Recession risks, JetBlue moves on Spirit, LNG deals


By Geoffrey Smith — Everyone thinks a recession is more likely. Well, Goldman Sachs, Deutsche Bank and Elon Musk do it anyway, and more and more central bankers are talking as if they’ve made their peace with the idea. Relations between Russia and the West hit new lows after Lithuania blocks Russian rail access to the Baltic enclave of Kaliningrad. Existing home sales data is in, JetBlue makes a decisive move in its pursuit of Spirit Airlines, and big news is afoot in the world of liquefied natural gas. Here’s what you need to know in the financial markets on Tuesday, June 21.

1. Russia-EU relations sink to a new low

While the United States was on vacation, relations between Russia and Europe deteriorated sharply. Following last week’s series of gas supply cutoffs by Gazprom (MCX:) to its European buyers, Lithuania has halted the transit of most goods through its territory to the Russian enclave of Kaliningrad in the Baltic Sea. The European Commission in Brussels approved the measure.

Russia called the move “illegal” and “unprecedented” and vowed to retaliate. The Security Council said its measures “will have a serious negative impact on the Lithuanian population.”

Meanwhile, Kremlin spokesman Dmitry Peskov told MSNBC that relations are likely to suffer long-term damage from the current crisis and refused to rule out the execution of two US citizens fighting in Ukraine who were captured by proxies. Russians.

2. Recession risk increases, say Goldman, Musk

Recession fears are on the rise, with analysts at Deutsche Bank and Goldman Sachs warning of a growing risk of an economic contraction. Goldman raised its estimate for next year to 30% from 15% previously, citing both inflation and the effects of the Ukraine conflict on the world economy.

Goldman is in good company. Elon Musk told a conference in Qatar overnight that he believes the United States will have a recession soon. He also confirmed that he expects to lay off around 10% of Tesla’s salaried staff, or 3.5% of its total workforce.

The warnings come as more and more central bank officials speak openly about their willingness to sacrifice growth in the pursuit of stable prices. Bank of England Chief Economist Huw Pill became the latest to pick up on that refrain on Tuesday, while on Monday St. Louis Fed President James Bullard warned that US inflation expectations would drop. The US could be unleashed without credible Fed action.

The Fed president from Richmond speaks at 11 am ET, and the one from Cleveland will speak an hour later.

3. Stocks Prepare to Rebound at Open Despite Warnings; JetBlue, spirit eye

The holiday seems to have brightened the mood of US stock market investors. Markets are set to reopen comfortably higher later amid some dip buying by those who think the recent sell-off has been exaggerated.

As of 6:20 a.m. ET, they were up 496 points, or 1.7%, while , and were up 1.8%.

Individual stocks likely to be in the spotlight later include spiritual airlines (NYSE:) after JetBlue (NASDAQ:) raised its offer and finally agreed that it will have to shed more assets to get antitrust clearance for its plans. Spirit jumped 12% premarket on perceptions that JetBlue’s bid, which is higher than rival Frontier Group’s, will now catch on.

The data calendar is relatively light, with the manufacturing survey at 8:30 a.m. ET and the May figures at 10 a.m.

4. Qatar seals massive LNG development deals

Europe’s search for alternatives to Russian gas took two big steps forward, as the Gulf state of Qatar signed a series of deals to develop what will be the world’s largest liquefied natural gas project.

QatarEnergy said on Tuesday that exxonmobile (NYSE:) will acquire a 6.25% stake in the North Field East project, joining others including France’s TotalEnergies (NYSE:), Italy’s Eni (BIT:) and ConocoPhillips (NYSE:), who have signed agreements similar in recent days. . However, the project, which will increase Qatar’s LNG capacity by nearly 50% to 110m tonnes/year, is expected to come online in 2026.

Furthermore, Venture Global became the first US company to sign a long-term LNG supply contract with Germany.

5. Oil extends recovery as Biden prepares tax holiday decision

Crude oil prices extended their rally since last week’s selloff, amid expectations that US President Joe Biden will announce an oil hold to cushion the impact of high prices on drivers. Americans.

Biden told reporters Monday that he expects to make a decision by the end of the week on the tax collection, which currently stands at ca. 18.4 gallons.

As of 6:30 a.m. ET, futures were up 2.2% at $110.41 a barrel, while futures were up 1.5% at $115.81 a barrel. Newswires quoted Russell Hardy, CEO of one of the world’s largest traders, Vitol, as saying markets are unlikely to go much lower unless there are signs of a substantial “decrease in demand”.

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