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May 2nd - The BESA Times

Fifty-second Edition - Monday, 23rd Every week, a complete snapshot of what happened around the world in the past seven days


Last week, Emmanuel Macron and Angela Merkel met Donald Trump in Washington. The two visits took place a few days before May 1st, when the exemption from steel and aluminium tariffs granted to the EU expires. The two European leaders confronted the US President on several issues: the Iranian nuclear deal, the Paris agreement, NATO military spending and, of course, trade tariffs. Little progress was made, if any. Washington has reaffirmed its stance against the Paris agreement in the foreseeable future, and still considers necessary a major overhaul of the agreement with Iran. As far as trade is concerned, Chancellor Merkel did not manage to persuade President Trump to postpone the exemption deadline; Brussels will now have to choose between taking in the tariffs or accept quotas on the same goods (even if the latter option is against the WTO principles). On the NATO front, Merkel accepted to increase German military spending; however, the 2% GDP target will not be met in the foreseeable future.

On Friday 27th, the leaders of North and South Korea met for a historical summit in Panmujom, a small village close to the border. There had only been other two summits of this kind since the armistice was signed in 1953. Mr Moon and Mr Kim produced a joint statement in which they pledged to work for the complete denuclearisation of Korea and the official end of the war. However, no specific policy was agreed on and the North Korea’s state media played down the significant progress made, especially as the nuclear issue is concerned. The White House declared that a summit between Kim Jong Un and Donald Trump will take place conditionally on concrete and verifiable actions by Pyongyang towards denuclearization.


What to remember of last week's news?

The Serbian president Vučić has opened up to an agreement with Kosovo, a former province of the country that proclaimed independence in 2008. In a recent interview, he has argued that there is a window of a year to close a deal. Belgrade has never recognized the new State and still considers the territory its own. The deadlock has also stalled the progress towards EU membership for both countries; the recent declaration may be an attempt to flatter Brussels. Despite his close ties with Moscow and his alleged control over the media, Vučić is seen by European leaders as the pivotal figure for the access of Western Balkan countries to the Union.

WeWork made its entrance in the bond market on Wednesday 25th, raising $700 million of unsecured notes expiring in 2025 ($200 million more than expected), at a yield of 7.875%. The provider of shared office space is planning an expansion into education and needed to diversify its capital structure. The company, which operates without directly owning its workspaces – following an asset-light model – is growing at a remarkable pace. However, last year’s 98% increase in revenue was outpaced by the doubled net loss. The seven-year notes have a 56bp spread on Tesla’s comparable securities. This might be due to investors’ wariness over the quirky, non-GAAP accounting metrics the firm uses, such as the ‘community-adjusted EBITDA’ - according to which WeWork would, in fact, be profitable.


Understand in Pictures

Amazon has a larger market capitalization than the other 13 biggest global retailers combined. The outstanding figures for the first quarter of 2018 led its shares to an all-time high on April 27, when it leapt 7% on the day to reach $ 1,617.54 . The company, which keeps pursuing an aggressive expansion and investment policy, is set to increase even further revenues and income throughout 2018.


Did you know?

India has been suffering a scarcity of cash for quite a long time. In November 2016, the prime minister Modi unexpectedly declared void most of the paper currency, in an attempt to contain corruption and money laundering. The following injections of bank notes have not managed to keep up with the demand of paper rupees, since the population has not shifted to digital transactions as hoped. As of today, many ATMs are empty, and the banking system has restricted withdrawals from accounts. Throughout the country, discontent is growing, as most jobs operate almost entirely in cash. Should the cash crunch continue, it would deeply affect the Indian economy and the popularity of Modi’s administration.


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What to expect for next week:

On May 2 the EU Budget Commissioner will present his proposal for the 2021-2027 Multiannual Financial Framework. It will be the basis for the negotiations over the next long-term union budget, the first which will not include the UK contribution – € 12 to €13 billion per year. The final document will be ratified before the European Parliament elections, a year from now. On the same day, a new round of Brexit talks will begin in Brussels.





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