BONUS: Energy Transition and Security in Europe
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Time Stamps(00:11) Geopolitics and EHS: A European perspective
(01:05) Security concerns in energy transition
(01:55) Geopolitical impacts on energy supply
(04:13) Private sector innovations
(05:34) Regulatory challenges and adaptations
' The energy transition in Europe is being accelerated by a need for energy security that 's underlying thing. That energy security comes in two ways. It's security of supply of energy in terms of raw material to produce energy, but it's also security in terms of the impacts of bad actors.' - Alex
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CNBC
an hour ago
- CNBC
Hedge funds eye betting against the Swiss Franc over carry trade rebound
Hedge funds are starting to bet against the Swiss franc and are using the currency to finance purchases of the higher-yielding British pound in a trade driven by diverging central bank policies. The move is a classic "carry trade," a strategy where investors borrow in a currency with low interest rates to buy a currency with higher rates, aiming to pocket the difference. While the most popular version of this trade involves the U.S. dollar and Japanese yen, Patrick Ernst, a strategist at UBS Global Wealth Management, described the pound-franc pairing as an "interesting intra-European alternative." One catalyst for the trade has been a sharp appreciation in the franc, which Barclays analysts termed a "deflationary shock" for the Swiss economy. The currency strengthened by over 11.3% against the U.S. dollar following President Donald Trump's tariff announcements on April 2, pushing it near its most expensive levels in a decade in real terms. Swiss strength a 'real nuisance' Investors have rushed into the Swiss franc owing to its perceived safe haven status amid increasing global geopolitical and economic concerns. CHF= 5Y bar To combat deflationary pressures from a strong currency, the SNB cut interest rates on June 19 to become the first central bank to re-enter a zero-policy rate environment. However, the desired effect on the currency has proven to be elusive. "The Swiss National Bank would love it if people were to sell the Swiss franc," said Jane Foley, head of FX strategy at Rabobank. "It's a real thorn in their side, the strength of the Swissy." "The fact that it is a safe haven is not something that they would wish on anyone. It's a real nuisance to them," she added. The recent strength in the franc has also meant that short sellers, who bet on falling values, have lowered their wagers relative to the end of last year. "Our flow and positioning indicators suggest that CHF shorts are not at extreme levels, i.e., there is potential for more," said UBS Wealth Management's Ernst. Weighing up the pound While bets against the franc are building, positioning on the British pound conveys the opposite sentiment. The pound's appeal in the carry trade stems from the cautious stance of the Bank of England, which has signaled only gradual policy easing. The U.K. central bank's base rate currently stands at 4.25%. With inflation remaining "stubbornly high," the central bank is expected to proceed more slowly with rate cuts, maintaining a significant yield advantage for sterling. This growing divergence is what makes the pound an attractive investment funded by borrowing in the lower-yielding franc. This dynamic is also expected to persist in the near future as UBS' Ernst does not expect the BOE to increase its pace of cuts beyond its quarterly base case. "The latest central bank meetings in the UK and Switzerland underlined once again that the vast interest rate differential between the two economies is unlikely to fade quickly," Ernst said in a note to clients on June 20. He added that the view holds even as recent UK labor market data has shown some signs of weakness. The persistence of high inflation is seen as the overriding factor that will keep the BOE on its cautious path. The carry trade The diverging central bank trends have prompted specific recommendations from major banks. Barclays has advised clients to enter a long GBP/CHF position — which overweights sterling and underweights the franc — targeting a move to 1.15 with a stop-loss at 1.06, in a note to clients in April. More recently, in June, UBS forecasts the pair will appreciate toward 1.13 and remain in a 1.10 to 1.15 range. The trade is not without significant risks, though. A primary concern is a global risk-off event or "more geopolitical and trade risks" that could trigger safe-haven flows back into the Swiss franc. A sudden geopolitical event could cause the franc to rally sharply, which could completely erase the profit from the carry and "even leave you in the red," explained Foley. Despite the clear rationale, many investors who were in the trade at the start of the year were "burnt" by a "shocking" drop in April after the Trump administration's tariff announcement proved harsher than expected, Steve Englander, global head of G10 FX research, said. As a result, he noted, traders are going to be more cautious to be the "first one in on that trade" again.
Miami Herald
2 hours ago
- Miami Herald
Nissan Is Trying to Delay Supplier Payments to Ease Spending
Nissan CEO Ivan Espinosa may have only been in his job since April, but the tide that he shifted at the automaker has been anything but calm. Just last month, the 46-year-old announced a new restructuring plan called Re:Nissan, which heavily focuses on consolidating the automaker's current assets, including cutting nearly 19,000 jobs, as well as the shutdown of seven global assembly plants. "It is a very, very painful and sad decision to take. We wouldn't be doing this if it were not necessary for the survival of Nissan," Espinosa said at the time. However, according to a new report by Reuters, Japanese automaker Nissan is adopting a unique approach to regulating its cash flow and spending, involving its suppliers, as revealed by a newly surfaced batch of internal emails that offers a clearer look at how tight things have become behind the scenes. According to a newly surfaced batch of internal emails reviewed by the newswire and close internal sources at Nissan, the automaker has requested that some of its suppliers in Europe and the United Kingdom agree to delayed payments in exchange for more compensation. This strategy is designed to provide temporary relief from Nissan's fiscal crisis. Following his appointment as Chief Executive in April, Espinosa has been working to stabilize operations at the company amidst its financial pressures. Sources familiar with the matter indicate that Nissan suppliers were presented with two options: they could either stick to the original payment schedule or agree to a slight delay in exchange for additional compensation. In the former case, HSBC would provide upfront payments to suppliers, leaving Nissan on the hook with the British bank to pay back with interest. Despite this, this kind of arrangement seeks to provide immediate liquidity for the company and its limited resources. This course of action highlights Nissan's efforts to free up cash before the end of the April-to-June quarter. As part of this initiative, Nissan intends to shift some payments originally scheduled for June into mid-August, and in some situations, even as far as September. Surprisingly, this approach to deferred payments is not new for Nissan. A similar tactic was said to be utilized in March near the end of the 2024-2025 fiscal year. Additionally, there are separate allegations suggesting that Nissan may have underpaid suppliers in Japan, potentially violating Japanese laws. In a statement to Reuters, Nissan acknowledged the existence of this program and confirmed that it had offered "more flexible payment terms" to its suppliers. The company further explained that the decision is tied to maintaining enough liquidity to support ongoing turnaround efforts and to cover upcoming bond repayments. According to internal emails exchanged between staff members in Nissan's European and UK purchasing and treasury departments, seen by Reuters, this effort to lean up its spending came "from CEO top down." However, Nissan later told the newswire that the CEO "didn't mandate functional tasks in regions" and declined to comment on internal goals or discussions. Further, an email exchange involving a Nissan treasury department director mentioned a "purchasing task" intended to free up €150 million (~$175 million) by delaying payments past the end of the quarter. A separate internal document from October 2024 reviewed by Reuters showed that Nissan saved an estimated €59 million (~$69 million) through flexible payment arrangements with more than a dozen suppliers and other companies it contracted in the region, including companies like the staffing firm ManpowerGroup as well as the Mitsui O.S.K. Lines, which provides sea shipping services. This discovery is especially damning because it comes as Nissan is hemorrhaging money in ways that would make Dave Ramsey and Caleb Hammer seethe with rage. Nissan previously posted a net loss of ¥700 billion (~$4.5 billion) for the 2024-2025 fiscal year, and reported that it held ¥2.2 trillion (~$15.1 billion) of cash on hand and equivalents. Nissan expects to post a loss of ¥550 billion (~$3.8 billion) this quarter. This is solely my opinion, but I think Nissan needs to be examined more closely from an outside perspective. Granted, Ivan Espinosa intends to right-size the company, reduce its footprint, and reduce its workforce as part of its Re:Nissan plans. Just saying, Stellantis hired McKinsey, and they aren't unfamiliar with helping other automakers. Copyright 2025 The Arena Group, Inc. All Rights Reserved.
Yahoo
2 hours ago
- Yahoo
Dollar nursing double-digit losses, but bears aren't done yet: MS
-- The dollar's bruising slide to two-year lows this week has some betting on a rebound, but Morgan Stanley warns the bears aren't ready to loosen their grip just yet. With widely expected U.S. rate cuts later this year and the greenback's safe-haven status under fresh scrutiny, the bank says more pain could be in store for the dollar. 'We forecast that the US dollar (USD) will continue its year-to-date depreciation, driven by both fundamental and technical factors. Fundamentally, a convergence in US growth and interest rates weighs on USD, while increased FX hedging and continued debates around USD's safe-haven status increase USD's discount to fair value,' Morgan Stanley strategists said in a recent note. Bets on sooner Federal Reserve rate cuts were given a boost on Tuesday after chairman Jerome Powell didn't rule out a July rate cut, saying the central bank's decision would be led by incoming data. Following the remarks from Powell, traders are now pricing in a roughly 23% change of rate in July, up from about 20% a day earlier, according to Fed Rate Monitor Tool. While odds still point to no rate cut in July, traders are now closely watching the nonfarm payrolls report due Wednesday for any signs of significant weakness in the labor market that could tip the Fed's hand into an earlier cut. Technical factors are also amplifying the dollar's decline. As the incentive for global investors to hedge U.S. assets rises and the cost of FX hedging falls, Morgan Stanley expects hedge ratios for U.S.-held assets—especially European holdings of U.S. equities—to climb, adding further pressure on the greenback. 'The more consistent and persistent this positive correlation [between USD and US equities], the greater the incentive to hedge,' the strategists said. Even after this year's drop in the greenback, dip buyers aren't likely to emerge as the dollar remains at the upper end of its long-term historical range. The real broad USD index is still about 15% above its long-run average, and above the 90th percentile of its historical range. That, Morgan Stanley says, means the recent selloff isn't enough to justify a bullish turn: 'Citing the extent of year-to-date declines as a reason for hitting pause on USD shorts isn't a persuasive argument considering the longer-run historical context.' For all the rumblings of a dollar comeback, Morgan Stanley says the bears are still in control. With U.S. rate cuts looming and safe-haven demand fading, the greenback's slide may have further to run. Related articles Dollar nursing double-digit losses, but bears aren't done yet: MS Tariff rush lifts ASEAN exports, but BofA warns payback looms in H2 Trump says not extending July 9th trade deadline, doubts deal with Japan Sign in to access your portfolio
