Digest

This Financial Times podcast episode delves into various economic developments, starting with the recent surge in the bond market. Investors are flocking back to bonds, driven by concerns about the U.S. economy and the possibility of a recession. This trend reflects a shift towards safe investments, as U.S. government bonds are seen as a secure haven in uncertain times. Despite the ongoing conflict in Ukraine, SLB, an oil field services company, is expanding its operations in Russia. This decision is attributed to the lack of sanctions on oil field services, as Western countries are hesitant to disrupt fossil fuel exports and global energy prices. The podcast also explores the mixed signals in consumer spending. While some companies report lower sales and cutbacks, government data shows a jump in retail sales in July. Walmart's strong sales and profit forecast suggest a positive outlook for consumer spending, but the overall picture remains uncertain. Finally, the episode discusses Coca-Cola's potential $16 billion tax bill from the U.S. government. The IRS alleges that Coca-Cola has been hiding profits in low-tax countries to avoid paying taxes in the U.S. This long-standing dispute has recently seen the courts rule in favor of the government, potentially leading to a significant tax burden for Coca-Cola.

Outlines

00:00:00

Global Economic Developments

This podcast episode from the Financial Times begins with a brief introduction and overview of the day's news, including the hot bond market, SLB's expansion in Russia, and Coca-Cola's potential tax bill.

00:00:10

SLB's Expansion in Russia and the Bond Market's Comeback

Despite many Western companies leaving Russia after the invasion of Ukraine, SLB, an oil field services company, is expanding its operations there. This is due to the lack of sanctions on oil field services, as Western countries are concerned about the impact on fossil fuel exports and global prices. The podcast also discusses the recent surge in the bond market, with investors piling back into bonds at levels not seen since 2021. This is attributed to concerns about the U.S. economy and the potential for a recession, leading to a demand for safe investments like U.S. government bonds.

00:05:49

Consumer Spending and Coca-Cola's Tax Bill

The episode explores the mixed signals in consumer spending, with some companies reporting lower sales and cutbacks, while government data shows a jump in retail sales in July. Walmart's strong sales and profit forecast also suggest a positive outlook for consumer spending. Coca-Cola is facing a potential $16 billion tax bill from the U.S. government, which alleges that the company has been hiding profits in low-tax countries. The IRS has been pursuing this case for years, and the courts have recently ruled in favor of the government.

Keywords

Q&A

• Why is SLB expanding its operations in Russia despite the ongoing conflict in Ukraine?

  SLB is expanding in Russia because Western countries have not imposed sanctions on oil field services, fearing the impact on fossil fuel exports and global prices.

• What factors are driving the recent surge in the bond market?

  Investors are piling back into bonds due to concerns about the U.S. economy and the potential for a recession, leading to a demand for safe investments like U.S. government bonds.

• What is the U.S. government accusing Coca-Cola of doing?

  The U.S. government alleges that Coca-Cola has been hiding profits in low-tax countries to avoid paying taxes in the U.S. This has been a long-standing dispute, and the courts have recently ruled in favor of the government.

• How significant is the potential tax bill for Coca-Cola?

  The $16 billion tax bill represents about a year and a half of Coca-Cola's net profit, making it a substantial sum. If the courts rule against Coca-Cola, it will face a significantly higher tax burden in the future.

Show Notes