Fidelity sees volatility, rising recession risk: Davos update

German Chancellor Olaf Scholz called for a broader international effort to isolate Russia and thwart President Vladimir Putin’s efforts to undermine the global order.

“This is an attempt to bomb us back to a time when war was a common political tool, when our continent and the world lacked a stable order of peace,” he said Thursday in a speech at the World Economic Forum in Davos, Switzerland.

The conflict in Ukraine has dominated the first in-person Davos gathering in two years. Surging inflation, energy security, food shortages and climate change have also been high on the agenda, as leaders grapple with an increasingly volatile world.

Key Developments

• The Reasons to Worry Just Keep Piling Up for Davos Executives
• Scholz Calls for Wider Alliance Against Putin to Thwart Russia
• Iran Tells Biden He Must End Trump Policies to Save Nuclear Deal
• Oil Market Balanced But Spare Buffers Run Low, Says Aramco
• Currency Slump, 132% Inflation No Cause for ‘Panic’ in Zimbabwe

All times CET:

Scholz Says Russian Victory Must Be Prevented (11:15 a.m.)

Germany’s Scholz said Russia’s invasion was not only threatening Ukraine’s existence but was also undermining an international order of rules-based cooperation. “That’s why our goal is very clear: Putin must not win his war. And I’m convinced: He won’t win it,” Scholz said.

Scholz’s plea comes as the European Union struggles to maintain a united front in talks over further sanctions against Moscow, and many emerging powers in Asia, Africa and South America show little readiness to criticize or even punish Russia over its invasion of Ukraine.

“Putin wants to return to a world order in which the stronger dictate what is right; in which not everyone is entitled to freedom, sovereignty and self-determination,” he said, adding that Germany would not accept peace dictated by the Kremlin.

Monkeypox Can Be Contained, Moderna Says (11:10 a.m.)

Moderna Inc. Chief Executive Officer Stephane Bancel said he believes the current monkeypox outbreak can be contained as health officials around the world respond swiftly to a rise in cases. The chances of it becoming another pandemic are close to zero, he said in a Bloomberg TV interview.

The company is working on a potential vaccine candidate in the labs just in case, he said. Bancel also said that people in many parts of the world are too complacent about Covid and that he’s worried in particular about China, adding that its policy isn’t sustainable. “The only way out is having a high-efficacy vaccine,” he said.

Citigroup’s Dickson Says US Stocks Needed a Correction (9:30 a.m.)

US equity markets were probably overvalued before this year’s slump and the Federal Reserve’s tighter monetary policy “appears to be more right than wrong,” according to Tyler Dickson, Citigroup’s global co-head of banking, capital markets and advisory.

“Their actions have had a cooling effect, which we think was necessary in order to address the substantial concerns about inflation,” Dickson said in an interview. “There was a need for an equity-market correction.”

Risk of Recession Higher, Fidelity Says (9 a.m.)

The risk of a recession has increased and markets are likely to remain volatile, Fidelity International Chief Executive Officer Anne Richards said.

“The risk of a recession has unquestionably gone up,” Fidelity’s Richards said in an interview with Bloomberg TV. “If the backdrop of the economic environment accelerates in a downward direction, I think you could see more volatility in markets.”

Rio Tinto Says Iron Market ‘Balanced’  (8:45 a.m.)

Jakob Stausholm, the chief executive officer of Rio Tinto Group, said the iron-ore market is currently well balanced as strong physical demand for the steelmaking ingredient is offset by China’s Covid-19 curbs.

“There’s no doubt that the fight against Covid in China has had an impact, very short term, on the Chinese economy, but China seems very determined to meet their growth targets and are right now accelerating their infrastructure investments,” Stausholm told Bloomberg TV. “Right now there is quite a good balance. There is not too much demand, there’s not too much supply.”

Illy Says Coffee Unlikely to Fall This Year (8:30 a.m.)

Coffee prices are unlikely to decline before next year, Andrea Illy, the chairman of Illycaffe SpA, told Bloomberg TV.

“I don’t see the conditions for the price to come down in the next 10 months, it probably will be mid 2023 before the price will start to come down, if nothing happens in the meantime,” Illy said. Prices of coffee are twice as high as they used to be a little bit more than one year ago, as a consequence of the frost and drought in Brazil, which destroyed 10% of the plants and compromised another 20% of the production, according to Illy.

Business Cards Make Way for QR Codes (8 a.m.)

The last rites have been read for the humble business card before but this time could be serious. At the networker’s ultimate playground in Davos, not only have the ski boots been jettisoned in the spring sunshine but printed paper cards have been replaced by QR codes. Some delegates haven’t stocked up at all, punching an app on their phone and waving it front of their contact’s mobile instead. Not only does it save paper but it spares users any tedious typing.

While WhatsApp and WeChat promise to make the QR code ubiquitous, some can’t bring themselves to let old habits die. “I had business cards made especially for this event,” Saeju Jeong, co-founder and CEO of health app Noom Inc. “I’ve already given out 40% of what I brought, so maybe I should have brought more.” While he didn’t have business cards before, he might be a late convert: “I like it,” he said. “It’s the formality — people exchange their cards. It’s kind of like a souvenir for me.”

Remote Working Can Hurt Office Relations (8 a.m.)

Working from home can poison office relations because communicating virtually requires far more empathy than meeting a person in real life, according to the chief executive of the real estate group Jones Lang LaSalle Inc.

Christian Ulbrich said in an interview that one reason staff should return to the office at least three days a week is because “conflicts are much easier resolved when people are together.” He said he had learned from experience that it is easy to upset people accidentally on video calls.

Experts Highlight Benefits of Shorter Week (8 a.m.)

Labour experts highlighted how flexible work can help retain talent and lead to greater productivity and well-being in the workforce. “The flexibility people want most at work is not choices about where they work, it’s when and how much they work,” said Adam Grant, an organizational psychologist at the Wharton School at the University of Pennsylvania.

After the United Arab Emirates introduced a shorter work week earlier this year, around 70% of employees reported working more efficiently and spending more time with their families, while there was a 55% reduction in absentees, according to the country’s minister for government development and the future.

Cambodia Hails US Ties, Seeks Sanctions Relief (7:45 a.m.)

Cambodia said ties with the US have improved significantly and it expects the Biden administration to lift sanctions imposed over its relations with China “very soon.”

“We’re pushing very hard,” Kao Kim Hourn, Cambodia’s minister delegate to the country’s prime minister, said in an interview, referring to negotiations over sanctions. “This is the best point we’ve had in our relationship in the past 72 years.”

Zimbabwe ‘Not in Panic Mode’ Over Inflation (7:20 a.m.)

Zimbabwe is taking measures to tackle an inflation rate that’s rocketed to 132% after the national currency slumped, according to Finance Minister Mthuli Ncube. The country is looking at strategies such at climate-proofing agriculture and has used gold and platinum to secure credit.

“We are not in panic mode,” Ncube told Bloomberg Television. Zimbabwe has social protection to feed the hungry, and international institutions such as the African Development Bank are on the ground, working with the government and supporting the vulnerable population, he said.

Dutch May Join Wheat Escorts for Ukraine (7 a.m.)

The Netherlands would consider joining an alliance to send warships to escort grain supplies stuck in Ukrainian ports but would need assurances from Russia and, ideally, involvement from Turkey, Dutch Defense Minister Kajsa Ollongren told Bloomberg.

Establishing a so-called sea corridor would need a “real assurance” from Russia that it would cooperate and allow ships to travel given the presence of mines as well as their ships in the Black Sea, she said. It’s also important that Turkey be involved given its proximity and because of its efforts to maintain dialog with both Ukraine and Russia, she added.

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