YouSaid · the spoken record

Frances Coppola

lines on the record: 101
first: 2022-04-25
most recent: 2022-04-25
sittings or episodes: 1
sources: podcast

Every line below is reproduced as it was said and linked to the record it came from. Nothing here is summarised or generated. Directory · Search · Corrections

“Other side of any expert bought surplus is somebody else's imports, right? So depending on where it's exporting to, first of all, it can very definitely be hit by the other side of sanctions, one thing. So for example, if it was in the habit of exporting, say, machinery to Russia, that's going to be sanctioned.”
2022-04-25 · Forward Guidance · Can Europe's Economy Handle Russian Sanctions? | Frances Coppola · IDENTIFIED FROM THE TRANSCRIPT
“It really is more exposed to Ukraine than, say, the US is. There is a non-zero risk of the war escalating into Europe. And Germany, it's interesting you mentioned the German 30 year. Germany's entire economic model is extremely externally dependent. They rely totally on their external surplus, right? And if that collapses, then they are in big trouble and they are also extremely exposed to Russia because of their energy policy. And they're going to have to rethink that. So it could well be that in the specific case of Germany, the yields are rising simply because of the increased political and economic risk caused by Ukraine.”
2022-04-25 · Forward Guidance · Can Europe's Economy Handle Russian Sanctions? | Frances Coppola · IDENTIFIED FROM THE TRANSCRIPT
“And the simple answer is inflation Would have thought that the yields are rising because of inflation impressions. I must confess I haven't looked at the break-evens, but the unadjusted yields would be rising because of inflation. There's also political risk and they might also be rising because of that, that actually Europe”
2022-04-25 · Forward Guidance · Can Europe's Economy Handle Russian Sanctions? | Frances Coppola · IDENTIFIED FROM THE TRANSCRIPT
“I have a view on that. The people who are going to buy those treasuries are banks. It's really very straightforward. They need collateral for funding if they're going to increase their lending. So I don't buy that one either. Joseph and I don't often disagree, but I'm not sure where he's coming from on that one. It doesn't make sense.”
2022-04-25 · Forward Guidance · Can Europe's Economy Handle Russian Sanctions? | Frances Coppola · IDENTIFIED FROM THE TRANSCRIPT
“Absolutely, yeah. Yeah, when you have diverging monetary policy, inevitably investors will go for the currency where they're expecting interest rates to rise. Well, that's totally understandable, really.”
2022-04-25 · Forward Guidance · Can Europe's Economy Handle Russian Sanctions? | Frances Coppola · IDENTIFIED FROM THE TRANSCRIPT
“To inflation, it's tightening so the dollar's going to go up. The other big component of it, of course, is oil. The dollar does respond to the oil price. That also will tend to drive up the dollar too. So there are a couple of things there. If it's oil, then I would expect the dollar to start coming down, really, but I agree with you about the conflicting monetary policy signals would tend to drive up the dollar, as it has done before. I mean, if you recall, you know, under Trump, the Fed was raising rates and doing quantitative tightening and everybody else was sitting. ECB had negative rates, was doing QE. And I'm surprised, surprise, the dollar went up. We played this scene before.”
2022-04-25 · Forward Guidance · Can Europe's Economy Handle Russian Sanctions? | Frances Coppola · IDENTIFIED FROM THE TRANSCRIPT
“Right, well, the dollar has exploded higher. I think a lot of that is because the two biggest components of the US dollar index, the DXY, the euro and the yen, both of those central banks have indicated they're extremely unwilling to tighten monetary conditions to respond to inflation.”
2022-04-25 · Forward Guidance · Can Europe's Economy Handle Russian Sanctions? | Frances Coppola · IDENTIFIED FROM THE TRANSCRIPT
“Often treasury yields have fallen because everybody rushes and the dollar has risen because everybody's been rushing into safe havens. And so they're buying treasuries and they're buying the dollar, right? This time It's a little more complicated merely because I think of this kind of bitter, this thing about, is China and India going to displace the donors a little bit more fear, so treasury yields aren't falling as much as might have been expected they are rising a bit. The dollar is though. If this was the end of the dollar, as some are predicting, I would be expecting a hyperinflationary collapse, and it's not what we've got. It's not what markets are predicting either. So I kind of don't buy”
2022-04-25 · Forward Guidance · Can Europe's Economy Handle Russian Sanctions? | Frances Coppola · IDENTIFIED FROM THE TRANSCRIPT
“Because I am unconvinced. I think that dislodging the dollar's dominance and its sidekick euro, frankly, in some markets is actually much more difficult than that, that yes, China is important, but it doesn't have a convertible currency. It doesn't make sense, this. And if you think the rule's going to take over, then I'm sorry you're dreaming. It's not going to happen. It doesn't make any sort of sense. So I think there's an element of kindness, fear going on. If you actually looked at the fear and greed indicator now, I think you'd be seeing it very firmly. And fear territory and when that happens, well, one or two things can happen when that happens, depending on their view of the US. So when the fear greed index has been in fear territory in the past,”
2022-04-25 · Forward Guidance · Can Europe's Economy Handle Russian Sanctions? | Frances Coppola · IDENTIFIED FROM THE TRANSCRIPT
“So many times over the last decade or so, oh, the US is screwed, the treasuries are going to collapse, there's going to be hyperinflation, blah, blah, blah. I've heard that so many times, and I'm hearing it again now. This idea that because of the Ukraine war, because of US sanctions, Russia and China and India will form some kind of economic unit that will take over from the US and destroy the dollar. And I'm going, really? Why do you think this? I need to see more justification than just we're afraid.”
2022-04-25 · Forward Guidance · Can Europe's Economy Handle Russian Sanctions? | Frances Coppola · IDENTIFIED FROM THE TRANSCRIPT
“That's a great point, and I'd also add that the forward, what the market is implying for the Fed funds rate, if you look at, let's say, the euro dollar futures, it has an inversion. So the terminal rate, as I said, by the end of 2023 is somewhere above 3%, but then it slowly trickles down from there, indicating that on average, the market is pricing in a net easing. Why would it be easing? Well, because there's a recession. This episode is brought to you by BCB Group, Europe's leading provider of crypto-friendly business banking for institutions in the crypto space. They also provide trading services allowing you to trade FX and cryptocurrency quickly and at scale. They specialize in efficient execution of large orders in illiquid markets. So if you are an institution looking to make high volume trades, you need to check out BCB Group because a great trade idea is worth nothing if you can't execute it. And that is exactly what BCB Group helps you to do.”
2022-04-25 · Forward Guidance · Can Europe's Economy Handle Russian Sanctions? | Frances Coppola · IDENTIFIED FROM THE TRANSCRIPT
“Last time I looked, well, certainly the one I was looking at the German ones today, and they appear to be still negative, which is most weird. So I guess the message I'm getting on interest rates is that they are going to go up a little bit and then kind of come down again, I think, really. I think that's where we are, that central banks in Europe might raise rates in response to inflationary pressures, but they will have to bring them down again in 23 and 24 because of recessionary pressures. That's what I'm seeing.”
2022-04-25 · Forward Guidance · Can Europe's Economy Handle Russian Sanctions? | Frances Coppola · IDENTIFIED FROM THE TRANSCRIPT
“Because people can't afford it. So people will pay more for essential goods, like their own utility bills and food and things like that and cut spending elsewhere to accommodate. And so the fact that producer prices are high does not necessarily mean there's going to be high or sustained consumer price inflation and it can trigger a recession. So the ECB will have to tread very cautiously I think about monetary tightening and the Bank of England also though to a lesser extent because the UK growth has been stronger but then arguably from a lower base.”
2022-04-25 · Forward Guidance · Can Europe's Economy Handle Russian Sanctions? | Frances Coppola · IDENTIFIED FROM THE TRANSCRIPT
“to accommodate that. So I would guess that Lagarde is seeing that coming and thinking I don't think we can proceed very far, fast with monetary tightening because we've got that coming up. And plus also the point that when your producer prices are high, unless your wages can grow to match what's being passed on to customers, the effect is deflation.”
2022-04-25 · Forward Guidance · Can Europe's Economy Handle Russian Sanctions? | Frances Coppola · IDENTIFIED FROM THE TRANSCRIPT
“The Maastricht Treaty limits the fiscal compact was effectively suspended during the pandemic. Now that's the rule that basically says countries should not be running fiscal deficits of more than 3% or have debts in excess of 60% of their GDP. And of course during the pandemic lots of way over that, including Germany. But they were only suspended, not abandoned. And so there's pressure to start reimposing those limits again. And if they do, then lots of countries in the EU will have to tighten their belts in order to get their deficits down and start bearing down on their public debt. And if that happens, then we're back into the kind of post-fences crisis period situation again where you've got fiscal tightness across the whole of the EU. And the ECB then will be under pressure to keep monetary policy.”
2022-04-25 · Forward Guidance · Can Europe's Economy Handle Russian Sanctions? | Frances Coppola · IDENTIFIED FROM THE TRANSCRIPT
“world prices about gas and oil particularly. And when you've got that kind of cost pushing inflation, which is massively pushing up producer prices, it's a question of the extent to which producers can impose those price rises on the population. If they can, then you get inflation and you also get a recession because people can't afford them. The only way you don't get a recession is if wages go up as well, which is exactly what central banks don't want. So the kind of juggling act for the ECB will be the fact that the outlook for European growth is really not very good and fiscal position in most European countries is quite tight and will be tighter because the mastery treaty limits will start to bite again soon. So lots of them will have to go back into austerity.”
2022-04-25 · Forward Guidance · Can Europe's Economy Handle Russian Sanctions? | Frances Coppola · IDENTIFIED FROM THE TRANSCRIPT
“And employers think they can get away with rising prices so they agree to the higher wage rises, and down we go again. That's a wage price spiral like we had in the 1970s, and that's what central banks will be wanting to nip and demand. I have to say I'm not seeing much evidence of it at the moment. And I think a lot of that is, I mean, certainly where I am, is because we've got a really large public sector and we've got, the government is imposing limits on pay rises in the public sector. And when you've got a public sector of that size, that's kind of setting the wage price level for the private sector as well. So if your public sector is limited to 1%, then your private sector is not going to offer a great deal more. So I'm kind of not buying this wage price argument. So if I can turn now to Europe and the inflationary pressures here, which are much more external than they are in the US, right? It is about...”
2022-04-25 · Forward Guidance · Can Europe's Economy Handle Russian Sanctions? | Frances Coppola · IDENTIFIED FROM THE TRANSCRIPT
“Which is domestically generated. I imagine what the Fed will be looking out for will be evidence that there's some kind of wage price spiral developing, whether people are starting to demand and get higher wages in general because of cost of living increases. The argument would be that while unemployment is elevated, that's unlikely and while unions continue to have little power that's maybe unlikely but we'll see and I imagine that's what they're watching and that'll also be what they're watching in Europe as well certainly in the UK and I think also the ECB will be watching it as well to see what kind of wage price developers endogenous what you might call endogenous pressures where you get a feedback loop where you know prices rise so people demand higher wages to compensate”
2022-04-25 · Forward Guidance · Can Europe's Economy Handle Russian Sanctions? | Frances Coppola · IDENTIFIED FROM THE TRANSCRIPT
“That's not hawkish. So I think we need some perspective on this. We are not talking about huge interest rates rise here. We are still talking about a really gradual and cautious approach, even in a situation where we've got quite high inflationary pressures coming from the fiscal side.”
2022-04-25 · Forward Guidance · Can Europe's Economy Handle Russian Sanctions? | Frances Coppola · IDENTIFIED FROM THE TRANSCRIPT
“And that's entirely independent of what else is going on in the world. I think the US needs to raise, the Fed needs to raise rates. How much it needs to raise them by is an interesting question, what the amount it's priced in at the moment is kind of going to bring it back to where it was before the pandemic rather faster than we thought. And we should be aware of how far we removed we are from the kind of level of interest rates, say, in 2005, right? You know, when interest rates were over 5%. Now we say 5%. Oh my goodness, that's massive. And it wasn't. It was normal. Now we're talking about like 2.7% or something and we might get there by 2024 and say, my goodness, that's hawkish. And I couldn't really. I'm not seeing it's hawkish. Compare even to where we were before the pandemic.”
2022-04-25 · Forward Guidance · Can Europe's Economy Handle Russian Sanctions? | Frances Coppola · IDENTIFIED FROM THE TRANSCRIPT
“that people who didn't need that money wouldn't be able to spend it because we were shutting down half the economy. And so they would save it. And then when the economy reopened, they would spend it, right? So I felt it was wrongly timed. It would not have the effect of stimulating the economy as people thought because the point of stimulating at the same time as you're shutting down, it's absurd, right? You then did a second drop and that was, in my view, a big mistake. Once having done the first one, you had to wait and see if when that started to be spent down, whether that was enough to stimulate the economy and Joe Biden, the president didn't wait. And I can understand why he didn't. But because of that, I think you've overstimulated and therefore the Fed does need to raise rates, right? That's my position on US.”
2022-04-25 · Forward Guidance · Can Europe's Economy Handle Russian Sanctions? | Frances Coppola · IDENTIFIED FROM THE TRANSCRIPT
“Okay, let's talk through different areas because there are two different things here. And let's talk about the US first. Now, the US had enormous, not only monetary stimulus, but also fiscal stimulus during the pandemic. In my view, it did too much, right? So I opposed the first helicopter drop during the pandemic, the CARES Act helicopter drop, because I felt”
2022-04-25 · Forward Guidance · Can Europe's Economy Handle Russian Sanctions? | Frances Coppola · IDENTIFIED FROM THE TRANSCRIPT
“So, how the Federal Reserve has seen a big shift from very dovish to less dovish, perhaps hawkish, how has the European Central Bank performed in terms of these pressures when, yeah, war is very inflationary, these sanctions very inflationary. So the European Central Bank should be hiking rates every meeting. And yet they remain quite devish, right?”
2022-04-25 · Forward Guidance · Can Europe's Economy Handle Russian Sanctions? | Frances Coppola · IDENTIFIED FROM THE TRANSCRIPT
“And how does that whole mishmash that you just laid out? How does that affect the central bank response function? Because, okay, the pandemic, it's long lasting. There remain people who are going to be unemployed and not going back to work. There's a lot of impairments that will persist, in other words. So therefore, maybe the central bank should be dovish. RSTAR, natural rate of interest should be lower, perhaps negative. But on the other hand, you have these huge inflation area problems that, yes, they are mostly supply chain-driven, but just because they're supply chain driven doesn't mean it's not inflation. Someone's price of the price of something went up 20%. Consumer buying it doesn't say, oh, this is supply driven. So it's actually not inflation. They still buy it.”
2022-04-25 · Forward Guidance · Can Europe's Economy Handle Russian Sanctions? | Frances Coppola · IDENTIFIED FROM THE TRANSCRIPT
“It is the sanctions that do this, not the war itself, it's the West's response to it is inflationary by definition, and also the continuing pandemic supply chain disruption from elsewhere in the world is going to drive up prices as well.”
2022-04-25 · Forward Guidance · Can Europe's Economy Handle Russian Sanctions? | Frances Coppola · IDENTIFIED FROM THE TRANSCRIPT
“Keep themselves safe, and you're kind of heading the same. The United States is kind of heading in the same direction doesn't mean the virus has gone away. It definitely hasn't. There's a proportion of people who haven't turned to work and are not going to. There are a lot of people who've retired early. There are people who are scared to return to work. And in other parts of the world, we still have an active pandemic. We've got a, as I mentioned just now, we've got a full lockdown in Shanghai. And that is a serious problem for the whole world. So I'm personally of the opinion that we are going to see higher inflation and for a longer period of time because the kind of supply disruptions that ought to be calming down now are not going to calm down now because of the disruptions to supply caused by Ukraine's sanctions.”
2022-04-25 · Forward Guidance · Can Europe's Economy Handle Russian Sanctions? | Frances Coppola · IDENTIFIED FROM THE TRANSCRIPT
“So, quite a lot of people actually ended up with more money as a result of the pandemic than they had before. And it's fair to say some of those people are now spending that money. And that's one of the things that's driving inflation, spending now spending down the money that they accumulated to in the pandemic. And so I thought that there would be inflation because demand would recover quicker than supply and that would mean price rises in the short term and it would moderate as the supply side picked up. Then we had a war. And so wars are inflationary. And also they disrupt supply chains, they disrupt markets, they disrupt everything. Russia is an oil producer, Ukraine is a grain producer. Here we go again. Plus, of course, the pandemic isn't over. People keep forgetting this, that just because in the UK now we've lifted all restrictions and said, well, it's basically up to people.”
2022-04-25 · Forward Guidance · Can Europe's Economy Handle Russian Sanctions? | Frances Coppola · IDENTIFIED FROM THE TRANSCRIPT
“Now is the top of inflation Is really hard because wars are inflationary for lots of reasons. So here I was. I was team transitory originally. I had always said right back from April 2020 when we first went into the pandemic and started to see falling prices because of the pandemic. And there were lots of people arguing for helicopter money and universal basic income and all sorts of things. And I remember saying there will be inflation when the economy reopens after the pandemic has passed because we are supporting demand with extensions to unemployment benefit, extensions in my country to universal credit with furlough schemes, with handouts like the CARES Act. There was a lot of money given out and there were also a significant proportion of people who worked throughout drew their full salaries and couldn't spend them.”
2022-04-25 · Forward Guidance · Can Europe's Economy Handle Russian Sanctions? | Frances Coppola · IDENTIFIED FROM THE TRANSCRIPT
“What's your rough forecast for inflation? It can be in Britain, it can be in the US, Europe, anywhere. Do you think for so long people have said that now is the top? Oh, wait, now is the top, now is the top on inflation. When do you think we will finally hit peak inflation?”
2022-04-25 · Forward Guidance · Can Europe's Economy Handle Russian Sanctions? | Frances Coppola · IDENTIFIED FROM THE TRANSCRIPT
“And I'm not terribly surprised by that really. And I think myself that the IMF's most recent estimates are on the optimistic side.”
2022-04-25 · Forward Guidance · Can Europe's Economy Handle Russian Sanctions? | Frances Coppola · IDENTIFIED FROM THE TRANSCRIPT
“Who are not working, whether it's because they are unemployed, we still do have elevated unemployment as a result of the pandemic, although not as much I think as in other countries. And also people who are out of work because they are ill or because their disabilities are so severe that they can't work. They're particularly affected and the other group of people who are going to be affected by this quite significantly are pensioners. Because of that, I mean, pensioners are quite a considerable proportion of our economy. And so we might well find that if they start cutting back on disposable spending because they're having to spend more on heating and lighting and what have you, that we will suffer demand reduction and potentially a fall in GDP. The IMF is currently forecasting lower GDP growth for the UK next year.”
2022-04-25 · Forward Guidance · Can Europe's Economy Handle Russian Sanctions? | Frances Coppola · IDENTIFIED FROM THE TRANSCRIPT
“During the pandemic to make life easier for people on low income. So I must emphasize universal credit in the UK is not unemployment benefit. It includes unemployment benefit, but a substantial proportion of those who receive it are actually in work, but on low incomes. So it's like earned income tax credits. We had those as well and we just merged everything into one, really. But it is particularly people who are out of work that are hit by this because people in work had an increase in, had a change in what we call the taper, which is the rates at which universal credit is withdrawn as your income rises. So that taper was relaxed so people don't lose so much of their income as their income rises and don't lose so much of the universal credit. And that makes a difference to people's total income. So it's particularly those.”
2022-04-25 · Forward Guidance · Can Europe's Economy Handle Russian Sanctions? | Frances Coppola · IDENTIFIED FROM THE TRANSCRIPT
“Well, it's kind of hard to say. I must add that it's not just one utility company. It was actually gas prices in the UK are actually a managed price. So this was a cap imposed by the government or by the regulator of GOM on all utility companies. So in effect, all utility company companies have now been able to raise their prices, which they couldn't before. So that's what's happened. It affects everybody. The people who are particularly affected by this are people on low incomes. People on low incomes tend to spend more of their incomes on things like utilities and essential goods anyway. And so they've been particularly badly hit by this. And also some of them have been hit, are being hit by other changes as well, notably the withdrawal last autumn of the increase in temporary increase in universal credit introduced.”
2022-04-25 · Forward Guidance · Can Europe's Economy Handle Russian Sanctions? | Frances Coppola · IDENTIFIED FROM THE TRANSCRIPT
“rather than developed countries which tend to have more diversified supplies. I think the problem with developed countries is more to do with disruption of supply chains, which we already had because of the pandemic. And of course, that's not over. So one of the things that's happening right now is disruption of supply chains because of a lockdown in Shanghai. It's nothing to do with the Ukraine war, but it's absolutely going to affect our food supplies. And we shouldn't ignore what's going on in the rest of the world.”
2022-04-25 · Forward Guidance · Can Europe's Economy Handle Russian Sanctions? | Frances Coppola · IDENTIFIED FROM THE TRANSCRIPT
“And resulting in food riots and protests, and it's thought to have triggered the Arab Spring revolts that ran across the Middle East in 2009, 10, 11, how about then? So I would expect this time the kind of disruptions we're seeing to food markets if we do see a disruption in the supply of food from Ukraine and from Russia and maybe from other satellite states as well, for example Kazakhstan now has banned export of grains to preserve its own supplies and that's going to have a knock-on effect to other countries in that area who are very reliant on Kazakhstan for supplies of foodstuffs and they will then have to buy grains on the open market and that will push up prices. So it's those countries that are going to be particularly affected by any spike in”
2022-04-25 · Forward Guidance · Can Europe's Economy Handle Russian Sanctions? | Frances Coppola · IDENTIFIED FROM THE TRANSCRIPT
“To hold your opponents' supporters feet to the fire, and I would say that's what's going on, is supplying pressure to Europe. And that in itself would tend to cause disruptions in markets. As far as food markets are concerned, though, this is an interesting one because wheat markets, when those are disrupted, the countries that suffer most are those that don't have a very diversified food supply. So it doesn't tend to be countries like the US and UK in developed countries generally that suffer. particularly i mean the price of bread goes up so we go and eat something else instead don't we it's the countries where it's a stable foodstuff and they're in big trouble if the price goes up and we saw this in 2009 when we had a qe driven increase in the price of wheat of grains then which caused food prices to staple food prices to spike sharply in the middle east and north africa”
2022-04-25 · Forward Guidance · Can Europe's Economy Handle Russian Sanctions? | Frances Coppola · IDENTIFIED FROM THE TRANSCRIPT
“What's hard to tease out is the extent to which the price rises you're seeing at the beginning of the war are sustained or will be repeated later on or whether they simply are this immediate, oh my goodness the world has shifted under our feet effect. And it eventually calms down and people adapt to the changes in the markets. I think at the moment it's a little too early to say because the war itself is changing over time. I mean, there are developments all the time. Russia is now testing ICBMs, which is clearly intended as a threat to Europe, not to the US so much, because I don't think there are ICBMs would even reach New York, but they definitely would reach cities in Europe. And there's no point in testing ICBMs at this stage in a war unless you think that you can use”
2022-04-25 · Forward Guidance · Can Europe's Economy Handle Russian Sanctions? | Frances Coppola · IDENTIFIED FROM THE TRANSCRIPT
“Again, I think we see what we tend to see at the start of any global crisis, which is a mad panic. I mean, if you think back to March 2020, we kind of saw similar disruptions in financial markets at the time gone by everybody panicking. And in the UK, we had hoarding of certain foodstuffs leading to shortages of them that were nothing to do with the pandemic epidemic and everything to do with people hoarding. And you see the same effect in world markets that you get kind of people dropping out of certain markets or all crowding into certain markets to buy before the price goes up. Those kinds of effects. So it's not surprising really to see short-term disruptions in commodity markets at the start of a war because wars do disrupt supply chains.”
2022-04-25 · Forward Guidance · Can Europe's Economy Handle Russian Sanctions? | Frances Coppola · IDENTIFIED FROM THE TRANSCRIPT
“Oh, definitely. And what is your maybe more longer term or midterm view on commodity prices and in particular non-Russian countries able to withstand it? And let's turn to another commodity, which is wheat. I know Ukraine and Russia combined produce something like 30%, maybe a little bit shy of that, of the world's wheat supply, which sounds like a lot, and it is. However, I also learned that only a small fraction of that is actually exported. A lot of it is consumed within the country. So you had a surge in the price of wheat even more dramatic than the survey of oil. And that too has moderated. So what about wheat? And you can choose any other commodities that you think stand out.”
2022-04-25 · Forward Guidance · Can Europe's Economy Handle Russian Sanctions? | Frances Coppola · IDENTIFIED FROM THE TRANSCRIPT
“That would have made a difference. The kind of supply constraints in the market have been eased a little bit, I think, one way or another. So that would have brought prices down as well. But yeah, there were probably some speculators jumping on the bandwagon.”
2022-04-25 · Forward Guidance · Can Europe's Economy Handle Russian Sanctions? | Frances Coppola · IDENTIFIED FROM THE TRANSCRIPT
“The private sector itself imposes an embargo on an oil supplier. Never mind what governments do, the private sector didn't want to buy Russian oil, the price of Russian oil collapses and the price of every other sort of oil goes up. And so people pay more for their oil simply because of that. And that's been an interesting effect as well. I don't think we've seen it to quite the same extent in the gas market, I think, because Russia, in certain Europe, Russia has rather cornered that market, so it's actually quite difficult to do. Certainly there's more sources of supply in the oil market. But yes, it is an interesting question. There was quite a noticeable spike in both oil and gas at that time. And that may well have been driven up by speculation. And it has calmed down since. There were other things like the US are going to draw on its strategic oil reserve.”
2022-04-25 · Forward Guidance · Can Europe's Economy Handle Russian Sanctions? | Frances Coppola · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, it's a good question. I mean, I think we should say that for Germany it's gas rather than oil. That's the problem. And there was actually quite a bifurcation in the oil market whereby the price of WTI moderated, in fact the price of everything moderated except Russian oil, which”
2022-04-25 · Forward Guidance · Can Europe's Economy Handle Russian Sanctions? | Frances Coppola · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, so I think the price of oil reached its peak in early April, maybe shortly after we did our first interview. Since then, it has been muted and that was the peak. We haven't made a new high, leading a lot of people say, oh, that high was only due to speculation, not due to fundamentals. Therefore, Germany has more bargaining power than perhaps we think. What do you think about that? I mean, how high do you think the price of natural gas or oil could go if Germany does move forward with these sanctions on Russia energy?”
2022-04-25 · Forward Guidance · Can Europe's Economy Handle Russian Sanctions? | Frances Coppola · IDENTIFIED FROM THE TRANSCRIPT
“Difficult for country even that's holding out on sanctions actually to buy things at world prices is going to face much higher producer price inflation. The fact is that Germany is completely dependent upon external supplies for energy and to a large extent on Russia. And the price is rocketing. It's losing out either way.”
2022-04-25 · Forward Guidance · Can Europe's Economy Handle Russian Sanctions? | Frances Coppola · IDENTIFIED FROM THE TRANSCRIPT
“I think Germany isn't exactly making itself any friends at the moment because it has been very kind of, oh no, we mustn't hurt our own economy about the sanctions and even about things like supplying arms. It has been kind of a little bit reluctant to do so. In fact, there's a report today saying that Olaf Schultz is facing pressure from his own party because of his opposition to supplying heavy weapons to Ukraine. So the mood, if you like, regarding Russia is tightening, I think. So it may be that Germany will be eventually forced just by public mood to change its stance. But the producer price inflation is quite shocking, actually. And that does suggest, actually, that sanctions are biting in a different way, that if you make it very”
2022-04-25 · Forward Guidance · Can Europe's Economy Handle Russian Sanctions? | Frances Coppola · IDENTIFIED FROM THE TRANSCRIPT
“A lot of directions that we can go. I guess we'll stick with Germany. How has the appetite to impose sanctions on Russian energy? Has that gone up over time? Does it seem more or less likely? I know Germany just reported it's one of its inflation indicators, the producer price index, that was at a shocking 31%. So if there isn't a ban yet and producer inflation is already at 31%, do you think that it would go much higher and sort of Is that too big of a cost for Germany to bear?”
2022-04-25 · Forward Guidance · Can Europe's Economy Handle Russian Sanctions? | Frances Coppola · IDENTIFIED FROM THE TRANSCRIPT
“Gas will hurt to some extent. It won't hurt, I think, as much as might be thought because it's still possible for other countries to buy oil and gas. Whereas had they sanctioned Gazprom Bank to prevent oil and energy transactions taking place, to prevent anything from being settled in dollars, I think that might have had a more comprehensive effect.”
2022-04-25 · Forward Guidance · Can Europe's Economy Handle Russian Sanctions? | Frances Coppola · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, the US has, but it's all part of a global oil market because other countries also buy Russian oil and gas, there isn't a comprehensive ban on Russian oil and gas. Individual countries, some individual countries have, including the US and the UK as well. But in Europe, there is still huge resistance to anything like that. And some of the most significant resistances coming from Germany, which really does significantly affect European view on this. And that matters. And there's also the question of to what extent Russia can divert its sales to China. We don't know. There are some issues there with physical transfer. They don't have the pipelines in place, basically, yet. They're working on it. So although the US embargo on oil...”
2022-04-25 · Forward Guidance · Can Europe's Economy Handle Russian Sanctions? | Frances Coppola · IDENTIFIED FROM THE TRANSCRIPT
“While estimates I'm seeing now are predicting a recession in Russia, a collapse of fall in GDP of the order of 10%, which is significant, we've also seen significant capital flights and as ever with these kind of things, they hurt in particular sectors and unfortunately often hurt poorer people more. So I think the damage to the Russian economy is going to be significant, but I still think that until we have a comprehensive ban on sales of oil and gas to the West, it's not going to hurt as much as it needs to. And we are still some distance from that. I know imposed full sanctions on Spurbank, but still not on Gazprom Bank. So you still, the West still can buy oil and gas. I know that they've been mulling over an embargo sales. But gas seems certain in Europe still seems to be sacrosanct”
2022-04-25 · Forward Guidance · Can Europe's Economy Handle Russian Sanctions? | Frances Coppola · IDENTIFIED FROM THE TRANSCRIPT
“So a lot of it has been focused on individuals, the idea being that if the West can hurt the people close to Putin, they can lean on Putin to change his plans to give up on his attempts to break Ukraine. I have to say a lot of people cast some shade on this saying it's not that simple. The most influential people around Putin are not necessarily the people who run the businesses, the very rich people they are, other people who have significant influence on him. So it's not clear the extent to which sanctioning oligarchs will have the desired effect. But certainly it's caused a bit of a storm, for sure.”
2022-04-25 · Forward Guidance · Can Europe's Economy Handle Russian Sanctions? | Frances Coppola · IDENTIFIED FROM THE TRANSCRIPT