From Credit Suisse’s new CEO to a loophole in the UK’s prime minister election – Here’s your July 28 news briefing
To start off, we’re looking into:
Credit Suisse’s new CEO
Credit Suisse has been in the middle of some pretty big scandals. Between being fined after authorities accused it of helping clients dodge taxes and being handed money laundering penalties, the bank’s name has been associated with some major disgraces. This includes money laundering linked to 1MBD to repackaging risky loans in the Greensill scandal to the Archegos hedge fund collapse. In fact, The Guardian has made a timeline documenting some of the bank’s biggest scandals over the past several decades.
Now, the company has posted its third straight quarterly loss of about US$1.6 billion in the three months through June, fueled by litigation expenses, a slowdown in its investment and trading business and “geopolitical, macroeconomic and market headwinds.” With that, it also announced that asset management head Ulrich Koerner will be appointed its new CEO to oversee “a comprehensive strategic review.” Moving forward, the new big wig has to try and inject some morale into the company culture after an exodus of staff following the scandals. It’s also up to Koerner to reassure clients and investors and essentially steer the ship back to a path of stability and profitability.
US-Russia prisoner swap
Back at the start of the Russian invasion of Ukraine, Brittney Griner, a professional basketball player who had been playing in Russia, was arrested at a Moscow airport on drug charges that the US considers wrongful. So far, Griner has been going through the Russian legal system, where she says she was made to sign papers that no one explained and that she was forced to use her phone to translate since she didn’t have a lawyer.
Now, there are reports that the Biden administration has made an offer of a prisoner swap to bring home Griner, along with Paul Wheelan, an American who was arrested and convicted of being a spy. On Wednesday, Secretary of State Antony Blinken confirmed that the US had made “a substantial offer,” though he declined to go into specifics. Sources familiar with the deal have told CNN that, in exchange, the US will be turning over Viktor Bout, a Russian arms trafficker dubbed “the merchant of death” who was arrested for selling arms to a Colombian rebel group. Bout is currently serving a 25-year sentence.
There isn’t any word yet on whether Russia is approving of the deal, and no one is really disclosing explicit details yet.
The Democratic Republic of Congo will auction oil drilling rights in the rainforest
At COP26 last year, whereby activists poured onto the streets to urge governments to do more about our climate crisis, the Democratic Republic of the Congo (DRC) President Felix Tshisekedi signed a US$500 million deal to protect the country’s rainforest. See, the Congo Basin rainforest is crucial to the African continent’s ecosystem since it regulates rainfall all the way to Egypt and is the only rainforest that takes in more carbon than it emits. The northern peatlands, for example, store the equivalent of about three years worth of global emissions from fossil fuels.
Now, despite outcries from environmental groups like Greenpeace Africa, the DRC will move forward with plans to auction off blocks of its rainforest for gas and oil drilling permits. Some of these blocks also overlap with Virunga National Park, a sanctuary for endangered mountain gorillas and a Unesco World Heritage site. Basically, the DRC doesn’t seem to be acting in the spirit of that agreement they made at the COP26 climate conference.
And it doesn’t look like that COP26 deal could block the auctions either. Instead, this auction seems to be a reversal of the 10-year protection pledge made by DRC.
To end, we’ll look into:
Will the rest of the world decide the UK’s next prime minister?
Now that Boris Johnson resigned, how will his replacement be chosen? Well, it turns out, it isn’t the most straightforward process. First, all the members of Parliament in the Tory party (which is the majority party) get to vote on the list of names until it gets whittled down to two. That’s what they’ve been doing for the past few weeks, and finally, we have our two candidates – Rishi Sunak and Liz Truss.
But now that there are two names, it goes to a vote of all the card-carrying, dues-paying members of the Conservative Party out there, and they get the final say. What’s interesting, though, is that you don’t actually need to be a British citizen to be a member of the Tory party, which means that any members around the world can vote.
“You do not have to be eligible to vote in the UK to join the Conservative Party or Conservatives Abroad,” says the website for the Members of Conservatives Abroad, the party’s network of supporters living overseas.
Unfortunately for anyone out there looking to sway the UK election, you’re out of luck – only those who have been members for at least three months are eligible to get a ballot, which means that you’d have to be registered before June 4, 2022 to vote.
Still, this is a real loophole in their system since it means that the next leader of the UK could be elected by only about 0.2% of the UK (the number of party members actually in the country) and any other number of party members living outside of the UK who decide to vote in the election.
In other news …
📈Stocks: MSCI’s gauge of stocks across the world gained 1.71%.
- The Dow Jones Industrial Average jumped 436.05 points, or close to 1.4%, to 32,197.59.
- The S&P 500 gained 2.62% to settle at 4,023.61.
- The Nasdaq Composite climbed 4.06% to 12,032.42.
- Hong Kong’s Hang Seng index fell 1.13% to 20,670.04, and the Hang Seng Tech index slipped 1.3%.
🧠Quick factors to bear in mind:
- The Fed hiked rates by 75 basis points.
- Jerome Powell, the Fed chair, came out to say that he doesn’t think the US is currently in a recession because components of the economy are “performing too well."
- Powell added that the group would eventually slow the extent of rate hikes.
- Both these things combined help investor sentiment.
- The US’ second-quarter GDP report will be published Thursday.
- Meta reported its first-ever yearly decline in revenue for its second quarter, down 1% to US$28.8 billion, with forecasts that the third quarter might be even uglier.
- Alibaba’s shares dropped 3.26% after jumping 4.82% on Tuesday when it announced plans for a dual primary listing in Hong Kong.
👄Some comments and chatter:
“As the stance of monetary policy tightens further, it likely will become appropriate to slow the pace of increases while we assess how our cumulative policy adjustments are affecting the economy and inflation," said Powell.
About the rate hike: “Too little would’ve undermined confidence in the Fed and too much would have undermined confidence in the economy. It was well telegraphed and properly balanced against expectations," said Jack Ablin, chief investment officer and founding partner at Cresset Capital in Chicago.
🛢Oil: US crude is up 2.4% at US$97.26 per barrel. Brent is up 2.13% at US$106.62 per barrel. This comes after a report showing that the US had lower reserves and Russia’s cuts in gas supply to Europe.
👛Bitcoin: Bitcoin is up 7.36% at US$22,825.60.
📞Biden and Xi’s confirmed meeting: According to people familiar with the situation, Biden and Xi will speak Thursday (Friday in Hong Kong time). One of the top meeting agenda items is the possible visit of US Congress speaker Pelosi to Taiwan – something that Beijing has warned would have “grave impacts” on Sino-US relations if it does go ahead.
🔐Wuhan is in lockdown … again: Almost one million people in a suburb of Wuhan are in lockdown again after four cases of COVID were found.
✈The return of Sri Lanka’s ex-head: A lawmaker told reporters that Sri Lanka’s former president Rajapaksa is headed back to the country and that he was not in hiding. The date of his return isn’t known.
🚀So, Russia’s going to stay? After telling, well, the world that it was going to leave the International Space Station partnership after 2024, Russia has now reportedly said it’s going to stay until 2028.
👙Your body is a beach body, says Spain: Fearful to strip down to a bikini because you’re feeling slightly pudgy and round? Well, Spain’s Equality Ministry has a message for you. The ministry has launched a summer campaign that features five women of various shapes and sizes with a slogan above saying, “Summer is ours too.”
🙅♀️Musk-Brin drama: Since WSJ reported that Elon Musk had an affair with Sergey Brin’s now ex-partner, Nicole Shanahan, leading to Brin selling all his personal investments in Musk’s companies, Shanahan has denied the reports, as has Musk. Here are some of Musk’s frustrations aired out on Twitter.
Written and put together by Jake Shropshire, Vanessa Wolosz, Christine Dulion and Krystal Lai