000 homes and bossinesses without power at 6:30 a.m. local time, according to Poweroutage.us, which tracks utility outage data.

“These are localized outages that are not related to system-wide reliability issues,” Peter Lake, chairman of the Public Utility Commission of Texas, said earlier at a media briefing. “The grid remains strong, reliable, and it is performing well in this winter-weather event.”

Natural gas has continued to flow through the pipelines that feed many of the state’s power plants, with limited disruptions. And wind turbines, whose poor performance during last year’s deep freeze has become the focus of Abbott’s scorn, supplied far more power than expected, keeping electric heaters humming.

The Electric Reliability Council of Texas, which runs the power grid, said electricity demand could set a winter record on Friday of 73.5 gigawatts, close to the state’s summer high of 74.8 gigawatts. Typically, a gigawatt is enough to power about 200,000 Texas homes.

Abbott said Thursday the system was prepared. “The Texas power grid is the most reliable and resilient it’s ever been,” he said at a press conference.

See: Texas Had All Year to Prep for Cold, and It’s Not Ready  

Texas has been bracing for the worst in this latest storm, which is part of a massive cold front that stretches to Maine. Many schools, universities and churches have closed, while grocery stores have been left depleted as residents stocked up on food. Even sea turtles off the Texas coast are under threat from the cold.

The storm is moving through fairly quickly, and temperatures are set to rise this weekend. That would be a key difference from last year’s storm, which lingered for days.

“It’s obviously quite cold, but the duration of that cold won’t be very long,” said William Iwasko, a meteorologist with the weather service’s Lubbock office.

Some natural gas wells have frozen in Texas and neighboring Oklahoma, shutting about 5% of overall domestic output during the peak demand season for the furnace and power-plant fuel, according to Jade Patterson, an analyst at BloombergNEF. The interruptions will take as long as five days to restore once temperatures moderate, he said.

Meanwhile, wind has provided an unexpected benefit to the state’s electrical grid, according to Ercot. On Thursday morning, wind accounted for about 30% of the grid’s electricity supply.

“We expected significant icing in the western part of the state,” Ercot Interim Chief Executive Officer Brad Jones said in the briefing. “That has not occurred as severely as expected.”

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