Mnuchin Alarmed by Inflation as U.S. Economy Revives: FII Update

(Bloomberg) -- Former U.S. Treasury secretary Steven Mnuchin told the Future Investment Initiative forum he was concerned by rising U.S. inflation, and warned price pressures are unlikely to let up. 

“It is something that we are all going to have to deal with,” Mnuchin said on Wednesday in Riyadh, echoing comments from some of the world’s top executives at Crown Prince Mohammed bin Salman’s signature business event. 

Earlier, an official said more than 40 companies have been issued licenses to open their regional headquarters in Saudi Arabia, as the oil-exporting kingdom steps up competition with the Middle East’s business hub, Dubai. And Saudi Energy Minister Abdulaziz bin Salman said efforts to cut warming gases must avoid hurting poor countries’ economies.

Key Stories: 

• Saudi Arabia Says Global Climate Push Must Be More ‘Egalitarian’
• Saudi State Miner Will Spend ‘Huge Amount’ on Battery Metals
• Saudi Deal With Euroclear to Allow Foreign Access to Debt Market
• Blackstone’s Schwarzman Says Energy Squeeze Will Trigger Unrest
• Women Were Scared of Working at Blackstone, Schwarzman Says
• Aramco Warns That World’s Spare Oil Supplies Falling Rapidly
• Dalio, Fink Say They’d Pay More Tax If Funds Were Spent Well
• Wall Street Investment Banks Almost An Oligopoly, Says Diamond

All items below are Saudi local time:

Mnuchin Calls Inflation ‘Concerning’ as Economy Rebounds (2:20 p.m.)

Steven Mnuchin, the former U.S. Treasury secretary now running his own firm, said the U.S. economy is seeing a “very strong” rebound from the pandemic but the upswing in demand is creating excessive inflationary pressures. 

“Unfortunately we do see inflation,” Mnuchin said. “It is concerning and something that is going to continue on, and something that we are all going to have to deal with.” For the global economy and the Middle East, “stable energy prices are so important,” he said.

In a separate interview with Bloomberg Television, Mnuchin said that U.S. inflation was probably running at 4%-5% and would stabilize at 3.5%. “That’s still significant,” he said. 

“For a long time, the Federal Reserve was concerned it couldn’t get inflation up to 2%. But now, given the enormous amount of fiscal and monetary support, I am very concerned that we’re going to see higher interest rates and an impact on consumers.”

Saudi Arabia Set for 100GW of Solar Power, Says ACWA CEO (2:10 p.m.)

Saudi Arabia is likely to ramp up solar power hugely by 2030, said Paddy Padmanathan, chief executive officer of ACWA Power International.

“I see us having 100 gigawatts of solar online and in development by the end of the decade, both on and off grid,” the head of the Riyadh-based utility said in an interview.

The kingdom barely has any solar power at the moment, and previous efforts to build it up have largely failed. By way of comparison, the U.K. has about 40GW of installed wind and solar power at the moment.

Eric Cantor Says Moelis Can ‘Compete Very Well’ in War for Talent (1:30 p.m.)

Moelis & Co. Vice Chairman Eric Cantor said the boutique investment bank is prepared to navigate one of the most competitive markets for bankers in recent years as dealmaking booms.

“It’s not any secret there’s a war on for talent -- in most industries -- and I think the financial services industry investment banking is no exception,” he said in an interview. “We are a very dynamic young firm that is now looking at a talent pool that we compete very well with.”

Cantor also said the Middle East is “one of the most exciting regions to do business in right now.”

HSBC’s Quinn Says Companies Need Support to Transition to Net Zero (12:30 p.m.)

HSBC Holdings Plc Chief Executive Officer Noel Quinn admitted that there remains a large amount of scepticism over the transition to Net Zero, but said he was optimistic that banks could help finance the change. 

“I believe the acceleration on this initiative is really, really fast,” said Quinn. He pointed to the criticism that came with providing funding to old economy companies with high levels of emissions. “There is a temptation for the world to say this a bad corporate,” he said. “We need to put the finance behind those companies that are going to transition. We have to get comfortable transitioning corporates from where they are to where they need to be.”

Quinn said HSBC had begun a “cultural change” program for its staff to make them more knowledgeable on climate change issues. “I’ve got to learn and I’m learning, and our colleagues have to learn.”

Baker Hughes, KPMG Eye Regional HQs in Saudi Arabia (11:40 a.m.)

More than 40 global companies including Baker Hughes, KPMG and Schlumberger have got licenses to open their regional headquarters in the Saudi capital of Riyadh as part of a new program to attract global businesses to the kingdom.

The firms will get incentives like exemptions from work-visa limits, eased regulations. Companies including Deloitte, Pepsico, Unilever, Siemens and Philips have signed up, according to a presentation. Around half of them had already signed memorandums of understanding in January to relocate their regional headquarters to the kingdom.

Saudi officials are trying to turn Riyadh into the main business hub in the Middle East as Crown Prince Mohammed bin Salman overhauls the economy. Multinational companies have typically chosen Dubai as their base, but the kingdom’s transformation is increasing regional competition.

Saudi Deal With Euroclear to Allow Foreign Access to Debt Market (11:20 a.m.)

Saudi Arabia reached an agreement with one of the world’s biggest bond clearing systems to settle transactions in its debt market. 

The deal between the kingdom’s Securities Depository Center Company, known as Edaa, and Brussels-based Euroclear Bank will give foreign investors access to the sukuk and bond market within the Saudi Exchange. Under the terms of a deal signed at the FII conference, the link is expected to become operational in March 2022.

Vestas Looking to Manufacture Wind Turbines in Saudi Arabia (10:22 a.m.)

Vestas is planning establish a manufacturing hub in Saudi Arabia that will serve as its headquarters for the wider region, Chief Executive Officer Henrik Andersen said. The Danish wind power specialist will make turbines in the kingdom.

State Miner Maaden to Spend ‘Huge Amount’ on Battery Metals (9:21 a.m.)

Saudi Arabia’s state miner said it would start to invest heavily in battery metals, as prices soar with the uptake of electric vehicles and the growth of wind and solar power.

“In the next 10 to 20 years we are going to spend huge amount of money looking for those metals in Saudi Arabia,” Abdulaziz Al Harbi, chief executive officer of Maaden, said to Bloomberg Television in Riyadh, when asked about nickel and lithium.

Standard Chartered Chief: Green Transition Distant for Poor Nations (10:15 a.m.)

Standard Chartered Plc Chief Executive Officer Bill Winters has warned that while developed countries have a clear pathway to funding the transition to a low-carbon economy, for much of the world it remains a distant prospect. There is a “huge gap” to close, said Winters, who pointed out that advanced economies can see 60% to 70% of the funds needed, compared to less than 10% in Sub-Saharan Africa. “There is a big, big, disconnect,” he said. “Connecting the finance to the underlying technology is our key goal.”

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