HSBC weighs multibillion pound sale of its operations in Canada

(qlmbusinessnews.com via news.sky.com– Wed, 5th Oct 2022) London, Uk – –

HSBC Holdings is working with investment bankers at JP Morgan on a deal that would represent a further retrenchment from North America, Sky News learns.

HSBC Holdings is exploring a multibillion pound sale of its operations in Canada in what would mark a significant retreat from its presence in North America.

Sky News has learnt that HSBC's board has instructed investment bankers at JP Morgan to sound out prospective buyers of its business in the country.

Sources said a sale would represent a substantial deal – both financially and symbolically – for HSBC.

According to its website, HSBC is the seventh-largest bank in Canada, having made more than a dozen acquisitions there since the early 1980s.

One analyst suggested that the value of its Canadian subsidiary could be in the region of $7bn (£6bn).

It comes as the London-headquartered lender is confronted by a campaign orchestrated by the Chinese insurance group Ping An for it to embark on a wholesale break-up.

Ping An, which owns more than 8% of HSBC, is thought to have told HSBC – led by chairman Mark Tucker and chief executive Noel Quinn – to split its lucrative Hong Kong business from the rest of its global empire.

HSBC has already retrenched from parts of its business in the US, announcing last year that it would sell or wind down its mass-market retail operations there.

It also sold its business in Brazil in 2016 for more than $5bn.

The group remains, nevertheless, a sprawling international banking giant, with a presence in more than 60 countries.

It is one of Britain's biggest high street banks, having acquired the Midland Bank in 1992.

The group remains domiciled in the UK, and last reviewed its global base in 2015 under then chief executive Stuart Gulliver.

Responding to an enquiry from Sky News, HSBC said in a statement: “HSBC regularly reviews its businesses in all its markets.

“We are currently reviewing our strategic options with respect to our wholly owned subsidiary in Canada.


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“Amongst the options being explored is a potential sale of HSBC Group's 100% equity stake in HSBC Bank Canada. HSBC Bank Canada is a very strong business and Canada's leading international bank.

“The review is at an early stage and no decisions have been made.”

HSBC's London-listed shares were trading on Tuesday morning at just over 470p, giving it a market value of more than £101bn.

By Mark Kleinman

Britain at ‘significant risk’ of gas shortages this winter, says regulator

(qlmbusinessnews.com via uk.reuters.com — Tue, 4th Oct, 2022) London, UK —

 UK faces a “significant risk” of gas shortages this winter and a possible emergency due to the conflict in Ukraine and limited supplies in Europe, the energy regulator has said.

Although Russia only meets about 4% of Britain's gas needs, a disruption in supply to Europe has contributed to driving up British prices and makes it harder for Britain to secure gas from others.

In a letter to power company SSE (SSE.L), regulator Ofgem said Britain faced the possibility of a “gas supply emergency” in which gas supplies to some gas-fired power plants are curtailed, which can stop them from generating electricity.


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Responding to the publication of the letter, Ofgem said in an email: “This winter is likely to be more challenging than previous ones due to the Russian disruption of gas supplies to Europe.”

In the event of gas supply issues the regulator and Britain's National Grid could be forced to curb supply of gas to gas-fired power stations to make sure enough supply remains available to households.

“We need to be prepared for all scenarios this winter,” Ofgem said in the email.

“As a result, Ofgem is putting in place sensible contingency measures with National Grid ESO (Electricity System Operator) and GSO (Gas System Operator) as well as the government to ensure that the UK energy system is fully prepared for this winter,” Ofgem said.

SSE had contacted Ofgem for clarity over imbalance charges which could see power generators forced to pay for failing to produce promised electricity, if emergency measures meant they did not get the gas they needed.


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Gas-fired power plants were responsible for more than 40% of Britain's electricity production last year while the fossil fuel is also used to heat around 80% of British homes.

Britain's National Grid (NG.L) said in July there could be periods where electricity supply is tight this winter, given uncertainty over supplies of Russian gas to Europe, but that it expects to be able to meet demand.

National Grid is expected to announce its winter outlook on Thursday.

Reporting by Susanna Twidale and Sachin Ravikuma

 

Chancellor Kwasi Kwarteng U-turns on plans to scrap 45p tax rate

(qlmbusinessnews.com via bbc.co.uk – – Mon, 3rd Oct 2022) London, Uk – –

The government has U-turned on plans to scrap the 45p rate of income tax for higher earners.

Chancellor Kwasi Kwarteng told the BBC the proposals, announced just 10 days ago, had become “a massive distraction on what was a strong package”.


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“We just talked to people, we listened to people, I get it,” he added.

The decision, which marks a humiliating climbdown for Prime Minister Liz Truss, comes after several Tory MPs criticised the plan.

On Sunday, Ms Truss had said she was committed to the policy.

The plan to scrap the 45p rate, paid by people earning more than £150,000 a year, was announced as part of a package of tax cuts.

Mr Kwarteng told BBC Breakfast the proposal was “drowning out a strong package”, including support for energy bills, and cuts to the basic rate of income tax and corporation tax.

Asked whether he owed people an apology, he said: “We've listened to people. And yeah, there is humility and contrition in that. And I'm happy to own it.”

On how the decision was made, he said: “The prime minister decided not to proceed with the abolition of the rate.”

However, pressed on whether it was her U-turn, Mr Kwarteng added: “No, we talked together, I said this is what I was minded to do and we decided together, we were in agreement that we wouldn't proceed with the abolition of the rate.”

Asked if he had considered resigning, he said: “Not at all.”

On Sunday, the prime minister had told the BBC the move to cut the top rate of income tax was “a decision that the chancellor made”.

But she also said she was absolutely committed to it as part of a package to make the tax system “simpler” and boost growth.

Asked whether his previous comment that there was “more to come” on tax cuts still stood, Mr Kwarteng said there would be no tax cuts ahead of the next Budget in the spring.

Pressed on whether his economic plans would mean spending cuts for public services, the chancellor said there would be more details in the government's fiscal plan on 23 November.

However, he said the government was sticking to its 2021 comprehensive spending review, meaning it will not raise spending in line with inflation.

BBC political editor Chris Mason said the U-turn had left the chancellor and prime minister “humiliated, wounded and weakened”.

“But Liz Truss will hope it creates space to move forward, hauling herself out of the political quagmire of a budgetary statement that imploded on contact with political reality,” he said.

Labour called for the government to “reverse their whole economic, discredited trickle down strategy”.

Shadow chancellor Rachel Reeves said the U-turn came “too late for the families who will pay higher mortgages and higher prices for years to come”.

Lib Dem leader Sir Ed Davey called on the chancellor to resign, saying he no longer had “any credibility” and the whole mini-budget needed an overhaul.

Plans to scrap the top rate of tax had seen remarkable opposition from the markets, other parties and a growing number of Tory MPs.

Conservative Party chairman Jake Berry had previously warned Tory MPs who voted against the prime minister's tax measures that they would be kicked out of the parliamentary party – known as losing the whip.

But increasingly, it seemed Ms Truss did not have the numbers to get it through Parliament.

On Sunday, senior Tory Michael Gove hinted he would not vote for the plan when it came to Parliament, saying “I don't believe it's right”.

The former cabinet minister said the PM's decision was “a display of the wrong values”.

Former cabinet minister Grant Shapps had warned the prime minister would lose a Commons vote on the proposal.

He welcomed the U-turn, telling the BBC: “It's better to act, it's better to reverse ferret on something that's causing a problem like this, and it sends a very important signal to the public and also to the markets that we are serious about sound money.”

The decision was also welcomed by the Confederation of British Industry.

Director-general Tony Danker said the pledge had become a “distraction” from other economic reforms, which he said would “make a real difference to growth”.

The U-turn, suggestions of which were first reported by the Sun, comes on the second day of the Conservative conference in Birmingham, with Mr Kwarteng due to speak later on Monday.

The pound jumped on the news, rising by more than a cent against the dollar to $1.1263, before falling back.

The currency touched a record low last week after Mr Kwarteng's mini-budget created turmoil on the markets.


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A 45% tax rate applies to income above £150,000 in England, Wales and Northern Ireland.

Scrapping the top rate made up around £2bn of the £45bn worth of tax cuts announced by the chancellor in his mini-budget.

Other measures announced included a cut to the basic rate of income tax to 19%, a reversal of the recent rise in National Insurance and scrapping the cap on bankers' bonuses.

By Nick Eardley

 

Vodafone and Three UK accelerate ‘merger’ talks

(qlmbusinessnews.com via news.sky.com– Mon, Oct 3rd c 2022) London, Uk – –

A combined Vodafone and Three UK would become the largest mobile telecoms supplier in Britain, with a deal potentially being struck by the end of the year, Sky News learns.

Vodafone and the owner of Three UK have accelerated talks about a deal to combine their British operations, paving the way for the creation of the industry’s mobile phone industry’s biggest player by customer numbers.

Sky News has learnt that Vodafone and CK Hutchison are hopeful of striking an agreement by the end of the year to establish a joint venture or other form of business combination.


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People close to the talks said the discussions had intensified in recent weeks following a period in which they were thought to have stalled.

CK Hutchison, the Hong Kong-based conglomerate, has been exploring a sale of Three UK for some time, having concluded that the operation – which has 9m customers – was sub-scale in a sector which carries huge capital investment requirements for developing network infrastructure.

It is said to have decided that a deal with Vodafone represents its best opportunity to help it play a role in market consolidation, with the latter's chief executive, Nick Read, under pressure form shareholders to revive its flagging share price.

Insiders said on Monday that discussions between the two companies were now at a “relatively advanced” stage, although several significant hurdles remained outstanding and there was no certainty that a deal would ultimately be reached.

The most imposing of these is likely to be the regulatory scrutiny that a deal would face both from Ofcom, the telecoms industry regulator, and the Competition and Markets Authority.

Industry sources said it was “almost certain” that the CMA would want to launch a full-blown, or Phase-II, merger inquiry, with the majority of such investigations leading to deals either being blocked or requiring remedies such as asset sales.
One Vodafone investor queried whether such remedies, depending upon their scale, could undermine the logic of a tie-up.
Concerns are also likely to be raised by rivals about the volume of spectrum owned by the combined group, with one analyst saying it would control 46% of all UK mobile spectrum.

Ofcom, meanwhile, has hinted at a softer approach to consolidation among the UK's leading mobile networks.

A deal would create a market-leading business, with roughly 27 million customer connections.

That would be larger than Virgin Media O2, which boasted 24 million retail connections in July, and EE, which is owned by BT Group and has approximately 20 million customers.

Industry chiefs have ben calling for regulators to allow the consolidation of the UK industry from four major networks – EE, O2, Three UK and Vodafone – to just three, a move that would stoke concerns among consumer groups of price hikes during a huge squeeze on Britons' cost-of-living.

Market sources say CK Hutchison has indicated during deal-related talks that it was seeking a valuation for Three UK of roughly £6bn, although that pre-dated the sale of some mobile towers assets, so it was unclear if that figure remained current.

One industry analyst speculated on Monday that the value of the combined Vodafone-Three UK business could be in the region of £12bn-£15bn.

In recent months, doubts have intensified about Mr Read's long-term position after a number of prominent investors acquired stakes in Vodafone.

The most recent of these was Xazier Niel, the French billionaire, who disclosed that he had built a 2.5% stake in the company.

Mr Niel said in an accompanying statement that he believed there were “opportunities to accelerate…the streamlining of Vodafone's footprint”.


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Cevian Capital, a major European activist investor, emerged as a Vodafone shareholder last year, while state-controlled Emirates Telecommunications Group, acquired almost 10% of the FTSE-100 company in May.

On Monday morning, shares in Vodafone were trading at just over 100p, giving the company a market capitalisation of about £30bn.

Its stock has fallen by 10% during the past year.

Vodafone and Three UK both declined to comment.

 

£1bn Serco pension scheme seek financial support from outsourcer amid markets turmoil

(qlmbusinessnews.com via news.sky.com– Fri, 30th Sept 2022) London, Uk – –

Serco's pension trustees asked the company to provide a standby credit facility as it faced growing demands for collateral amid a surge in gilt yields, Sky News learns.

Sky News has learnt that the outsourcing giant's pension trustees contacted the company in recent days about establishing a new credit facility in the event of a continued deluge of collateral calls.

The request is thought to be highly unusual and highlights the turmoil caused even in well-funded and well-run corporate pension schemes by the sudden surge in gilt yields that followed last Friday's fiscal statement by Chancellor Kwasi Kwarteng.

The Bank of England intervened in financial markets on Wednesday by promising to buy tens of billions of pounds in government bonds during the next fortnight in an attempt to stabilise the market.

That followed a slump in sterling's value against the dollar to its lowest-ever level and deep anxiety about investors' appetite to buy UK government bonds.

Ministers have sought to blame the turmoil on global market forces, but Mr Kwarteng's £45bn of unfunded tax cuts, announced in last week's mini-budget, have been held responsible by many analysts for sparking the most dangerous financial markets rout since the 2008 banking crisis.

A person close to Serco pointed out that its retirement schemes boasted a surplus, before tax, of £105.3m at its latest half-year results.

The source added that the standby loan request from its pension trustees was simply to provide liquidity to help it meet demands for additional collateral.

Corporate pension fund trustees were faced with no choice but to sell billions of pounds of equities and bonds this week to meet margin calls – forcing them to put up extra collateral – as gilt yields surged and upset delicately balanced hedging strategies.

The turmoil has drawn closer attention to so-called Liability-Driven Investing, in which many pension schemes use financial instruments such as derivatives to help them match their long-term assets and liabilities.

The precise number of Serco's pension scheme members was unclear on Friday.

Members' retirement funds are not at risk as a consequence of the move to seek financial support from the schemes' sponsor.

According to its most recent results, Serco makes annual deficit recovery payments of £6.6m, a figure that is fixed until 2030.


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Serco is one of Britain's biggest outsourcing groups, handling contracts for a multitude of government departments.

This month, the company announced that Rupert Soames, its long-serving chief executive and grandson of Sir Winston Churchill, would retire.

He is regarded as one of Britain's most capable chief executives, having transformed Serco's fortunes since taking over in 2014.

Serco and its pension trustees both declined to comment.

By

Porsche shares rise on first trading day in €75bn stock market float

(qlmbusinessnews.com via theguardian.com – – Thur, 29th Sept 2022) London, Uk – –

UK’s Next warns sterling plunge may cause second cost of living crisis

(qlmbusinessnews.com via uk.reuters.com — Thur, 29th Sept 2022) London, UK —

The plunge in the value of the pound looks set to create a second cost of living crisis for Britons, clothing retailer Next (NXT.L) warned on Thursday, cutting its sales and profit forecasts.

Shares the company tumbled more than 7% after it said August trading had been below expectations and pressure on household budgets was set to intensify in the coming months.

“It looks like we may be set to have two cost of living crises: this year, a supply side-led squeeze, next year a currency led price hike as devaluation takes effect,” said CEO Simon Wolfson.


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Next, which trades from about 500 stores and online and is often considered a gauge of how British consumers are faring, said it now expected full price sales in the second half of its financial year to fall 1.5%, and a full year pretax profit of 840 million pounds ($905 million), up 2.1% versus 2021-22.

It previously forecast second-half full price sales growth of 1% and a full year pretax profit of 860 million pounds.

The company said cutting its guidance was a difficult call, given sales in September had improved and the company may see benefits from recent government measures, such as an energy price cap. Sales to date in August and September are down 0.3%.

The group reported a pretax profit of 401 million pounds for the six months to July, up 16%, with full price sales up 12.4%.

TURMOIL

Confidence levels among Britain's consumers sank to a record low this month as they struggle with the accelerating cost of living, even before the government's mini-budget on Friday sowed turmoil in the mortgage market, leading to warnings of a sharp drop in house prices.

Wages are failing to keep pace with inflation that was 9.9% in August and Next's rivals Primark(ABF.L), ASOS (ASOS.L) and Boohoo (BOOH.L) have all warned on profit this month.

The government has announced a raft of tax cuts and help on energy costs for consumers and businesses, but the pound/U.S. dollar exchange rate has fallen to almost parity, raising the price of imports.

Wolfson said that while it seemed inevitable that clothing and homeware sales would slow, healthy employment and savings levels provided some comfort.


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He said it was too early to tell what impact government help would have, though it was likely the scale of the measures would support spending.

Looking to the 2023-24 year, he said if the weakness of the pound continued, it would likely inflate selling prices, particularly in the second half.

Separately on Thursday, H&M, the world's No.2 fashion retailer, launched a cost savings drive after reporting weaker-than-expected profits.

Reporting by James Davey

 

IMF criticised UK government’s mini-budget, warns ‘likely to increase inequality’

(qlmbusinessnews.com via news.sky.com– Wed, 28th Sept 2022) London, Uk – –

The IMF also recommended against fiscal policies not targeted towards specific groups, saying that the plans as they are will benefit the rich rather than those who really need help.

The International Monetary Fund (IMF) has criticised the UK government's mini-budget, saying the plans for tax cuts and spending will increase inequality and counteract the Bank of England's monetary policy.


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The conflicting government and currency policies, of seeking to ramp up growth via tax cuts and rein in inflation through interest rate rises, attracted sharp comment from the global financial institution on Tuesday.

“It is important that fiscal policy does not work at cross purposes to monetary policy,” a spokesperson said.

UK policy condemned as ‘utterly irresponsible' – pound latest

The IMF – which saw its concerns echoed by a former Bank of England deputy governor – also recommended against fiscal policies not targeted towards specific groups.

“Given elevated inflation pressures in many countries, including the UK, we do not recommend large and untargeted fiscal packages at this juncture, as it is important that fiscal policy does not work at cross purposes to monetary policy,” the spokesperson added.

The organisation was unequivocal: “The nature of the UK measures will likely increase inequality.”

‘Tories believe in redistribution – from poor to rich!'

‘Consider more targeted support'

It is the latest in mounting criticism of the government's decision to fund the biggest tax cuts in 50 years by borrowing money.

The announcement sent the pound to an all-time low, making importing goods more expensive, and saw government borrowing costs increase as gilt yields rose.

The IMF called on the government to consider more targeted support to families and business.

Chancellor Kwasi Kwarteng's 23 November fiscal plan, to be announced along with Office of Budget Responsibility forecasts, would be an appropriate occasion to do so, the IMF said.

It would provide an “early opportunity for the UK government to consider ways to provide support that is more targeted and re-evaluate the tax measures, especially those that benefit high-income earners”.

Why does the weak pound matter?

The situation is being watched, the IMF warned, adding: “We are closely monitoring recent economic developments in the UK and are engaged with the authorities.”


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The IMF has had to intervene in UK affairs in the past.

In 1976, Britain had to apply for an IMF loan of nearly $4bn during a financial crisis. At the time, IMF negotiators insisted on deep cuts in public expenditure.

By Sarah Taaffe-Maguire, business reporter

 

HSBC hires Goldman Sach’s Ma to lead North Asia global banking

(qlmbusinessnews.com via uk.reuters.com — Tue, 27th Sept, 2022) London, UK —

HSBC has appointed Goldman Sachs partner Christina Ma as its head of global banking for North Asia, according to a memo seen by Reuters.

Ma will join the bank after 21 years with Goldman Sachs , most recently as its head of Greater China equities.


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She will replace Dai Kitamura, who was serving in the role on an interim basis before taking extended leave earlier this year. He will leave HSBC on Nov. 1 after 27 years with the bank.

The contents of the memo were confirmed by a HSBC spokesperson.

Ma will remain based in Hong Kong, and starts her new role in the first quarter of 2023, the memo said.

Reporting by Scott Murdoch

 

How Amazon Changed Whole Foods, With New High-Tech Shopping

Source: CNBC

Five years ago, Amazon bought Whole Foods for $13.7 billion. Since then, there’s been a lot of changes, including a new CEO starting Sept. 1. It added a palm-scanning payment option, hundreds of cameras and sensors to enable checkout-free shopping, and a “dark store” devoted entirely to online orders. Take a look at how the new high-tech shopping, prices and product selection have changed since Amazon took over the specialty grocer in 2017.

 

BoE set for second hefty rate rise in a row

(qlmbusinessnews.com via uk.reuters.com — Thur, 22nd Sept, 2022) London, UK —

The Bank of England looks set to raise interest rates by at least half a percentage point on Thursday in a bid to tame inflation that is just off a 40-year high, against a backdrop of a tumbling currency and a free-spending government.

Economists polled by Reuters last week expect the BoE to announce at 1200 GMT that rates will rise to 2.25% from 1.75%, while financial markets have priced in a bigger move to 2.5%.

The BoE is also expected to confirm that it will soon sell some of the 838 billion pounds ($944 billion) of government bonds which it bought during more than a decade of quantitative easing – the first major central bank to do so.


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The BoE's half-point increase in rates last month was its biggest since 1995. If it raises rates by three-quarters of a point on Thursday it would be the largest hike since 1989, barring a failed, temporary attempt to shore up sterling in 1992.

The U.S. Federal Reserve increased its main interest rate by three-quarters of a percentage point on Wednesday and signalled more large increases to come.

Sterling sank to its lowest since 1985 against the U.S. dollar after the Fed decision and is at its lowest against a basket of currencies since 2020, pushing up the price of imports.

Central banks globally have been hiking rates to tackle inflation caused by the surge in energy prices following Russia's invasion of Ukraine, as well as supply-chain pressures and labour shortages since the COVID-19 pandemic.

The BoE was the first major central bank to raise rates in the current cycle, beginning in December last year.

Britain's annual rate of consumer price inflation edged down to 9.9% in August from a 40-year high of 10.1% in July, its first drop in nearly a year though still far above the BoE's 2% target and the highest in the Group of Seven.

MIXED INFLATION OUTLOOK

The short-term outlook for inflation is now somewhat better than at the time of the BoE's last meeting in early August.

New Prime Minister Liz Truss's caps on household and business energy tariffs mean inflation is unlikely to rise as high as the 13.3% peak the BoE had pencilled in for October, or rates of more than 15% which economists expected for early 2023.

However, the caps – combined with likely cuts to taxes on employment, business profits and potentially house purchases – amount to more than 150 billion pounds of economic stimulus that was not factored into the BoE's forecasts last month.

This, in turn, could prompt the BoE to raise rates more than previously thought over the coming year, despite what will still be a big squeeze on living standards from high inflation.

“Although the immediate risk of recession over the coming winter is diminished, substantial fiscal stimulus adds to the risk of high inflation being maintained for longer – and hence the chances of, ultimately, substantially more policy tightening by the Bank of England being required,” Investec economist Sandra Horsfield said.

Interest rate futures late on Wednesday showed BoE rates reaching 3.75% in December and plateauing at 4.75% from March.

New finance minister Kwasi Kwarteng will set out more details of the budget plans on Friday, including an update to debt issuance.

Last month, the BoE forecast the economy would enter recession in the final quarter of 2022 and shrink throughout 2023.


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A recession of this length now looks unlikely, economists say, but there is a risk – following contraction in the second quarter and weak retail sales and business survey data since – that the economy is already in a technical recession.

A public holiday to mark Queen Elizabeth's funeral, following more than a week of national mourning that led to the cancellation of some public events, will also reduce third-quarter output. The BoE also decided to delay by a week its policy announcement, which had been due out on Sept. 15.

Reporting by David Milliken

The Ethereum Merge Is Done, Opening a New Era for the Second-Biggest Blockchain

(qlmbusinessnews.com via coindesk.com — Thur, 22nd Sept 2022) London, Uk – –

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By Sam Kessler

The historic upgrade casts aside the miners who had previously driven the blockchain, with promises of massive environmental benefits.

The massive overhaul of Ethereum known as the Merge has finally happened, moving the digital machinery at the core of the second-largest cryptocurrency by market value to a vastly more energy-efficient system after years of development and delay.

It was no small feat swapping out one way of running a blockchain, known as proof-of-work, for another, called proof-of-stake. “The metaphor that I use is this idea of switching out an engine from a running car,” said Justin Drake, a researcher at the non-profit Ethereum Foundation who spoke to CoinDesk before the Merge happened.


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The payoff is potentially gigantic. Ethereum should now consume 99.9% or so less energy. It's like Finland has suddenly shut off its power grid, according to one estimate.

Ethereum’s developers say the upgrade will make the network – which houses a $60 billion ecosystem of cryptocurrency exchanges, lending companies, non-fungible token (NFT) marketplaces and other apps – more secure and scalable, too.

When the Merge officially kicked in at 6:43 a.m. UTC, more than 41,000 people were tuned in on YouTube to an “Ethereum Mainnet Merge Viewing Party.” They watched with bated breath as key metrics trickled in suggesting that Ethereum's core systems had remained intact. After about 15 long minutes the Merge officially finalized, meaning it could be declared a success. The price of ETH – whose current market value near $200 billion makes it the second-largest cryptocurrency after bitcoin (BTC) – was largely flat after the Merge.

The update, which ends the network’s reliance on the energy-intensive process of cryptocurrency mining, has been closely watched by crypto investors, enthusiasts and skeptics for the impact it is expected to have on the wider blockchain industry.

Mark Cuban, investor and billionaire owner of the Dallas Mavericks basketball team, told CoinDesk he would be “watching [the Merge] with interest like everyone else,” pointing out that it might make ETH, the network's native token, deflationary.

The idea was there from the start that Ethereum would eventually make the switch to proof-of-stake. But the transition was a complicated technical effort – an endeavor so risky that many doubted it would happen at all.

“There’s a part of me which hasn’t completely realized that this is actually happening,” Drake said. “I’m somewhat in denial, you know, because I’ve trained myself to just expect it to happen in the future.”

The update’s complexity was compounded by the fact that it may have been one of the largest open-source software endeavors in history, requiring coordination across dozens of teams and scores of individual researchers, developers and volunteers.

Tim Beiko, an Ethereum Foundation developer who played a key role in coordinating the update, said to CoinDesk, “I think the Merge can genuinely get those people who were interested in Ethereum, but skeptical of the environmental impacts, to come and experiment with it.”

Goodbye, miners

In 2008, Bitcoin introduced the world to the idea of a decentralized ledger – a single, immutable record of transactions that computers around the world could view, alter and trust without the need for intermediaries.

Ethereum, introduced in 2015, expanded upon the core concepts of Bitcoin with smart contracts – or computer programs that effectively use the blockchain as a global supercomputer, recording data onto its network. That innovation was the essential ingredient behind decentralized finance (DeFi) and NFTs – the main catalysts of the most recent crypto boom.

The Merge retires Ethereum’s proof-of-work system, where crypto miners competed to write transactions to its ledger – and earn rewards for doing so – by solving cryptographic puzzles.

Most crypto mining today happens in “farms,” though they may be more aptly described as factories. Picture massive warehouses lined with rows of computers stacked on top of one another like shelves of books at a university library – each computer hot to the touch as it strains to pump out cryptocurrency.

This system, which was pioneered by Bitcoin, is what caused Ethereum to guzzle so much energy and is responsible for fueling the blockchain sector’s reputation as an environmental menace.

“My daughter and I spoke about NFTs a few months ago,” recalled Ben Edgington, a product leader at the Ethereum research and development firm ConsenSys. “At the dinner table I rather foolishly mentioned some NFT projects, and she was yelling at me, ‘How can you boil the oceans with this nonsense? This is terrible. I can't believe that you do this for a living.’”

Edgington, who began his career researching climate science before eventually landing in crypto, understood where his daughter was coming from. “Rightly or wrongly, she'd absorbed a very toxic environmental narrative,” he said. “I mean, it's kind of hard to defend ‘stickers for grownups’ that emit, by some estimates, a megaton of [carbon dioxide] a week.”

Hello, stakers

Ethereum’s new system, proof-of-stake, does away with mining entirely.

Miners are replaced by validators – people who “stake” at least 32 ETH by sending them to an address on the Ethereum network where they cannot be bought or sold.

These staked ETH tokens act like lottery tickets: The more ETH a validator stakes, the more likely one of its tickets will be drawn, granting it the ability to write a “block” of transactions to Ethereum's digital ledger.

Ethereum introduced a proof-of-stake network in 2020 called the Beacon Chain, but until the Merge it was just a staging area for validators to get set up for the switch. Ethereum’s transition to proof-of-stake involved merging the Beacon Chain with Ethereum’s main network.

According to Beiko, the energy consumption of proof-of-stake is “not even a rounding error in terms of environmental impact.”

“Proof-of-stake is like running an app on your MacBook,” he said. “It's like running Slack. It's like running Google Chrome or running Netflix. Obviously, your MacBook plugs into the wall and uses electricity to run. But no one thinks about the environmental impact of running Slack, right?”

Edgington pointed to the environmental impact of the Merge upgrade as the benefit he is personally the most excited about. “I feel very proud, you know, that I'll be able to look back and say I've had a role to play in removing a megaton of carbon from the atmosphere every week. That's something that meaningfully affects my family and others,” he said.

New incentives

Rather than a single piece of open-source software, the Ethereum network is better understood as a nation-state – a kind of living organism that comes together when a bunch of computers talk to one another in the same language, all following an identical set of rules.

Ethereum’s new system introduces a new set of incentives for the people operating these computers to follow the rules as written, thereby securing the ledger from any unwanted tampering.

“Proof-of-work is a mechanism by which you take physical resources and you convert them into security for the network. If you want your network to be more secure, you need more of those physical resources,” Beiko explained. “On proof-of-stake, what we do is we use financial resources to convert to security.”

Although Ethereum had thousands of individual miners operating and securing its proof-of-work network, computers from just three mining pools dominated a majority of the network’s hashrate, a measure of the collective computing power of all miners.

If a few of Ethereum’s big mining firms colluded to amass a majority of the network’s hashrate, they would have been able to execute a so-called 51% attack, making it difficult or impossible for anyone else to update the ledger.

In proof-of-stake, the amount of ETH one stakes – not the amount of energy one expends – dictates control over the network. Proof-of-stake boosters say this makes attacks more expensive and self-defeating: attackers can have their staked ETH slashed, or reduced, as punishment for trying to harm the network.

Not everyone buys into the proof-of-stake hype. There are no signs that Bitcoin, for instance, will ever abandon proof-of-work – which proponents insist remains the more battle-tested and secure system.

And although control of the Ethereum network will no longer be concentrated in the hands of a few publicly traded mining syndicates, critics insist that old power players will just be replaced by new ones. Lido, a kind of community-run validator collective, controls over 30% of the stake on Ethereum’s proof-of-stake chain. Coinbase, Kraken and Binance – three of the largest crypto exchanges – own another 30% of the network’s stake.

Skepticism around proof-of-stake fueled Chandler Guo, a prominent crypto miner, to announce in the lead-up to the Merge that he would launch a fork of Ethereum’s old proof-of-work chain – a clone of Ethereum’s blockchain that hums along using the old miner-based mechanism.

Ethereum’s core developers have generally derided proof-of-work forks as sideshows and scams, but Guo’s “ETHPOW” effort and others like it have gained modest traction in certain corners of the crypto community.

Trading the Merge

In crypto markets, the Merge had become an object of speculation since at least mid-July, with traders initially viewing the event as a catalyst for a steep rally in the price of ETH. The market for ETH options started pricing in post-Merge gains, a welcome respite following the crash in digital-asset markets earlier in the year.

The prospect of a fork of the Ethereum blockchain by irate crypto miners spurred a wave of new activity, this time as traders tried to lock in value from the theoretical airdrop of a new “ETHPOW” token.

In general, it is impossible to predict with certainty how the markets will react to a successful Merge. The upgrade has been on Ethereum’s roadmap since its inception, so there’s the possibility that it has already, by-and-large, been priced in by the market.

“I think if you asked me maybe about three weeks ago, I would say that not only is it priced in, it’s overly priced in,” said Kevin Zhou of Galois Capital. “Now the market is roughly 70/30 in favor of this being a positive event for ETH.”

What’s next?

“This is the first step in Ethereum's big journey towards being a very mature system, but there are still steps left to go,” said Vitalik Buterin, Ethereum's co-creator, as he reflected on the Merge during Thursday's viewing party. He went on to mention Ethereum's relatively high fees and slow speeds, which were not addressed by the update, but remain as much a barrier to growing the network's user base as environmental concerns ever was.

Buterin, Ethereum's most visible figurehead, previously outlined a set of next steps for the network that includes “sharding” – a method that should help address the network’s sluggish transaction times and high fees by spreading transactions across “shards,” like adding lanes to a highway.


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That upgrade was initially slated to accompany the transition to proof-of-stake, but it was deprioritized given the success that third-party solutions – called rollups – have had in solving some of the same issues.

Rollups foreshadow the likely future for Ethereum development, where community solutions – rather than updates to Ethereum’s core code – play the primary role in expanding the chain’s capabilities.

For Buterin, the Merge is just the beginning. “To me, the Merge just symbolizes the difference between early stage Ethereum, and the Ethereum we've always wanted … to become,” he said on Thursday's live stream. “So let's go build out all of the other parts of this ecosystem and turn Ethereum into what we want it to be.”

By Sam Kessler

 

PepsiCo ends Pepsi, 7UP production in Russia months after promising halt over Ukraine

(qlmbusinessnews.com via uk.reuters.com — Tue, 20th Sept, 2022) London, UK —

PepsiCo Inc (PEP.O) has stopped making Pepsi, 7UP and Mountain Dew in Russia nearly six months after the U.S. company said it would suspend sales and production after Moscow sent tens of thousands of troops into Ukraine.

Pepsi's announcement came after Reuters visited dozens of supermarkets, retailers and gyms in Moscow and beyond and found cans and bottles of Pepsi printed with July and August production dates from factories within Russia.

The most recent date on a Pepsi product was Aug. 17.


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In a statement to Reuters, the U.S. company said it had stopped making concentrates for PepsiCola, Mirinda, 7Up and Mountain Dew in Russia.

“All concentrates have subsequently been exhausted in Russia and production has ended,” a PepsiCo spokesperson said on Sept. 8, the first public comments on the matter since the company announced in early March it was suspending production, sales, promotional activities and advertising in Russia.

The spokesperson said this was “in line with the announcement we made in March 2022” but declined to comment when asked for an update on sales and whether they had been halted.

The continued production means sodas are still widely available in Moscow and also in Vladivostok in the far east and Krasnoyarsk in Siberia, according to a review by Reuters.

A gym owner in Moscow said it had placed an order with Pepsi as recently as mid-August.

The West has not sanctioned food and drink as part of sweeping measures aimed at punishing Russia over its actions in Ukraine.

But the continued availability highlights the complexity of withdrawing from one of the world's largest countries. In 2021, Russia was New York-based Pepsi's third-biggest market, after the United States and Mexico.

Earlier in the summer, shops in the capital were still selling off stockpiles of foreign beers, months after the brewers said they would halt production.

Atlanta-based rival Coca-Cola Co's (KO.N) production in Russia also continued after it said in March it would suspend operations.


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The company said in June its bottler, Coca-Cola HBC AG (CCH.L), a separate company, and existing customers in Russia were depleting stock, after which production and sales of Coke and other brands would stop in Russia.

PepsiCo in March said it would continue to sell daily essentials, such as milk and other dairy offerings, baby formula and baby food, in Russia. The company has operated in Russia for more than 60 years and its colas were one of the few Western products allowed in the Soviet Union prior to its collapse.

Reporting by Alexander Marrow in Moscow and Jessica DiNapoli

What’s closed and what’s opened on day of Queen’s funeral

(qlmbusinessnews.com via news.sky.com– Mon, 19th Sept 2022) London, Uk – –

Monday has been declared a bank holiday – meaning many businesses will shut their doors and many GP appointments have been postponed.

Many supermarkets, cinemas and schools will be closed on Monday as a mark of respect on the day of the Queen's funeral.

It has been declared a bank holiday – meaning many businesses will shut their doors and many GP appointments have been postponed.

A number of pub groups have said they will keep venues open during the day, with Stonegate saying it plans to show the Queen's funeral on screens when it starts at 11am.

A massive security operation will be in place during the funeral, and transport will be disrupted across the capital, with TFL saying it would be the “biggest event and challenge” in its history.

Retailers

Some of the biggest retailers will be closed or partially closed, so workers can pay tribute to the Queen.

Tesco, Sainsbury's, Morrisons, Lidl and Aldi were among those closing their supermarket stores for the day.

“We want to express our deepest condolences to the royal family, as well as our gratitude to Her Majesty the Queen for her unwavering service,” said Tesco's UK chief executive Jason Tarry.

Tesco said it would open its Express convenience stores from 5pm, while a small number of convenience stores in central London and Windsor will remain open.

Other retailers including Sainsbury's also said convenience stores and petrol stations will open from 5pm.

Asda said it will shut its stores for the funeral, but all its supermarkets will open from 5pm, with colleagues working on Monday evening to receive double pay.

Retailers including Primark and Marks & Spencer and cinema chains such as Cineworld and Odeon will shut for the day.

Waterstones said it would close all its bookstores.

McDonald's restaurants will be closed from midnight until 5pm, while Greggs said almost all of its outlets would be shut.

What stays open

Downing Street has indicated it would be up to individual businesses to decide whether to be open or shut.

The Prime Minister's spokesman said the day of the funeral will operate as “a standard bank holiday”.

“Obviously individual businesses will need to make the decisions about what's right for them and discuss with their employees but there is obviously no one-size-fits-all approach.”

Among businesses choosing to stay open are Premier Inn hotels.

JD Wetherspoon said pubs in central London, railway stations and airports would open from 8am on Monday, while most of its pubs will only open from about 1pm, after the funeral takes place.

 

Pound falls to its lowest in 37-year as retail sales slide

(qlmbusinessnews.com via bbc.co.uk – – Mon, 19th Sept 2022) London, Uk – –

By Michael Race

The pound has fallen to a new 37-year low against the US dollar after figures showed UK retail sales fell sharply in August as the rise in the cost of living continued to hit households.

The larger-than-expected drop in sales volumes of 1.6% prompted fresh concerns over the state of the economy.

Sales across all retail sectors fell in August as households cut back in the face of rising prices.

One analyst suggested the figures showed the UK is already in recession.

Sterling fell more than 1% against the dollar to $1.1351 at one point, its lowest since 1985, following the release of the retail sales figures. The pound recovered later to climb above $1.14.

The pound has been falling against the US currency for most of the year, partly due to the strength of the dollar. A weak pound means Brits travelling overseas will find their spending money will not stretch as far.

This comes at a time when UK inflation, which is the rate at which prices rise, is running at a near 40-year high, despite slipping to 9.9% from July's 10.1%.

The Bank of England has predicted the UK will fall into recession towards the end of this year and it is expected to keep increasing interest rates in a bid to curb inflation.

Olivia Cross, assistant economist at Capital Economics, said August's retail sales figures backed up the consultancy's view that the UK economy is “already in recession”.

A recession is defined by the economy getting smaller for two consecutive three-month periods.

“Retail sales will probably continue to struggle as the cost of living crisis hits harder in the coming months,” Ms Cross said.

“But nonetheless the Bank of England will still have to raise interest rates aggressively.”

Higher prices, along with upcoming energy bill rises in October, have led households to tighten their belts when it comes to spending.

The government announced the Energy Price Guarantee last week to help people with energy bills. The support will see annual energy bill for a typical household capped at £2,500 for two years.

Typical energy bills were set to rise to £3,549 a year and even higher in 2023, before the government intervened.

Ms Cross, of Capital Economics, said that because of the intervention, any recession would be “smaller and shorter” than it had expected previously.

Martyn Beck, chief economic adviser to the EY Item Club, said the government support “should ease both the income squeeze and lift consumers' sentiment, suggesting the outlook for retailers isn't as gloomy as could have been the case”.

“However, real household incomes are still on course for a significant fall over the next 12 months or so,” he added.

The government is expected to set out the estimated cost of plans to cap energy prices in a “mini-Budget” next Friday, as well as tax cuts pledged by Prime Minister Liz Truss in a bid to boost the economy.

Analysis: Faisal Islam

Sterling's fall to a fresh 37-year low against the dollar today is not isolated. The pound also hit its weakest level against the euro for nearly a year and a half.

So while the big picture movement is strength in the US dollar, there continues to be specific additional pressure on the pound sterling in international markets.

This morning's trigger was far weaker than expected retail sales figures. But markets await next Friday and the extent of borrowing required for the government's energy plan and tax cuts.

The eurozone too is heading for recession, but there is little comfort in such company.

The risk is that a weaker currency, makes imports of essentials, from energy to food, more expensive, prolonging the period of high inflation. And if the UK's nearest trading partners are also in recession, exporters will not see significant benefit from a weaker pound.

The fall in retail sales continues the slide since the summer of 2021, when all Covid restrictions were removed, the Office for National Statistics (ONS) said. The drop seen in August was the largest month-on-month fall since December 2021.

Sales of food, online, non-food and fuel all fell in the month, the ONS said.

Supermarkets' sales volumes also fell by 0.9% in August, but alcohol and tobacco sales rose by 6.3%.

“Feedback from retailers suggests that consumers are cutting back on spending because of increased prices and affordability concerns,” the ONS said.

Danni Hewson, AJ Bell financial analyst, said people were “clearly thinking hard about what they spend their money on”.

“It's just not stretching as far as it used to, and essentials have to come first. But even essentials are costing more and with the spectre of unmanageable fuel bills looming large people did the only thing they could, cut back,” she said.

According to the ONS, department stores saw a large drop in sales in August – 2.7% – while sales in clothing shops fell by 0.6%.

“Big ticket purchases are being put off and that's unlikely to change in the coming months,” said AJ Bell's Ms Hewson.

On Thursday, John Lewis revealed that while its shopper numbers were higher than last year, customers were spending less and avoiding buying as many “big ticket” items.

The department store and its supermarket chain Waitrose reported a loss of £99m for the first half of its trading year. Waitrose said it sales were down 5% on last year, with basket sizes shrinking by “nearly a fifth”.

Food prices have been increasing around the world following Russia's invasion of Ukraine, which has been one of the main factors pushing up prices at supermarket tills.

Meanwhile, the proportion of retail sales online fell to 25.7% in August from 26.3% in July, but the figure remains significantly above pre-pandemic levels.

 

Ethereum cryptocurrency completes plan to reduce its carbon emissions by more than 99%

(qlmbusinessnews.com via theguardian.com – – Thur, 15th Sept 2022) London, Uk – –

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Ethereum, the second largest cryptocurrency, has completed a plan to to reduce its carbon emissions by more than 99%.

The software upgrade, known as “the merge”, will change how transactions are managed on the ethereum blockchain, a public and decentralised ledger that underpins the cryptocurrency and generates ether tokens, the world’s most popular cryptocurrency after bitcoin.


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Vitalik Buterin, ethereum’s inventor, announced the completion of the plan on Twitter on Thursday morning, tweeting “Happy merge all”.

The move means that ethereum will no longer be created by an energy intensive process known as “mining”, where banks of computers generate random numbers that validate transactions on the blockchain and generate new ether tokens as part of the process. The process, known as “proof of work” in the cryptocurrency world, will now move to a “proof of stake” system, where individuals and companies act as validators, pledging or “staking” their own ether as a form of guarantee, to win newly created tokens.

Ethereum mining used up as much electricity as Austria, according to the Digiconomist website, at 72 terawatt-hours a year. Alex de Vries, the economist behind the website, estimates that the merge will reduce the carbon emissions linked to ethereum by more than 99%.

De Vries added that the move could represent 0.2% of the world’s electricity consumption disappearing overnight. However, he said bitcoin remained the biggest single contributor to the crypto world’s carbon footprint.

“All eyes will be on bitcoin. It remains the largest polluter in the crypto space. Even today bitcoin is responsible for as much electricity consumption as Sweden. And we know that’s not going to change,” said De Vries.


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Ethereum rose 2% to $1,630 (£1,417) after the move, according to website coinmarketcap, valuing the currency at just under $200bn. Bitcoin is worth $387bn, having fallen sharply from its peak of more than $1tn last year.

Carol Alexander, professor of finance at University of Sussex Business School, said the merge was a significant event for the crypto industry

“The merge is the most important event in blockchain history,” she said. “In my opinion, today marks the beginning of the end of bitcoin’s dominance over crypto assets. Ethereum is achieving something that bitcoin never could because bitcoin is a purely speculative asset and its mining network would never agree to drop that source of income.”

By Dan Milmo