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Lillian McKenna

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Everything posted by Lillian McKenna

  1. According to Rick Perry, the U.S. Energy Secretary, the U.S. is preparing a set of sanctions against the companies participating in the Nord Stream 2 project backed by Germany and Russia. President Trump has been against the building of the gas pipeline, which started in 2015 and is expected to be completed later this year and will increase Germany’s reliance on Russian gas exports. The sanctions will be ready soon and will impose punitive restrictions on all companies involved in the project. The Nord Stream 2 project is supported by Germany, which has touted it as the solution to securing Europe’s growing energy needs given Russia’s massive natural gas resources. However, other European countries neighboring Russia and along the Baltic Sea have opposed the project saying it’s a security threat. Many of the project’s opponents say that the new pipeline will make the European Union extremely dependent on one gas supplier, which in this case is Russia, which is a long-term enemy of the U.S. Critics say that Russia could use the pipeline to hold European countries hostage by cutting off gas supplies in case of diplomatic spats or other confrontations.
  2. According to a recent lawsuit filed by American Airlines Group Inc. (NASDAQ: AAL), ongoing ‘slowdowns’ by its mechanics will disrupt the travel plans of about 3,400 more passengers each day during the summer months. This will be a major inconvenience for the affected US air passengers who may have to reschedule flights and hotel bookings during the summer months. The ‘slowdown’ has been going on since February and has so far caused 1,500 maintenance delays and 650flight cancellations, which could cripple the airline if the situation worsens. A similar situation was recently resolved by Southwest Airlines, which reached an agreement in principle with its mechanics who were also on a go-slow for several months. The airline believe this is an illegal negotiation tactic given that it has been in talks with mechanics unions for several years on labor-related issues. Most airlines have been operating with lower margins for years given higher fuel prices and this has made it very difficult for the management teams to effect salary and benefit hikes.
  3. The recent imposition of the FX settlement delay by the Banking Regulation and Supervision Agency did not benefit the lira immediately as it fell slightly against the US dollar. However, this move could scare away investors who might interpret it as a move towards stricter capital controls in the country. As much as the Turkish government wants to boost the lira, which has fallen over 35% against the US dollar since last year, they should be careful not to derail the country’s economy. President Tayyip Erdogan’s government has been accused of stifling dissenting voices under the guise of securing the country from another coup attempt, but this has raised concerns in the west. Turkey’s economy remains shaky as the current administration openly concentrates power among President Erdogan closest associates and family members. The FX settlement delays may result in a much weaker lira over the long-term as direct inflows of foreign capital decline as investors shy away from the country.
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