Turning up the heat – Qatar’s credit rating is cut plus business and economy news

Turning up the heat - Qatar's credit rating is cut
Image: Doha, Qatar

Who will blink first in this dispute, and how damaging could it be for Fatah– Qatar’s economy and the region?

Countdown to Comey. The former FBI Director will offer testimony about Trump and Russia, but could it damage Mr Trump’s position?

And investors worldwide are watching the UK electionWhen we say politics free, we do refer to the UK election and not the politicking going on at the moment in the Middle East.

The news in details:

We start in the Gulf state of Qatar, where concerns are growing about the economic fallout after neighbouring Arab states cut off diplomatic and trade ties over its alleged support of terrorist groups, something Doha denies.
Late Wednesday, top credit rating agency Standard and Poors cut Qatar’s credit rating, with a warning its stock market is down almost 10% in the last three days, and its currency is at an 11-year low.

Turning up the heat - Qatar's credit rating is cut
Image: Doha, Qatar

Qatar is a tiny nation, but it’s a very important. It has one of the world’s largest reserves of natural gas. It has seen exports of its liquefied natural gas or LNG. That’s made the state phenomenally wealthy. It has built up one of the world’s biggest sovereign wealth funds,

It’s used that money to buy assets across the globe. They range from Paris Saint-Germain football club to big stakes in Volkswagen, Russian oil giant Rosneft and commodities trader Glencore to Britain’s Barclays Bank.

Not to mention millions of square metres of London, including Canary Wharf, the Shard and Harrods. The success of Qatar Airways has made it a major aviation hub. But more than 50 flights a day have been grounded and it’s a huge employer of migrant workers, many of whom are working families from India to the Philippines depend. There are half a million workers from India alone in Qatar.

Why is Qatar looking increasingly isolated? This is because of long years of tension between Qatar and its neighbouring countries, like Egypt. We started seeing these problems that in 1985, when we had an attempted coup. We have been watching a lot of these tensions over the last few weeks increase, over the foreign policy, through mostly soft power but of course the fact that these measures; are taking place today, and to such an extent that it shows us that maybe a change from a US president with to the region could also have been the main trigger for such a large move from these countries.

Millennium HotelThere were some similarities with hot what happened in 2004, then, but it strikes me that this time it is more severe. We have had a lot of talks between these countries about Qatar’s foreign policy, that was more of a short-term spat, but this time we are seeing unprecedented levels of measures, so different in terms of the extent and the pressure they will put on the economy.

So what does it mean day-to-day for the economy and people living in Qatar? A few factors are important. The first one, you have seen already some shortages within the economy, it is very much import dependent, so we will see domestic prices increasing, but also economic activity in the country depends on imports as well so we will be seeing a halt in the construction activity.

Qatar Airways as we have mentioned as well. But most importantly we will see precious on the peg to the dollar. — we will see pressure on the peg to the dollar.

They do have reserves to maintain the peg, but as this conflict last longer, we will set pressure on liquidity within the banks. And as Sally outlined, so many investments from Qatar around the world, it has been active in spreading the wealth around the world so it has a diverse economy.

How long does this crisis last? No one really knows. But what are those ripple effects around the world? It is going to be very hard for the Qatari authorities to prove to these countries that there will be a change in policy.

They are asking for a very big change, so you have to make a big move to showcase and prove that the foreign policy is going to change and that will be quite difficult from Qatar’s 
perspective. So this might last a little longer than we saw in 2014. 
We mentioned some of the investments within the world, but also a lot of investment in the region, from Turkey to Egypt, so some of them are in projects that can’t be moved out, but the liquid ones that are mostly in stocks can be pulled, and we could see that if this lasts much longer.

Chinese economy
Image: Chinese Ship

On the other hand, China’s imports and exports were up strongly last month. Exports in May rose 8.7% compared to the year before.

The latest official trade figures gave the country a trade surplus Sony says, it has sold more than 1 million virtual reality, The PlayStation VR headset was released in October, and its relatively low price has seen sales grow faster than rival.

The headset is designed to work with the PlayStation 4 rather than three events are keeping traders transfixed today.

One is the UK election, and of course we won’t know the outcome of that until maybe this time tomorrow or earlier.

The other one is the European Central Bank meeting happening at lunchtime on Thursday. No policy change expected, but what will be said at the press conference afterwards is critical.

And then there is that James Comey testimony taking place today.

What does that mean for the Trump administration?

That is playing a part in markets worldwide, we are seeing a lot of caution in terms of trade. Data out of Japan as well, about its growth figures.

The final figures showing growth at 1%. But missed estimates by quite a distance, so that the pressure on stocks in Tokyo. Let’s have a look at Europe right now, so a sense of how things are going.

The FTSE 100 pretty flat, sterling still bubbling along. A slight gain for Germany, and that is the state of play here. All eyes will be on Capitol Hill, James Comey will testify to US lawmakers.

This will be his first public appearance since he was fired by President Donald Trump. Any damaging revelation in his testimony could dampen already flagging momentum for Trump’s pro-business fiscal agenda. They have warned that four-year sales will be lower than previously thought. It faces treasure from rising competition and commodity costs.

And a little bit of economics news now. The jobless claims dipped slightly to 240,000 from 248,000 in the week previous. Greece is time this is happening, Greece is rearing its ugly head again in terms of the debt crisis, but let’s talk debt first of all. There is no change expected, and this has been the case for a long time.

It is not necessarily the rates we are looking at now, it is the quantitative easing which is extending to December this year, but there is so December this year, but there is so much discussion at the moment about the fact that the German economy is overheating, the German economy is performing well and this is having stimulus pumped into it.

So much pressure coming from Germany to the EEC beta start to take that back, but it is getting a balancing act, Germany much stronger than the other countries. And we can see Germany in that position, you have Greece in a really dire position still.

On Wednesday, we had banks bailed out by Santander, the whole banking support system kicking in, and then you have this weekend, Parliamentary elections in France. It is just a mess, isn’t it? It isn’t a mess, but it is complicated! But it is a mess, as it has been for the last ten years, and we have known this story for such a long time.

We talked about Greece tenures are going exactly the same situation, and they said, but the IMF said, we will deal with your debt later. That doesn’t work, because later eventually comes around.

Yes, at the time we talked about them kicking the can down the got to the can, and what will they got to the can, and what will they do?

There will be a few more measures, a few more statements from Germany about what they will do, and it is a mess, unfortunately, and it doesn’t show any signs of changing. We will talk more about that a little later, you will talk as though the papers, but for now, thank you.

Let’s go to Australia now, where Special K is a special name. You may think of it as a serial. But, in Australia, it is all about tennis star who is becoming well known. The top 100 tennis player Thanasi Kokkinakis is trying to use the name commercially.

We have seen this sort of row before, but not often between a serial provider and a tennis player! It really is a different type of court case the Thanasi Kokkinakis! It is over intellectual property. The 21-year-old is known as Special K, and what he would like to do because he is trying to bank on his fame and his good health at the time being is to create a special tennis line of clothing, and all the stuff that can come with it, Kellogg’s is saying that Special K is one of its best selling cereals, and they are taking him to court in Adelaide.

Lawyers on both sides of decided not to say nothing, but they just showed the crying emoji with the sad words on his account.

Don’t cry over spilt milk, that is what people say.