Friday In Summary

Friday 18th March 2022

Good Morning {{Recipient.FirstName}},

Here are this morning’s headlines:
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P&O Ferries
P&O Ferries have let excel formulas overrule common sense and sacked 800 people on the spot yesterday, via video call. The entire seafaring staff of the business were let go at once and, adding insult to injury, their replacement contract crews were in mini-buses and coaches at the various docks across the country ready to replace them. The move, which came totally out of the blue, has blindsided unions and politicians and understandably been met with significant anger from just about everywhere. The cost savings they’ve likely calculated will almost certainly be outstripped by legal proceedings and reduced footfall, as they’re going to fare terribly in the court of public opinion. The company complained of £100m year on year losses, but also paid £270m in a dividend in 2020 to its owner Dubai Ports World. The dividend was announced pre-covid and therefore the business said it was legally obliged to make the payment and probably didn’t want to, but the parent company had a $1.8bn EBITDA in the first six months of last year, so probably could have swallowed a bit of short term pain, knowing that the business had a strong track record (and given that we live on an island, a very captive client base). This almost makes Philip Green look like the good guy.

The BBC has more:

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BoE Interest Rate Decision
Yesterday the Bank of England met market expectations by raising rates 25bp to 0.75%. Such a move had already been priced into the market – as had a 30% chance of a 50bp rate hike – however what took many analysts by surprise was Jon Cunliffe’s vote to keep rates unchanged. Cunliffe’s primary concern was over the detrimental implications that the Ukrainian Crisis would have on consumer confidence and household income, and its potential to stifle economic activity. While Cunliffe was the only member to vote for the status quo, the dovish tones resonated with the market and sterling weakened on the announcement. We haven’t yet seen whether this slight change in consensus is going to lead analysts to reconsider their forecasts for the pace of rate rises in the UK, but with the banks’ own inflation forecast showing a peak of 8% price growth over the year – and that likely to be on the low side once the energy price cap is lifted in April and the National Insurance rises come into play (with businesses paying more and therefore increasing prices to offset the costs), it is hard to see how the Bank could take a much softer tone as the year progresses.

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Russian Bond Payment
Yesterday, a ‘source familiar with the situation’ on the Russian bond repayment issue told Reuters that coupon payments were received by Citi via JPMorgan. If this is the case, Russia may have averted a technical default which many analysts had considered a likely outcome given that Moscow was scheduled to make two USD denominated sovereign bond payments totalling $117m. Many analysts were viewing this as the first test on the extent to which the international sanctions would affect Russia’s ability to continue to engage in the global finical system, which they appear to have passed. However, despite the success S&P have now moved the rating to CC – which in their words means “currently highly vulnerable; default has not yet occurred but is expected to be a virtual certainty”

 

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RT’s UK Licence
Keeping on the topic of Russia, in the last few moments RT’s UK licence has been revoked by Ofcom. RT is of course state-controlled and funded by the Russian taxpayer. Recently, it has come under intense criticism from its reporting over Ukraine and spreading disinformation and hence Ofcom currently has 29 investigations into the company.

Have a great day.

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