- Ever Given Ship Mostly Freed in the Suez Canal
- Block Selling Effect in Global Markets
- Attention is on Biden’s New Spending Package
Ever Given Ship Mostly Freed in the Suez Canal
The ship Ever Given, which blocked the Suez Canal, was partially re-floated this morning, and the first step was taken for the canal’s opening.
“The container ship began to float successfully after responding to the pulling maneuvers,” said Osama Rabie, head of the Suez Canal Authority (SCA), in a phone interview with state TV. “Once the ship is withdrawn, we will resume navigation directly, and we will take it to the Bitter Lakes.”
It is stated that while the issue of when the traffic will start again in the channel is still uncertain, there is damage to the hull of the ship, and it is not known when it can be lifted from the road for the passage of other boats.
Evergreen’s ship Ever Given had been blocking the canal since Thursday last week. Rescuers tried to remove the boat from where it was provided in the sand using trailer and scanner ships.
As soon as the ship is removed from the canal, the authorities will begin work to reopen the channel used for 12% of world trade. It is estimated that at least 450 ships are in line to cross the canal.
The crisis has forced companies to choose between waiting or rerouting vessels around Africa, which adds a huge fuel bill, 9,000 kilometers (5,500 miles), and over a week of travel to Asia and Europe. According to a study published Friday by German insurer Allianz, each day of the blockade could be costing global trade some $6-10 billion.
In addition, oil prices declined as the giant ship was partially floated by rescue teams and investors focused on extended quarantines.
Futures contracts lost around 2.5 % in the New York market, while Brent oil fell. While crude oil prices were affected by high volatility in the last sessions, West Texas Oil followed a volatile course last week. Abu Dhabi will issue a new oil futures contract to create a regional indicator. Considering that one-fifth of the world’s oil will be priced on this contract, the importance of such a move can be better understood.
”Considering the Suez and OPEC + uncertainties, we can see large fluctuations and increases in intraday volatility. I don’t think the Saudis or OPEC + will risk increasing production after the oil price drop with the ship’s bailout,” according to Vandana Hari, Founder of Vanda Insights.
West Texas Oil for May futures trades on the Nymex market, down 2.4% at $59.54 a barrel. Brent oil for May settlement stands at $63.25 a barrel on the London ICE Futures Europe market, down 2%.
Block Selling Effect in Global Markets
The impact of Bill Hwang, who was behind the $20 billion sales in global markets on Friday, continues to be effective on the first trading day of the week.
Due to Hwang’s call to complete collateral, significant sales of shares showed themselves in global markets, especially in US stock futures. The S&P 500 futures, which rose 1.7% on Friday, fell 0.6% in initial transactions. This effect was not seen in Asia.
As the rescue team rescued the Ever Given ship from the Suez Canal, the drop in oil prices accelerated. While the Bloomberg Dollar Index recorded a limited increase, the Mexican peso led the losses in developing countries’ currencies. US 10-year bond yield fell two basis points daily to 1.66 %.
The mysterious investor behind the global $20 billion deal on Friday was Archegos Capital Management founder Bill Hwang. A person at Archegos who answered the phone on Saturday declined to comment. Archegos was founded by Bill Hwang, who founded and ran Tiger Asia from 2001 to 2012, when he renamed it Archegos Capital and made it a family office, according to a page capture here of the fund’s website. Tiger Asia was a Hong Kong-based fund here that sought to profit on bets on securities in Asia.
According to Bloomberg’s report, banks, including Morgan Stanley and Goldman Sachs, forced Hwang to sell shares after some positions acted against him. Among the shares sold, American and Chinese media companies such as Viacom CBS, Discovery, Baidu and Tencent Music stood out. It was stated that the effects of the giant sale, which was triggered by the margin call, continued.
Morgan Stanley wanted to sell a large amount of Viacom CBS shares on Sunday, Bloomberg reported. The volume of shares subject to sale was more than $2 billion compared to Friday’s closing. On the other hand, Nomura suffered severe damage from Archegos related transactions. Nomura’s shares fell 15 % after the warning of loss.
Goldman, on the other hand, drew attention as the key player in the Hwang affair. Hwang accepted the crime of “insider trading” in 2012 and was on its blacklist. But with the attractiveness of tens of millions of dollars of commission income, Goldman removed Hwang from the blacklist.
Attention is on Biden’s New Spending Package
US President Joe Biden expected to announce a multi-trillion-dollar spending plan Wednesday. Additionally, Biden is expected to announce the framework of Pittsburgh’s infrastructure and employment program this week. Biden will also discuss the 2022 budget, where federal funds will be directed towards climate change and health, and the first details of Biden’s national spending plans will also come to light.
Biden will have to convince the public and lawmakers for a multi-trillion dollar infrastructure and social safety net.
“Successful presidents — better than me — have been successful in large part because they know how to time what they’re doing,” Biden said Thursday when asked why he was pursuing the massive spending package instead of other legislative priorities, such as gun control. Infrastructure is “the place where we will be able to significantly increase American productivity, at the same time providing really good jobs.”
Biden announced that tax policy changes would also be planned to support the $3 trillion long-term program. It is unclear whether the details will be revealed on Wednesday. White House spokesperson Jen Psaki told Fox News that Biden would announce its infrastructure plan this week, while social support such as healthcare and childcare will be announced at the end of April.
Republicans oppose Biden’s program over tax increases before the plan is announced. It is stated that some Democrats may also oppose due to concerns that the budget deficit will increase and high spending. The ‘Just Democrats’ demanded $2 trillion for climate change initiatives alone, while the ‘Green Sunrise Movement’ called for $1 trillion in investment and a $10 trillion annual budget for infrastructure and climate change efforts. Some lawmakers are also pressing for an expansion of health insurance.
White House Economic Advisor Cecilia Rouse stated that investments in infrastructure and workforce are needed to support productivity and employment growth, and that is their current focus.
After the changes to be made, a familiar situation may occur for those following Washington: If there is no consensus on spending, the risk of the government shutdown may come to the agenda on October 1, the start of the new fiscal year.