“While our growth this year will not be linear, we are confident that our approach is supporting a profitable company today and in the long term, creating value for all stakeholders, our partners, our customers and our shareholders,” said CFO Rachel Ruggieri. This is stated in the presentation for investors.
But that plan was thrown out the window when Howard Schultz assumed the role of interim CEO on Monday, taking over the reins of the company for the third time.
“This decision will allow us to invest more in our people and our stores – the only way to create long-term value for all stakeholders,” he wrote.
What changed? Share buybacks are under the political microscope after the S&P 500 hit a record high of $882 billion last year. Giving cash to investors usually raises share prices by reducing the amount available, but critics say the money is better spent on workers and other investments that can stimulate the economy as a whole.
Last week, US President Joe Biden proposed new rules designed to limit the practice.
However, a Starbucks spokesperson indicated that the decision was not due to the political climate. The decision to suspend the buyback program was “on the agenda of Starbucks, and only the agenda of Starbucks.”
So the other important factor is the workers. Since December, several Starbucks stores have merged against the company’s wishes, according to my CNN Business colleague Daniel Wiener-Bronner. Still considering the option.
Schultz tried to discourage employees from unionizing by emphasizing the importance of “direct and general relations” with workers.
Let’s face it: in this climate, it can be harder for management to defend generous share buybacks, and boards like Starbucks might decide the money should go to staff instead. After all, shareholders have had a good time during the pandemic.
Starbucks shares fell nearly 3% in premarket trading on Monday. While they fell 22% this year, they are up 33% in 2020 and 2021.
On the radar: Senator Bernie Sanders drew a straight line between excessive buyouts and the need for unions in a recent statement after Schultz’s new role was announced.
“If Starbucks can afford to spend $20 billion on share buybacks and dividends…it can afford a unionized workforce,” he said.
War bonds and NFTs: how Ukraine finances its defense
The epicenter of the latest effort to raise money for Ukraine is a modest office above a bakery in north London.
Isaac Kamlish, Nathan Cohen and Isaac Bentata – aged 23 to 25 – gathered around their laptops last week and helped launch the first-ever sale of one-of-a-kind digital collectibles hosted by the national government.
Within 24 hours, Kyiv, using technology developed by the trio, sold more than 1,200 non-fungible tokens, or NFTs, raising around $600,000 to fund its defense against Russia.
The auction, which pioneered the use of blockchain technology as a wartime funding arm, highlights how the Ukrainian government is using both new and traditional tools to raise the cash it needs to survive the crisis.
One playbook was old school. Kyiv has raised an estimated $1 billion from war bonds sold to people and institutions in Ukraine as residents show a willingness to lend to the government even if there is no guarantee they will get all their money back.
The administration of President Volodymyr Zelensky has also called on potential donors around the world to directly transfer cryptocurrencies, which has raised more than $56 million, according to analytics group Chainalysis. And last week’s NFT sell-off saw collectors from Los Angeles to Barcelona rush to take part in what they saw as a big moment for Ukraine and cryptocurrency.
“The war in Ukraine is devastating and it will go down in the history books,” Ben Jacobs, co-founder of digital asset investment firm Scenius Capital, told me. “This use of crypto technology is itself historical.”
Jacobs of Venice Beach, California bought two NFTs for a total of $1,100, including small transaction fees. About $1,000 in Ether — the cryptocurrency commonly used to sell NFTs — was handed over to the Ukrainian government.
The London Metal Exchange is still in crisis mode
When a trade jumps by 250% within a few days, investors usually open bottles of champagne. In early March, this is exactly what happened to nickel futures — skyrocketing on the London Metal Exchange from $29,000 to $100,000 a metric ton after the invasion of Ukraine. But the champagne remains corked and investors are threatening to sue.
On Monday, British financial regulators said they were investigating the exchange’s recent actions, citing transparency concerns.
Known for its ring of red sofas and barking brokers, the LME has successfully navigated world wars, crises, and defaults over the past century and a half. But nickel, the metal used in stainless steel and the lithium-ion battery cells in most electric vehicles, could be what will ultimately deal the death blow to the world’s largest base metal market.
“Most likely, the LME will soon die a slow death due to a loss of confidence in it and its products,” Mark Thompson, executive vice chairman of mining company Tungsten West, tweeted.
A price spike, partly caused by the actions of the Chinese steel tycoon, led the LME to abruptly halt trading. Some deals have even been cancelled. As a result, many investors have lost faith in the exchange and are looking for an opportunity to conduct their business elsewhere. But the possibilities are limited.
“At the moment there is no alternative,” said Nikhil Shah, an analyst at CRU Group. “There is no other choice.”
The ISM non-manufacturing index, which tracks the US service sector, is released on Tuesday.