🌏 New petro politics

Plus: The correction's here | Wednesday, February 23, 2022

Open in app View in browser     Axios Markets By Matt Phillips and Emily Peck ·Feb 23, 2022 👋 Look, the Wednesday vibes are strong today. We're here with grim news about war and markets and poorly considered tweets. Speaking of which, you can follow @MatthewPhillips and @EmilyRPeck on Twitter to catch up with us during the day. Onward! Today's newsletter is 1,069 words, a 4-minute read.     1 big thing: Energy echo of the '70s Illustration: Annelise Capossela/Axios   Russia's invasion of Ukraine could mark the start of a new era of petro politics, an uncomfortable parallel to the last inflationary period America faced, Matt writes. Why it matters: Americans are likely to continue to face rising energy prices in the coming months, as Russia — the world's third-largest crude oil producer and largest natural gas producer — faces the prospect of sanctions. Driving the news: Germany halted the process of certifying the Nord Stream 2 pipeline built at great expense to bring natural gas directly from Russia, following the invasion. And President Biden announced his first round of sanctions on banks, Russian government bonds and individuals close to Russian President Vladimir Putin. European natural gas prices — already some of the highest on record — jumped. Crude oil futures — both American and European benchmarks — pushed closer to $100 a barrel. Context: Energy markets are global. High prices in Europe — where Russia is a major supplier of oil and natural gas — are acting as magnets pulling American supplies to the continent. U.S. liquified natural gas exports have soared to record highs in recent months, with much of the cargo sent to offset shortfalls of Russian gas exports. The U.S. also exports a significant amount of crude oil to Europe. By the numbers: In January, U.S. consumer energy prices — a broad category — were up 27% from the prior year. Gasoline was up 40%. Fuel oil was up 46.5%. Utility gas prices were up 23.9%. Between the lines: Energy supplies have been tight all year as global demand rebounds from the pandemic — and cold weather in the U.S. prompted a surge in natural gas prices earlier this year. But soaring prices are also being driven by political decisions, like Russia's invasion of a sovereign state and the West's willingness to punish those actions. Interestingly, the previous period of inflation came in the aftermath of the OPEC oil embargo of the 1970s, perhaps the last time we've seen such political pressures on energy markets. Our thought bubble: The new era of petro politics doesn't mean we'll have the nightmarish gasoline shortages that were common during the '70s embargo. But the geopolitical dynamics could add another degree of difficulty to containing the price pressures that have pushed inflation to a 40-year high. The bottom line: "Geopolitics is back into energy, and energy is back into geopolitics, in a way that hasn't been the case since the 1970s," Daniel Yergin, Pulitzer Prize-winning author and historian focused on global energy markets, tells Axios.     2. Catch up quick 💰 Russia's wealthiest have lost $32 billion this year, and sanctions will enlarge those losses. (Bloomberg) 🥊 Elon Musk is still fighting with the SEC. (AP)     3. Charted: The correction is official Data: FactSet; Chart: Axios Visuals The stock market continues to suffer in the face of inflation, higher interest rates — and now, Russia's invasion of Ukraine, Matt writes. Driving the news: The S&P 500 touched a milestone yesterday, closing in "correction" territory. Why it matters: A correction indicates a fairly serious stock market sell-off of 10% or more from a recent high. This is the first 10% tumble for the benchmark U.S. stock index since stocks plunged nearly 34% in the early days of the pandemic. Yes, but: Don't freak. On average, the market typically has one correction a year, according to Ned Davis Research. What's next: The markets will be sensitive to signs that a worsening sell-off could make the Federal Reserve think twice about its rate hike plans when it meets next month.     A message from Axios Remote teams run on Axios HQ     Axios HQ is a powerful writing tool helping distributed teams — big and small — stay connected. It's teaches the Smart Brevity® style you trust from Axios, but is purpose-built so any leader can make vital staff and stakeholder updates more engaging. Learn More     4. Omicron job jitters recede for higher income workers Data: Morning Consult/Axios Inequality Index; Chart: Axios Visuals As the economy recovered from Omicron-related disruptions this past month, Americans became less fearful that they could lose their jobs or see their hours reduced, Axios' Kate Marino writes. But those concerns receded a lot more for higher-wage workers than they did for those making less than $50,000 per year, new data from the Morning Consult/Axios Inequality Index shows. The big picture: That sort of labor market uncertainty, more pronounced among the lower-income group, doesn't show up in the jobs report — but it does have a real economic impact because it causes people to hold off on making large purchases or major economic decisions, Morning Consult economic analyst Jesse Wheeler tells Axios.   Share Axios and earn rewards If you like this newsletter, your friends may, too! Refer your friends and get free Axios swag when they sign up. Be a good friend and share   5. Tweeting is hard Illustration: Aïda Amer/Axios   Coinbase got a lot of attention — and new users — after running that Super Bowl ad of a QR code bouncing around the screen. But, on Monday night, the cryptocurrency exchange's marketing win lost a little luster, after CEO Brian Armstrong fumbled a Twitter thread bragging about the origins of the ad spot, Emily writes. Why it matters: Twitter missteps aren't uncommon for tech executives, but for a fintech like Coinbase — seeking to be a major player in finance — this kind of unforced error could appear amateurish. What happened: In a 12-tweet thread, Armstrong said Coinbase was initially pitched "a bunch of standard Super Bowl ad ideas" by an outside agency and didn't like them. They brainstormed instead. "No ad agency would have done this ad," Armstrong tweeted. The intrigue: But an agency did have the idea of using a QR code, Kristen Cavallo, CEO of The Martin Agency, said in a reply to Armstrong's sixth tweet: Coinbase's ad "was actually inspired by presentations our agency showed your team on 8/18 (pages 19-24) and 10/7 (pages 11-18) with ad concepts for the Super Bowl floating QR codes on a blank screen." Her reply got thousands more likes than Armstrong's initial missive. Go deeper: Coinbase's chief marketing officer, Kate Rouch, replied to Cavallo — with five more tweets — hours later. She said the company had indeed worked with an agency, Accenture Interactive, in creating its ad. "Our CEO actually thought we were a single team when presenting work," she wrote. "Multiple agencies — including The Martin Agency — pitched us ideas that included QR codes for several different campaigns," she added. Armstrong also fired off a final tweet about 12 hours after his first, acknowledging they had help from "a creative firm." Flashback: It's not the first time Armstrong has come under fire for his tweets. Last fall, when the SEC effectively killed Coinbase's proposed lending product, saying it should be regulated as a security, he tweeted that he didn't see how a lending product could be a security. Then, in an apparent "subtweet," the SEC shared a video explaining what bonds are and how they work. The bottom line: Unless you're Elon Musk, Twitter miscalculations can quickly turn into PR misfires.     A message from Axios Remote teams run on Axios HQ     Axios HQ is a powerful writing tool helping distributed teams — big and small — stay connected. It's teaches the Smart Brevity® style you trust from Axios, but is purpose-built so any leader can make vital staff and stakeholder updates more engaging. Learn More   Like this email style and format? 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