BRICS takes on the Dollar, $170,000 Driver Pay 💰

GLOBAL CURRENCIES

US Dollar Pressures

The BRICS Alliance, which encompasses Brazil, Russia, India, China, and South Africa, is gearing up to discuss the potential of using local currencies for cross-border transactions at their forthcoming August summit. Their overarching objective is to bolster their respective economies by prioritizing native currencies in international trade, effectively sidestepping the U.S. dollar. The member nations are convinced that transacting in local currencies within the bloc will not only be more efficient but will also prove to be cost-effective. Such a move is anticipated to catalyze business growth within the BRICS nations.

It's crucial to note the evolving landscape of global foreign exchange reserves. In FY 2002-03, the U.S. dollar held an imposing 71% share. However, over the last two decades, its grip has loosened, representing just 59% of all foreign exchanges by 2023, a decline of 12%. BRICS is not merely observing this shift passively; they are actively accelerating the decline. The alliance is engaging with developing nations across Asia, Africa, and South America, advocating for a reduced reliance on the U.S. dollar in their trade practices.

If this trend of "de-dollarization," championed by BRICS, continues unabated, we could witness a significant drop in the U.S. dollar's share in foreign exchange reserves in the coming decades. Such a paradigm shift could empower BRICS to reshape global power structures and the financial order within the next 20 years.

VIDEO OF THE WEEK

The worlds largest cargo aircraft. Antonov AN-225

With a weight of 285,000 kgs and a wingspan of 88 meters, the Ukrainian aircraft was so large that it could carry:

• 80 Passenger Cars

• Semi Trailer Trucks

• Trains

• A Boeing 747 - Yes you read that correct

(Spoiler alert, tragic story but there seems to be a chance of a happy ending)

UNION DEAL

Driver Pay Reaches $170k

United Parcel Service (UPS), has issued a cautionary statement about its anticipated profits for the year, attributing the decrease to recent wage hikes granted to US workers under a labor agreement. This announcement comes in the wake of the most significant inflation surge in the United States in four decades.

As per the terms of the five-year contract, UPS revealed that the average annual earnings for a full-time driver would rise to approximately $170,000 (£135,000), encompassing healthcare and additional perks.

The pay increases have materialized amidst a period of heightened inflation, with prices experiencing a 3% uptick over the year leading up to June. This comes after a more substantial increase of over 9% in the prior year. As the cost of living escalates, pressure on household finances has sparked labor unrest, prompting unionization drives at companies such as Starbucks and instigating strikes across the nation.

The Teamsters union's threat of a strike recently posed challenges for UPS, causing customers to reroute roughly a million daily packages to competitors, resulting in a sales loss of around $200 million.

In an investor update, UPS indicated that the labor deal with the Teamsters, likely to gain worker approval this month, will also contribute to diminished profits. The company now forecasts an adjusted operating margin of 11.8% for the year, a drop from the initial projection of 12.8% in May. This decrease is further influenced by declining shipments due to economic weakening.

UPS boasts the largest unionized workforce in the US and is renowned for its relatively generous compensation package. The agreement with the Teamsters has significantly improved conditions for part-time employees and drivers, including higher starting pay, recognition of Martin Luther King Jr Day, and commitments to better work environments.

GLOBAL TRADE SNIPPETS

MSC has purchased a majority share in AlisCargo Airlines: The sole Italian airline specializing in intercontinental freight transport. This move aligns MSC with competitors Maersk and CMA CGM, who have also been actively expanding their own branded air cargo services.

PayPal launches its own USD digital stablecoin: PayPal’s stablecoin has been created to facilitate payments and is fully supported by U.S. dollar deposits, short-term U.S. Treasuries, and comparable cash assets. It can be redeemed on a one-to-one basis for U.S. dollars and is issued by Paxos Trust Company.

China trade slumps: China's imports and exports declined more rapidly than anticipated, raising concerns about the potential impact on the world's second-largest economy's recovery prospects.

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