🎩 Houdini Energy Security
Europe escapes blackmail by making itself...un-blackmailable.
Two months into the closure of the Strait of Hormuz, with roughly a fifth of global LNG stranded somewhere between Ras Laffan and a frightened insurance broker, the European gas market is doing something faintly insulting. It is staying calm. Dutch TTF closed last week at €45.60/MWh for next-day delivery, barely a sixth of the €300+ peak hit four years ago. Brussels and Bern picked this very moment to ban short-term Russian LNG contracts as a first step toward a full embargo in 2027, a decision the press graciously called « difficult timing. » The futures curve called it Tuesday.
The official explanation runs along familiar lines: European demand has dropped 20% since 2022, thanks to the combined heroics of heat pumps, mild winters, and that perennial favourite, the energy transition. The actual explanation is in Ludwigshafen, where BASF has spent the past three years closing one ammonia plant, one methanol plant, one melamine plant, and assorted nylon precursors, while shovelling €3B into a new Verbund site in Zhanjiang. Germany’s chemical sector runs at roughly 70% capacity, the IGBCE reckons 40K to 50K jobs in the industry are on the gangplank, and BASF alone has cut 4.8K headcount worldwide between late 2023 and early 2026. That is what an energy transition looks like when narrated by someone selling the family silver.
A continent that no longer needs much gas because it no longer makes much of anything is, naturally, a continent harder to blackmail. There is something darkly elegant about the strategy: solve the energy security problem by removing the energy users. Asia, which still bothers to manufacture things, is paying full freight. The JKM benchmark hit $16/MMBtu, up 51% since the strait closed, urea is up 50%, and helium, that minor by-product of Qatari liquefaction without which no semiconductor ever sees the light of day, is being rationed. Chinese LNG imports, in a touching display of timing, are tracking their lowest level in eight years, Beijing having decided it preferred to drill domestically and pipe in the rest.
Heading into a refill season in which summer prices sit above winter ones, European storage caves are well below average, the usual incentive to top them up duly removed. Switzerland, which now burns less gas than it did in 2000 and parks 15% of annual demand abroad by federal decree, is contemplating the radical option of digging its own hole in Valais. The Kiel Institute, in a paper nobody on the trading floor has read, notes that the blockade hits hardest in countries that never had the privilege of choosing deindustrialisation as a defence policy: South Asia, sub-Saharan Africa, the parts of the Middle East still trying to grow. Their inflation is the price of Europe’s quiet TTF screen. And that, even with all the sarcasm in the world, is hard to find funny.
Have a great week!
M. Hantale🧀
- 🇮🇷 Diplomacy. Iran warns against any American intervention in the Strait of Hormuz, as Washington plans to escort ships that have been blocked for two months.
- 🇨🇴 Climate. Fifty-seven countries gathered in Colombia for the first international conference dedicated to phasing out fossil fuels, marking a step towards developing concrete strategies on a global scale.
- 🇮🇷 Diplomacy. The ICRC president calls on Iran to respect humanitarian law and protect civilians amid the risk of conflict escalation.
- 🇨🇭 Defence. Switzerland launches a call for projects endowed with CHF 15M to support innovation in dual-use technologies, combining civil and security applications.
- 🇺🇸 Conflict. Donald Trump threatens to impose a prolonged maritime blockade on Iran and states he no longer wants to « play nice » following the failure of nuclear talks.
- 🇦🇲 Diplomacy. The President of the Confederation is taking part in the European Political Community summit in Yerevan whilst a Swiss initiative on those displaced from Nagorno-Karabakh is struggling to garner support.
Economy & Finance
- 🇩🇪 Inflation. German inflation reached 2.9% in April, its highest level since the beginning of 2024.
- 🇪🇺 Inflation. Consumer prices in the eurozone accelerated to 3% year-on-year in April, exceeding consensus expectations.
- 🇨🇭 Growth. The KOF indicator rose to 97.9 points in April but remains below its average, signalling a still modest recovery in the Swiss economy.
- 🇪🇺 Growth. The eurozone economy slowed in the first quarter of 2026, hampered by rising energy prices.
- 🇪🇺 Employment. EU member states support a reform providing that cross-border workers will receive their unemployment benefits from the country where they worked, rather than from their country of residence.
- 🇨🇭 Real estate. The gap between rents on existing leases and those on the market is widening in Switzerland, limiting residential mobility according to a study.
- 🇦🇪 Commodities. The United Arab Emirates is leaving OPEC after nearly 60 years, weakening the cartel and paving the way for an increase in its oil production.
- 🌍 Commodities. The World Bank anticipates a 24% rise in energy prices in 2026, reaching their highest level since the start of the war in Ukraine.
- 🇨🇭 Industry. Swiss hotels recorded 6.2bn CHF in turnover in 2025, up 3.9% year-on-year thanks to tourism demand.
- 🇨🇭 Industry. The closure of the Strait of Hormuz is boosting demand for renewable energy solutions in Switzerland, but the recovery remains slower than in the rest of Europe.
- 🇪🇺 Rates. The ECB held its key interest rates unchanged, despite accelerating inflation in the eurozone in April.
- 🇨🇭 Raw materials. Imports of oil, gas and uranium cover nearly 70% of Swiss energy consumption, representing 7 billion CHF per year.
- 🇬🇧 Trade. British exports to the United States have fallen by 25% following the introduction of tariffs by the Trump administration, widening the trade deficit.
- 🇨🇭 Wealth. Swiss households’ net wealth rose by 4.6% in 2025 to exceed CHF 5,100bn, driven by real estate and financial markets.
Switzerland
- 🇨🇭 Health. A national hotline for victims of domestic violence opened on Friday on 142, following several technical delays.
- 🇨🇭 Immigration. A poll shows 52% voting intentions in favour of the initiative aimed at capping Switzerland’s population at 10 million.
- 🇨🇭 Employment. The share of people aged 64 and over in the Swiss active population has more than doubled since 2005, reaching 4.5% in 2025.
- 🇨🇭 Employment. Geneva continues its measures to improve the professional integration of the unemployed, as the cantonal unemployment rate reaches 4.7% compared to 2.8% on average in Switzerland.
- 🇨🇭 Innovation. An AI model developed by the University of Zurich enables translation from German to the various Romansh dialects for the first time.
- 🇨🇭 Climate. Several Swiss regions experienced the driest April ever recorded, with only 27% of usual precipitation according to MeteoSwiss.
- 🇨🇭 Science. ETH Zurich has developed an AI system capable of detecting pain in laboratory mice by analysing their facial expressions in real time.
- 🇨🇭 Science. Researchers from the University of Berne have created an artificial placenta model to better understand how medicines taken during pregnancy reach the foetus.
- 🇨🇭 Culture. Swiss archaeologists have discovered three mummies and a gold mask during excavations at Hout-Sekhem, in Egypt.
- 🇨🇭 Defence. A new committee launches a popular initiative to cancel Switzerland’s purchase of F-35 fighter jets.
- 🇨🇭 Politics. The Swiss Parliament rejects official recognition of the State of Palestine, considering that the conditions are not met.
- 🇨🇭 Politics. The National Council rejects by a large majority the popular initiative aimed at facilitating naturalisation.
- 🇨🇭 Politics. The cantons of western Switzerland are opposing the UDC initiative « No Switzerland of 10 million! », fearing risks to the economy and public finances.
- 🇨🇭 Politics. An initiative aimed at taxing airline tickets to finance trains and distribute mobility vouchers has been launched in Berne.
- 🇨🇭 Security. Swisscom alerts to a sharp rise in cyber threats in Switzerland, fuelled by AI, geopolitical tensions and growing digital dependency.
Elsewhere in the World
- 🇵🇪 Elections. Two weeks after the first round, Peru is still awaiting the final results of an extremely tight presidential election, with second place being decided by fewer than 24,000 votes.
- 🇩🇪 Government. The German coalition is undermined by persistent disagreements over reforms, exposing strong tensions between the CDU and the SPD as the budget bill approaches.
- 🇺🇸 Justice. Former FBI director James Comey turned himself in to authorities after being charged with an alleged threat against the life of President Trump via an Instagram post.
- 🇲🇲 Justice. Myanmar’s junta has commuted Aung San Suu Kyi’s prison sentence to house arrest as the country remains in civil war.
- 🇺🇿 Justice. Swiss justice abandons proceedings against Gulnara Karimova, daughter of the former Uzbek president, detained in her country until 2028.
- 🇲🇱 Conflict. Tuareg separatists announce their intention to seize Gao, Timbuktu and Ménaka following the capture of Kidal, whilst France recommends its nationals leave Mali in light of the deteriorating security situation.
- 🇦🇷 Energy. Argentina is urgently seeking LNG imports for winter as the global market remains disrupted by the war in Ukraine.
- 🇻🇪 Energy. Fewer than 30% of Venezuela’s oil wells are currently operational, despite efforts to restart production.
- 🇩🇪 Defence. The Pentagon announces the withdrawal of 5,000 American soldiers from Germany, raising concerns amongst Republican parliamentarians over European security.
- 🇷🇴 Politics. In Romania, a no-confidence motion brings together social democrats and the far right for the first time to overthrow the liberal Prime Minister.
- 🇨🇺 Politics. Negotiations between Washington and Havana are raising hopes of change as Cubans face an unprecedented fuel shortage linked to the American embargo.
- 🇱🇹 Security. Lithuania announces it has dismantled a network linked to Russian services, accused of preparing sabotage and assassinations in Europe.
- 🇬🇧 Security. Following a series of attacks on Jewish targets, Prime Minister Starmer denounces a wave of violence in London, amid an investigation into possible links with Iran.
- 🇬🇧 Security. Three men of Ukrainian origin are being tried in London for attempting to set fire to properties linked to the Prime Minister, after being recruited for payment by a Russian-speaking contact.
- 🇸🇴 Security. Attacks and hostage-takings of ships are multiplying off the coast of Somalia, marking a worrying return of piracy after several years of calm.
- 🇨🇭 Pharma. Novartis faces increased pressure from generic medicines, with quarterly revenue declining 1% to $13.1bn.
- 🇺🇸 Pharma. Novartis invests $23bn in a seventh production site in the United States, strengthening its industrial presence in Morrisville, North Carolina.
- 🇨🇭 Banking. UBS posts net profit of $3bn in the first quarter, up 80%, surpassing market expectations.
- 🇫🇷 Industry. Lafarge, owned by Swiss group Holcim, is appealing its conviction for financing terrorism in Syria in 2013 and 2014 by French courts.
- 🇫🇷 Industry. SergeFerrari plans to cease PET spinning operations at its Swiss Tersuisse site, with transfer of operations to France to strengthen its competitiveness.
SMI Index
| Name | Price | Mkt Cap | 7d Chg | YTD |
|---|---|---|---|---|
| Nestlé | 78.61 | – | ▼ -2.27% | ▲ +7.04% |
| Novartis | 114.50 | – | ▼ -0.19% | ▲ +8.74% |
| Roche | 322.30 | – | ▲ +0.37% | ▲ +2.05% |
| UBS | 34.41 | – | ▲ +3.40% | ▼ -6.85% |
| Zurich Insurance | 539.20 | – | ▼ -0.85% | ▼ -5.08% |
| ABB | 79.64 | – | ▲ +4.21% | ▲ +31.97% |
| Sika | 144.95 | – | ▲ +0.42% | ▼ -8.93% |
| Lonza | 477.50 | – | ▼ -1.08% | ▼ -10.85% |
| Geberit | 524.40 | – | ▼ -1.87% | ▼ -12.79% |
| Swiss Life | 910.40 | – | ▼ -1.79% | ▼ -2.34% |
| Partners Group | 871.20 | – | ▼ -1.58% | ▼ -15.42% |
| Givaudan | 2,798.00 | – | ▼ -0.43% | ▼ -7.43% |
| Swisscom | 658.00 | – | ▲ +0.15% | ▲ +18.06% |
| Swiss Re | 125.75 | – | ▼ -1.53% | ▲ +2.79% |
| Holcim | 72.64 | – | ▼ -0.41% | ▼ -7.04% |
| Julius Bär | 64.32 | – | ▲ +4.55% | ▲ +2.04% |
| Alcon | 58.20 | – | ▼ -2.15% | ▼ -8.40% |
| SGS | 84.88 | – | ▼ -0.24% | ▼ -5.19% |
| Logitech | 79.52 | – | ▲ +4.25% | ▲ +0.05% |
| Straumann | 85.56 | – | ▲ +2.12% | ▼ -8.26% |
📅 Data as of 2026-05-04 12:05
Forex CHF
| Pair | Rate | 7d Chg | YTD |
|---|---|---|---|
| EUR/CHF | 0.92 | ▼ -0.32% | ▼ -1.40% |
| USD/CHF | 0.78 | ▼ -0.28% | ▼ -1.13% |
| GBP/CHF | 1.06 | ▼ -0.12% | ▼ -0.49% |
📅 Data as of 2026-05-04 12:05
What Adult Regulation Looks Like
Here’s what everyone misses about the UBS capital fight. Switzerland is the only developed country that just looked at the problem and did the arithmetic. $20B in additional Common Equity Tier 1, ramped over seven years, against $7.8B in 2025 net profit. Tight, but not crippling. The rule covers 100% of foreign subsidiary book value with hard capital, up from the current 45%. End of memo.
UBS is furious. Sergio Ermotti’s team has been working the press for months. Shareholders floated the idea of headquarters relocation, like a teenager threatening to move out. To where, exactly? Frankfurt, where the ECB has spent five years writing memos about « competitiveness » without producing any? New York, where being a foreign bank under a second Trump term is its own contact sport? The « S » in UBS does most of the brand’s heavy lifting. Take it away and what remains is Deutsche Bank with better marketing.
Now the comparison nobody in Washington wants to make. UBS’s balance sheet is roughly 1.6x Swiss GDP. JPMorgan, the largest American bank, runs at about 16% of US GDP. Same business, different magnitude. Switzerland is carrying a single counterparty whose failure could mathematically exceed what the federal budget could absorb. No other developed country runs this exposure. So the response cannot be modeled on anyone else’s playbook.
The American answer to Too Big To Fail produced Dodd-Frank, 22,000 pages of implementing rules, and a Basel III « endgame » that Wall Street has spent two years successfully defanging. Brussels prefers frameworks. The Capital Requirements Regulation has been amended so often that compliance officers track it by Roman numeral. Neither approach prevented Credit Suisse from imploding in March 2023, nor did either spare Bern from being the only adult in the room when the rescue had to happen on a weekend.
Capital is not a vaccine. Credit Suisse died from a run on liquidity, not a shortage of capital, after a decade of strategic incoherence and reputational hemorrhage. Capital requirements are a buffer that buys time. $20B buys roughly enough time to organize an orderly resolution rather than a Sunday-night fire sale negotiated by a finance minister and a bank chairman over coffee. The distinction matters in basis points.
The Swiss approach gets caricatured abroad as either too lenient or too punitive. Neither caricature lands. A small country with one outsized lender is doing what every other country with a TBTF bank should do and largely refuses to. Shareholders eat the cost of holding extra capital. Taxpayers do not eat the cost of a second 2023. That is not posturing. That is risk management. And in 2026, that counts as radical.