Finance

The outcry was immediate. On August 11th Itamar Ben-Gvir, Israel’s minister of national security, said that his country could permanently occupy the Gaza Strip. “Sanctions,” Josep Borrell, the EU’s foreign-policy chief, hit back, “must be on the agenda”. It was unclear whether Mr Borrell meant they would be placed on Mr Ben-Gvir or Israel itself; either way, European support for measures targeting Israel is growing. A few months ago Micheál Martin, Ireland’s foreign minister, and a supporter of sanctions, said that his colleagues were beginning to consider the question of “what if” they went for them. More

Over the past year-and-a-half inflation has fallen sharply across the rich world. Although some central banks have now begun to cut interest rates, few are yet ready to pat themselves on the back for a job well done. In many countries the core rate of inflation, excluding volatile energy and food prices, remains uncomfortably high—at 3.2% in America and 2.9% across the euro zone—even as underlying economies show signs of slowing and financial markets become increasingly jittery. The marathon task of returning price growth to more normal levels is not quite finished. And the last mile, as so often, is proving the toughest. More

Many governments live in fear of bond-market “vigilantes”, investors who punish errant policies by aggressively selling the sovereign’s debt, driving down its price and thereby pushing up its yield. Financial regulators also worry about bond-market malfunctions, such as unsettled trades, when one party to a transaction fails to honour its promises. These mishaps can send ripples of anxiety through an entire financial system. More

UBS CEO Sergio Ermotti said Wednesday that market volatility could intensify in the second half of the year, but he does not believe the U.S. is heading into a recession.
Global equities saw sharp sell-offs last week as investors digested weak economic data out of the U.S. which raised fears about an economic downturn in the world’s largest economy.
UBS expects that the Federal Reserve will cut rates by at least 50 basis points this year.

Sergio Ermotti, chief executive officer of UBS Group
Stefan Wermuth | Bloomberg | Getty Images

ZURICH, Switzerland ꟷ UBS CEO Sergio Ermotti said Wednesday that market volatility could intensify in the second half of the year, but he does not believe the U.S. is heading into a recession.
Global equities saw sharp sell-offs last week as investors digested weak economic data out of the U.S. which raised fears about an economic downturn in the world’s largest economy. It also raised questions about whether the Federal Reserve needed to be less hawkish with its monetary policy stance. The central bank kept rates on hold in late July at a 23-year high.

When asked about the outlook for the U.S. economy, Ermotti said: “Not necessarily a recession, but definitely a slowdown is possible.”
“The macroeconomic indicators are not clear enough to talk about recessions, and actually, it’s probably premature. What we know is that the Fed has enough capacity to step in and support that, although it’s going to take time, whatever they do to be then transmitted into the economy,” the CEO told CNBC on Wednesday after the bank reported its second-quarter results.

UBS expects that the Federal Reserve will cut rates by at least 50 basis points this year. At the moment, traders are split between a 50 and a 25 basis point cut at the Fed’s next meeting in September, according to LSEG data.
Speaking to CNBC, Ermotti said that we are likely to see higher market volatility in the second half of the year, partially because of the U.S. election in November.
“That’s one factor, but also, if I look at the overall geopolitical picture, if I look at the macroeconomic picture, what we saw in the last couple of weeks in terms of volatility, which, in my point of view, is a clear sign of the fragility of some elements of the system, … one should expect definitely a higher degree of volatility,” he said.

Another uncertainty going forward is monetary policy and whether central banks will have to cut rates more aggressively to combat a slowdown in the economy. In Switzerland, where UBS is headquartered, the central bank has cut rates twice this year. The European Central Bank and the Bank of England have both announced one cut so far.
“Knowing the events which are the unknowns on the horizon like the U.S. presidential election, we became complacent with a very low volatility, now we are shifting to a more normal regime,” Bruno Verstraete, founder of Lakefield Wealth Management told CNBC Wednesday.
“In the context of UBS, [more volatility is] not necessarily a bad thing, because more volatility means more trading income,” he added. More

Just ignore it. That, in short, is the advice given to retail investors when stockmarkets convulse, as plenty have over the past few weeks. Watching hard-earned savings disappear in a flash tends not to promote a cool head. So do not check your portfolio, do not tot up your losses and, above all, do not decide that now is the time to overhaul your entire investment strategy. Simply wait for the storm to pass and for share prices to resume their long march upwards. More

In just 10.5 minutes, Zeekr’s new batteries can go from a 10% to an 80% charge, using the automaker’s ultra-fast charging stations, the U.S.-listed electric car company said Tuesday.
Tesla’s Model 3 can recharge up to 175 miles in 15 minutes, or about 48% of the stated 363 mile-range, according to the company’s website.
Zeekr said its 2025 007 sedan, which is set to begin deliveries next week, will be the firm’s first model to use the new batteries.

The New York Stock Exchange welcomes Zeekr Intelligent Technology Holding Limited in celebration of its initial public offering on May 10, 2024.

BEIJING — Chinese electric car brand Zeekr announced new batteries on Tuesday, which it says boast the fastest charge in the world.
The offering aims to address consumers’ long-standing worries about battery driving range and ease of charging.

In just 10.5 minutes, Zeekr’s new batteries can go from a 10% to an 80% charge, using the automaker’s ultra-fast charging stations, the U.S.-listed company said. Zeekr said that the new battery could achieve the same charge performance even in negative 10 degree Celsius (14 degrees Fahrenheit) weather in about 30 minutes.
Comparatively, Elon Musk’s Tesla says its supercharger allow the company’s vehicles to charge up to 200 miles in 15 minutes.
The company’s website says the Model 3 can recharge up to 175 miles in 15 minutes, or about 48% of the car’s stated 363 mile-range.
Chinese automaker Nio has also offered the alternative of a three-minute battery swap. The subscription service automatically changes out the battery of designated car models with a charged one at specific swap stations.

Zeekr said that its 2025 007 sedan, which is set to begin deliveries next week, will be the first model to use the new batteries.

The company noted it has opened more than 500 ultra-fast charging stations in China and plans to double that tally by then end of this year. Zeekr aims to operate more than 10,000 ultra-fast charging stations in 2026.
The Geely-owned electric car company delivered a record number of vehicles in June, making its deliveries for the first half of the year the largest among U.S.-listed Chinese companies that only sell pure electric cars. Deliveries fell slightly in July. More

Across the world worries are mounting about the economy. In America and Canada unemployment is rising, while consumer sentiment remains depressed. Europe continues to flirt with recession. Don’t even mention China. Yet there is one place where the mood is quite different. Despite fierce sanctions and pariah status, Russia’s economy is growing strongly. It turns out that bacchanalian spending, at a time of war, really juices an economy. More

The Olympic Games, as well as other mega events like Taylor Swift’s Eras Tour, produce sudden demand shocks in local economies that can appear to boost inflation, UBS says.
However, these mega events may not actually increase the cost of living for the local population.
The Paris Olympics has boosted demand — and prices — in various industries, including hotels and airlines.

A general view of the Eiffel Tower with the Olympics rings pictured with national flags of competing countries from the Place du Trocadero ahead of Paris 2024 Olympic Games on July 21, 2024 in Paris, France.
Kevin Voigt | Getty Images Sport | Getty Images

The Olympic Games are causing a surge in prices, but French consumers aren’t likely to feel its pinch.
Mega events like the Olympics, or even big concerts like Taylor Swift’s Eras tour, lead to a rise in demand for hotel — rooms and airline tickets, as well as other goods and services needed by the influx of visitors. Even so, most consumers may not feel the impact, according to UBS. 

Still, the data might suggest otherwise. That’s because the method for calculating consumer price changes might pick up the spiking costs in industries associated with tourism — like hotels — and provide a distorted impression.
“The Olympic Games or a Taylor Swift concert create a sudden demand shock,” wrote Paul Donovan, chief economist at UBS Global Wealth Management, in a recent analyst note. “The measurement method for these prices is more likely to capture the unusual and transitory pattern of demand, and it is here that the increase in consumer price inflation takes place.”

Taylor Swift performs onstage during The Eras Tour at Wembley Stadium on June 21, 2024, in London.
Kevin Mazur | Getty Images

This was already seen with the Eras Tour, as it boosted hotel revenue in cities across the U.S. where Swift was performing.
This year, U.K. hotel prices increased in June, but Donovan said the higher costs “may have been borne by a select group of aficionados of Swift’s music” given that the Eras Tour came to Wembley Stadium that month.
Meanwhile, the Summer Games are causing a similar phenomenon in Paris. “The tourists flocking to Paris for the Olympics, and paying the price, are not representative of French consumers,” he wrote.

A Parisian hotel boom?

Though hotels in the City of Light struggled in the beginning of July, with an estimated 60% drop in occupancy rates that prompted hotels to discount rates, the trend during the Games has reversed. Paris hotel occupancy levels during the Olympics, which started on July 26 and run until Sunday, are up versus last year, according to global real estate data company CoStar. But in the days after the closing ceremony, Paris hotel bookings are projected to drop from a year ago.

The city’s hotel industry has also seen massive year-over-year price increases. For each day during the first full week of this year’s Games from July 28 until Aug. 3, CoStar found a 206% year-over-year growth in weekly revenue per available room. That was fueled by a 17.4 percentage point rise in occupancy to 85.4% as well as a gain in the average daily rate (ADR) of 143%.
The Paris tourist office expects an occupancy rate of 86% from Aug. 5 through Sunday.
A notable price surge has also been seen in other parts of France. In the surrounding Île-de-France region, CoStar found that ADR grew 83.4% in the week ended July 27 from a year ago. At the same time, Paris occupancy fell 5.7 percentage points year over year, while ADR jumped by 90.8%.
“Is your average French person looking to stay in Paris at the moment? No, they are absolutely not, not unless they’re insane or going to the Olympics,” he told CNBC in an interview. “Most of them are unaffected by the surge in prices.”

Olympic gains

That said, the Games are drawing huge numbers of tourists. During the first week alone, the Paris tourist office reported 1.73 million visitors in Greater Paris, an 18.9% increase from 2023.
Of these, 924,000 were international tourists — about a 14% uptick from last year — with the largest number of foreign visitors coming from the U.S. French tourists coming to the city rose 25.1% to 803,000 from last year.
In all, the tourist office has estimated a total of 15.3 million visitors for the Olympic and Paralympic Games, with 11.3 million for the former and 4 million for the latter.

Tourists take selfies in front of the Arc de Triomphe on July 07, 2023 in Paris, France. Paris will host the Summer Olympics from July 26 till August 11, 2024. 
Matthias Hangst | Getty Images Sport | Getty Images

This comes as the Games tally record ticket sales. The Paris 2024 Organizing Committee recorded that a combined 10.6 million tickets have been sold or allocated for the Olympic and Paralympic Games so far, with at least 9.4 million for the Olympics and at least 1.2 million for the Paralympics. The previous record was held by the 1996 Atlanta Games at 8.3 million sold or allocated.
“What you find quite often is that tourism unrelated to the Olympiad falls off the edge of a cliff,” Donovan told CNBC, adding that this is what differentiates it from the Eras Tour and other mega events. “It’s a demand shock, but it’s a narrowly focused demand shock, which is sort of the problem on the inflation side, because you’re creating a concentrated period of absolutely supernormal demand. The pricing mechanism goes bananas basically.”
Demand fluctuations have also been seen in other related areas of the Parisian economy, such as the airline industry. Despite some airlines forecasting declines in third-quarter revenue as a result of less traffic to Paris this summer, recent Visa data shows flight bookings to the city have increased 39% in the period leading up to the Olympics over the year-ago period.

Tourists pass near a banner with the Paris 2024 logo before the start of the Paris 2024 Olympic and Paralympic Games on June 17, 2024 in Paris, France. 
Chesnot | 

Small businesses across the city have also seen gains. Visa found that those businesses received a year-ove-year sales boost of 26% from cardholders in the Games’ first weekend.
While the long-term economic impact of the Paris Olympics is still uncertain, Donovan expects that “on balance it will probably be a positive,” citing past Games that have seen tourism booms like Barcelona in 1992. “If you get it right, it can be a boost,” he said, noting that Summer Olympics tend to garner more attraction than the Winter Olympics in general.
Paris 2024 may generate as much as $12 billion, or 11.1 billion euros, in long-term economic impact, a recent study from the Centre for Law and Economics of Sport estimated. The International Olympic Committee said the next two Summer Olympics could see even more value being created.

“What we see is that the economic impact of the Games is very substantial,” said Christophe Dubi, the Olympic Games executive director. “This is an injection of resources in the local economy that leaves a profound impact now and in the future.”
The IOC’s Agenda 2020 reforms have helped the events become more sustainable economically, according to Victor Matheson, an economist and professor at the College of the Holy Cross.
This will be the first Summer Games projected to cost under $10 billion since Sydney 2000. Money was saved by having 95% of the venues be preexisting or temporary and the strategy could mark a “turning point” for the the Olympic movement, Matheson said.
“The IOC has allowed Paris to come through with an Olympics that doesn’t build these billion-dollar monuments at the Olympics and doesn’t gold-plate everything there,” he said. “Those sorts of things that can drive up costs pretty quickly, they don’t appear to be pushing that.”
Disclosure: CNBC parent NBCUniversal owns NBC Sports and NBC Olympics. NBC Olympics is the U.S. broadcast rights holder to all Summer and Winter Games through 2032.

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