Euro loses parity
Twitter is facing a legal peril
Germany’s aid for Ukraine
Piling utility bills in the US
Euro-area businesses spent years wishing for a weaker euro. Now it’s here and it couldn’t have come at a worse time. The currency has slid more than 12% against the dollar this year, taking it below parity for the first time in two decades. That decline is boosting import costs, compounding a damaging surge in energy prices and a record inflation spike ripping through the economy. All that is bad news for margins. German businesses warned they are still facing “strong costs pressures.” In addition, consumer inflation in the euro zone is already close to 9%, keeping a lid on demand, which will also weigh on sales and profits.
Twitter’s Whistle Blower
A whistle-blower complaint from Twitter’s former head of security, claiming severe shortcomings in the social media company’s handling of users’ personal data, will have wide ramifications for the business. US lawmakers vowed to investigate, and the legal team for Elon Musk, who is seeking to abandon his agreement to acquire Twitter, was emboldened by the claims. The former executive, Peiter Zatko, alleged “egregious deficiencies” in Twitter’s defenses against hackers and other lax approaches to security, according to a copy of the complaint reviewed by Bloomberg. The document also alleged that Twitter prioritized growth over reducing the number of spam accounts among other things.
Aid for Ukraine
German Chancellor Olaf Scholz has finalized a planned shipment of additional weaponry and ammunition worth more than 500 million euros ($499 million) to Ukraine, according to government officials familiar with the plans. It will provide more ammunition, anti-drone devices and armored recovery vehicles in the coming weeks as part of a fresh package. Germany has so far committed 700 million euros worth of weapons and equipment for Ukraine, with another 500 million euros earmarked to finance military equipment, according to the Kiel Institute for the World Economy.
Some 20 million households across the US — about 1 in 6 American homes — have fallen behind on their utility bills, according to the National Energy Assistance Directors Association, the worst crisis the group has ever documented. Underpinning those numbers is a blistering surge in electricity prices, propelled by the soaring cost of natural gas. The power bill crisis is even more acute in Europe, where the spike in natural gas prices has been far greater in the wake of Russia’s invasion of Ukraine. While policymakers there have sprung into action, throwing billions of euros in aid at struggling families to help them pay bills, there’s been no meaningful talk of doing anything on a similar scale in the US.
European equity futures edged lower while Asian stocks dropped as outlooks for the Federal Reserve and the global economy weighed on investors. Riksbank Deputy Governor Martin Floden speaks about Swedish and international monetary policy in Stockholm. French President Emmanuel Macron and his cabinet gather for their first meeting after summer break. Italian caretaker Prime Minister Mario Draghi attends Rimini meeting. Expected data include Finnish PPI. Royal Bank of Canada, Nvidia and Salesforce are on tap to report earnings.
(Source: Bloomberg, August 24-2022)