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Weekly Outlook

Our rundown on the most interesting and market-impacting stories this week.

Gazprom, the Russian state-controlled energy giant, has announced that it has cut off supplies of natural gas to Poland and Bulgaria. The move is the first of its kind to result from the Kremlin’s insistence that “unfriendly countries” pay for Russian energy in rubles. Russia’s currency plunged into freefall at the onset of the Russia-Ukraine war, prompting the Kremlin to declare that its crude and natural gas exports be paid for in rubles. Gazprom’s shutdown will continue until payments are made in rubles. Most of the EU is heavily reliant on Russia for natural gas, with Poland and Bulgaria depending on the country for more than 45% and 70%  of its supplies respectively. Kiril Petkov, Bulgaria‘s Prime Minister, has called the move “blackmail”.

European Energy Firms Accede to Ruble Demand

Energy firms around Europe are caving in the Kremlin’s demands that Russian energy be paid for in rubles. German firm Uniper is preparing to pay rubles to Gazprombank, spurred by Gazprom making good on an earlier demand by the Kremlin. Uniper will be paying in euros that will be converted to rubles in a manner that is “compliant” with both sanctions and Russian decree. Meanwhile, Italian energy group Eni is also preparing to open ruble accounts with Gazprombank. Russia supplies almost 40% of Europe’s natural gas, with some countries reliant on it for over half their needs.

Elon Musk Buys Twitter for $44 Billion

After a tumltuous month of will-he won’t-he news regarding Elon Musk’s ownership of social media platform Twitter, Tesla’s CEO has finally sealed the deal. At the price of $44 billion in cash, Musk will be the sole and entire owner of Twitter. Investors will receive US$54.20 per share – up over 38% from its 1st April price, when Musk first revealed his 9% stake in Twitter. Both sides have agreed to a $1 billion break fee paid by the instigator. Billionaires have been known to acquire media companies in the past – Rupert Murdoch owns the New York Post and Jeff Bezos owns the Washington Post – although Musk’s purchase of a social media company shows the increasing power that non-traditional media has over narratives. Musk has declared that he will bring free speech to the platform and combat spam bots.

Meta Jumps 18% On Strong Earnings

After an unprecedented rout in Februaray that saw its stock drop almost 27% overnight on poor growth figures for Facebook, Meta’s shares partially recovered on stronger-than-expected earnings for Q1 2022. This comes as Meta Founder Mark Zuckerberg made a statement outlining how the company would “slow the pace” of its investments into the Metaverse. Meta’s Metaverse business, Reality Labs, reported a loss of $10 billion in 2021, totalling over $21 billion in losses between 2019-2021.

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