The cost of extreme heat

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The European heat wave that ignited Italy, France and Spain last week has reached London, putting life on hold and testing infrastructure. Britain recorded its highest temperature on record this morning as the heat forced the closure of some schools, museums and doctors’ surgeries, and the cancellation of some trains and flights. Forecasters reported temperatures of 40 degrees Celsius, or 104 degrees Fahrenheit, today in London. Authorities have issued Britain’s first ‘red’ warning for extreme heat, declaring a national emergency in a country used to a temperate climate, where few homes have air conditioning. In the United States, President Biden could declare a climate emergency as early as this week, according to the Washington Post.

The human toll of the heat wave is alarming. Hundreds of people died across Europe. Thousands more have had to flee wildfires in Spain, France and Greece.

Extreme heat is also hurting the economyaccording to a study carried out last year by European economists and climate experts. The researchers estimated that heat waves had on average reduced overall annual GDP growth across Europe by 0.5% over the last decade, potentially more than double the damage estimated by heat waves in previous decades . The reason: extreme heat tends to reduce productivity, currently for those who work outdoors, but also increasingly for those who work indoors.

The summer has been a pressure cooker for businesses and consumers in Europe. Inflation, as elsewhere, is at its highest level in decades. Additionally, the war in Ukraine has driven up oil and gas prices as Russia threatened to cut off supplies. Last week, a draft report from the European Commission lowered its economic outlook this year for the euro zone to 2.6% GDP growth, after predicting 2.7% in May, and only 1.4% growth next year, against a forecast of 2, 3% in May.

The heat has already caused major disruption to harvests, driving up food prices. Wildfires in Spain, Portugal, France, Greece and Italy, which is experiencing one of its worst droughts on record, are destroying crops or threatening to reduce yields. Coldiretti, the Italian farmers’ association, said each fire costs Italians more than 10,000 euros per hectare – about $25,000 per acre – to extinguish the fire and rebuild the economic and environmental system over a period of 15 year. The group estimates that wheat production in Italy will decrease by 15% due to an increase in production costs and drought.

The heat wave in Europe is sure to further aggravate its energy crisis. The European energy crisis was already expected to cost the countries of the region $200 billion. Yesterday Uniper, one of Germany’s biggest electricity producers, said rising gas prices and growing demand for electricity as temperatures rose had exhausted almost all of the company’s cash. company and that it was going to need a bailout from the government.

Lucrezia Reichlin, professor of economics at London Business School, said the heat wave was straining European economies that were already in a fragile state. Public finances have also been affected, she said, as countries that had spent heavily on pandemic relief took costly measures to help consumers cope with high energy prices. “The combination of these things is entirely negative – the question is how negative is it going to be.”

Scaramucci’s SkyBridge is suspending withdrawals into one of its funds. SkyBridge Capital, led by Donald Trump’s communications director for 11 days, Anthony Scaramucci, would have been forced to suspend redemptions from one of its smaller funds that suffered heavy losses on crypto and equity investments. A pivot to crypto late last year also hurt the performance of SkyBridge’s largest fund, the Multi-Advisor Hedge Fund Portfolios, which had $2 billion in assets in March and had fallen. by 17% in the first five months of the year, according to a letter to shareholders from early June that was seen by DealBook.

Apple would intend to slow down its hiring. The changes, which will only apply to certain teams, will help the company to cope with a potential economic downturn, reported Bloomberg. Companies like Alphabet, Meta and Snap have cut budgets in recent weeks, and some, like Tesla, have made staff cuts amid broader market declines.

Elon Musk and Twitter lawyers prepare for their first meeting in Delaware. Both teams will present this morning before judge Kathaleen McCormick (virtually, because she has the Covid). Twitter is pushing for a four-day expedited trial in September, while Musk’s lawyers are proposing February. The court has made available a public access line to listen to the proceedings: 774-267-2687.

Aides to eight of the House’s most progressive members file petitions to form unions. It is the first substantial action by congressional staff to collectively organize for better working conditions and paves the way for housekeepers to negotiate working conditions, paid and sick leave and promotion policies without threat of retaliation – a right that federal workers already have.

Iran’s national energy company has reportedly signed a deal with Russian energy giant Gazprom. The memorandum of understanding, worth about $40 billion according to Iran’s Oil Ministry news agency, comes as Russian President Vladimir Putin travels to Iran today for a rare international visit, as sanctions bring the two countries closer together.

Yesterday, Bank of America and Goldman Sachs reported their second-quarter earnings, making them the last of the nation’s biggest financial firms and Wall Street powerhouses to do so. Bank of America’s profit fell by a third from the same period last year. Earnings were also down at Goldman, but like Citigroup last week, strong trading earnings helped it report better-than-expected earnings. Here are the takeaways:

Markets were volatile, but there was money to be made in trading. Second-quarter profits for all banks were down from a year earlier. But in some cases, the decline was not as severe as analysts had expected. Consumers continued to spend and borrow.

The economy could slow, but it won’t slide into an outright contraction, bank chiefs said.

  • “Nothing in the data that I see indicates that the United States is on the verge of a recession,” said Jane Fraser, chief executive of Citigroup, during a conference call.

  • “We looked a lot, very carefully, at our actual data,” Jeremy Barnum, JPMorgan’s chief financial officer, said in a call with reporters. “There is essentially no evidence of any real weakness.”

  • “It’s a tough market, but I think it’s important to say it’s not tough in 2008,” Morgan Stanley chief executive James Gorman told analysts.

Although most individual investors lost money in the second quarter, market volatility was a boon for banks. This was especially true at Goldman Sachs, where trading revenue rose 31%, outpacing rivals. In the wake of the financial crisis more than a decade ago, big banks, prompted in part by regulators and changes in the law, have vowed to steer away from risky bets in the market. Many now derive an increasing share of their income from trading, although they still report taking less risk than before.


— Zhiwu Chen, professor of finance at the University of Hong Kong, on the fallout from a banking scandal in China that exposed systemic problems in the country’s financial system.


Months before former President Donald Trump’s social media company announced its $300 million deal with a SPAC, employees of a little-known Miami investment firm learned of the impending merger, reports three people familiar with internal company discussions told The Times’ Matt Goldstein. Now, federal authorities are investigating an unusual spike in trading in the days leading up to the announcement of the deal with SPAC, Digital World.

Federal prosecutors and securities regulators are trying to determine why traders have collected millions of warrants released by Digital World days before the October 20 announcement of its merger with Trump Media. (Warrants allow holders to buy shares at a pre-determined price.) The day after the deal was announced, Digital World shares and warrants surged, with the stock price rising by 350% and the price of the warrants by nearly 1,300%. .

A federal grand jury in Manhattan has issued subpoenas seeking information about a Miami investment firm, Rocket One Capital, among others, Digital World said in a recent filing. A senior Rocket One executive, Bruce Garelick, was a member of Digital World’s board of directors until his resignation in recent weeks.

The exact scope of the federal investigations remains unclear. Authorities have not charged anyone with wrongdoing, and representatives for Garelick and others have denied doing anything improper.

But Rocket One officials are reportedly discussing ways to cash in on the ongoing deal. Two of the people familiar with Rocket One’s internal discussions said Garelick mentioned the possible merger with Trump Media to some employees last summer. Around that time, a Rocket One employee was asked to do a financial analysis of Digital World, including its warrants, one of the people said. Carl Schoeppl, an attorney representing Garelick, declined to comment.

This is the latest blow to the Trump SPAC deal. Federal authorities are also investigating whether Digital World’s disclosures about merger talks with Trump Media violated rules applicable to SPACs. And the SEC is considering blocking the merger altogether. Along with other investor commitments depending on the deal, that would strip Trump Media of $1.3 billion.

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