Daily Update: April 18, 2022


Start each business day with our analyzes of the most pressing developments affecting markets today, along with a curated selection of our latest and most important news on the global economy.

How elections in France could shape its energy and financial policies

The 2022 election is rushing to a runoff between incumbent French President Emmanuel Macron and Marine Le Pen of the far-right National Rally party following the April 10 vote on the top 12 candidates. The 2022 French elections come as the coronavirus pandemic continues to affect the global economy, Russia’s devastating invasion of Ukraine threatens Europe’s economic and energy security, and the French government faces rising energy costs and unprecedented reactor failures affecting populations. The outcome of the second final vote on April 24 will either see President Macron re-elected or Ms Le Pen rise to power – and indicate how the European country is advancing its energy security and decarbonisation goals alongside the outlook for its banking sector. .

According to S&P Global Commodity Insights and S&P Global Market Intelligence, the outcome of the presidential election affects France’s position as a potential frontrunner in European nuclear plans, but jeopardizes the country’s net zero goals.

The French presidential election looks likely to push the nation deeper into nuclear power, which already dominates its power generation mix. President Macron has pledged by 2050 to build six new nuclear reactors, increase solar energy production tenfold and build 50 offshore wind farms. Ms Le Pen advocated extending the life of the existing nuclear fleet and echoed President Macron’s plans to build at least six new reactors over the next three decades, but pledged to halt development of the onshore wind farms and to dismantle existing turbines.

Meanwhile, “if [energy] prices remain at current high levels, there will be pain,” Thomas Pellerin-Carlin, director of the Jacques Delors Energy Center think tank, told S&P Global Market Intelligence in a pre-election interview about how the new government may have to carefully tackle the issue to avoid a repeat of the yellow vest protests that unfolded across France in 2018-2019 “I see a lot of dry gunpowder and I see a lot of people with matches. ”

French banks also face risks related to the outcome of the last round of elections. Industry experts interviewed by S&P Global Market Intelligence said that while President Macron has overseen a business-friendly presidency since 2017, Ms Le Pen’s election could see France distance itself from the European Union and subsequently see turbulence in the financial system.

“A Le Pen presidency would bring a degree of uncertainty and unease linked to France, which could affect the European activities of French banks,” Sam Theodore, senior consultant at rating agency Scope Group, told S&P. Global Market Intelligence. “President Macron has succeeded in strengthening France’s international reputation and favorable position and in consolidating its leading role in Europe…Such an increase in France’s soft power serves the European and international presence of French banks well. [as] France probably has one of the most geographically diverse banking landscapes in the world.”

The power of the new government to implement its policies will depend on the results of the elections to the French National Assembly in June.

Today is Monday, April 18, 2022and here is today’s essential intelligence.

Written by Molly Mintz.


Construction cost inflation weighs on U.S. public infrastructure investment

The overall inflation of project costs for public sector sponsors creates a dilemma: either reduce the scope of capital programs or increase funding from a combination of taxes, tolls, general fund sources, federal grants or additional debt. The highest construction cost inflation in decades has come at an inopportune time; As historic levels of federal infrastructure investment begin to rise, cost inflation begins to erode some of its benefits. The producer price index for building materials and supplies increased by 24.9% between March 2021 and March 2022, and by 58.6% between January 2020 before the pandemic and March 2022.

—Read the full report of S&P Global Ratings

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Capital markets

Listen: Leveraged Finance and CLO Uncovered Podcast: Resurfacing Credit Headwinds

In the latest episode of CLOs Uncovered, Hina and Sandeep are joined by Ruth Yang, Global Head of Thought Leadership, as a guest. Listen to their discussion and learn about current challenges in credit markets. The objective of CLOs Uncovered is to provide market participants with more advanced analytical information on corporate credits, CLOs and leveraged finance transactions, with the regular S&P Global Ratings podcast, based on the main characteristics we observe in corporate credits and the sectors to which CLOs are exposed. for.

—Listen and subscribe to CLOs Uncovered, a podcast by S&P Global Ratings

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International trade

Push to relocate US manufacturing challenged by reliance on global supply chain

US companies have stepped up their exploration of relocating supply chains after being overtaken by dependence on Asia. Companies like Intel Corp., General Motors Co. and US Steel Corp. are building new manufacturing capacity in the United States, while other leaders have increasingly mentioned relocation – bringing production back to their home countries – during investor calls since the COVID-19 crisis began . President Joe Biden has made bringing supply chains closer to the United States a key pillar of his economic agenda, largely continuing the efforts of his predecessors to rebuild national capacity and increase the number of well-paying manufacturing jobs.

—Read the full article from S&P Global Market Intelligence

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Listen: Why Bank Of America Says Scope 3 Emissions Are The Biggest Challenge For Banks

The world is striving to achieve ambitious environmental, social and governance goals in the form of the Paris Agreement and the United Nations Sustainable Development Goals. It is clear that banks will play a central role in financing the changes needed to achieve these goals. In the latest episode of the ESG Insider podcast, hosts Lindsey Hall and Esther Whieldon chat with Karen Fang, Global Head of Sustainable Finance at Bank of America, about how one of America’s largest banks is tackling sustainability challenges . In the episode, Karen discusses the bank’s goal of deploying and mobilizing $1.5 trillion in sustainable finance by 2030, how Bank of America is working to align SDG and ESG goals. , and the steps the bank is taking to achieve its own net zero goal. She also talks about the U.S. Securities and Exchange Commission’s new climate disclosure proposal and the difficulty of measuring and managing Scope 3 emissions.

—Listen and subscribe to ESG Insider, a podcast from S&P Global Sustainable1

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Energy and raw materials

Strong support for French nuclear revival amid election, but hurdles remain

As Europe’s energy priorities are challenged by Russia’s invasion of Ukraine, France is expected to lead Europe’s ambitions to build new nuclear power plants, but the ongoing presidential elections present a certain risk in this regard, as well as other ambitions linked to France’s objective of achieving its decarbonization and energy independence objectives. S&P Global Commodity Insights, in its long-term forecast for electricity in Europe published on March 29, predicts that France will see the highest level of new nuclear construction in Europe, although it is not yet sufficient to prevent a gradual decline in total installed capacity until 2050 as existing reactors mature. the end of their technical life.

—Read the full article from S&P Global Commodities Outlook

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Technology and media

The Battle For Twitter’s Future Comes Down To Innovation Vs. Distraction

While Elon Musk’s Twitter Inc. bid is sure to get the attention the tech mogul seems to appreciate, there are plenty of other challenges Twitter faces regardless of Tesla Inc. CEO Musk’s Bid 54, $20 per share for 100% of Twitter shares in what it described as its “best and final offer.” Musk wrote that he would reconsider his shareholder status if the sale does not go through. “I think it’s very important that there is an inclusive space for free speech,” Musk said when asked why he cares about Twitter at a TED talk on April 14. . “Twitter has become a kind of de facto public square. People should have both the reality and the perception that they should be able to express themselves freely within the bounds of the law.”

—Read the full article from S&P Global Market Intelligence

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