It was supposed to be the lowest payrolls report since December 2020 and… it was, but not how the market expected. With consensus expecting a 200K print (and whisper predicting much lower amid the mass tech layoffs), virtually nobody – not even Goldman – expected anything resembling a beat. And while we did in fact get the weakest print since Dec 2020 (and tied with March 2021), the report was a completely unexpected beat to expectations, coming in at +263K, this was a huge beat to expectations of 200K (the 7th consecutive beat) and just barely a drop compared to the upward revised 284K last month.

The change in total nonfarm payroll employment for September was revised down by 46,000, from +315,000 to +269,000, and the change for October was revised up by 23,000, from +261,000 to +284,000. With these revisions, employment gains in September and October combined were 23,000 lower than previously reported

Monthly job growth has averaged 392,000 thus far in 2022, compared with 562,000 per month in 2021. In November, the biggest job gains occurred in leisure and hospitality (bartenders and waiters), health care, and government. Employment declined in retail trade and in transportation and warehousing.

As noted, this was the 7th consecutive payrolls beat of expectations in a row!

The unemployment rate was unchanged at 3.7% in November, in line with expectations, and has been in a narrow range of 3.5% to 3.7% since March. The number of unemployed persons was essentially unchanged at 6.0 million in November.  Among the major worker groups, the unemployment rates for adult men (3.4 percent), adult women (3.3 percent), teenagers (11.3 percent), Whites (3.2 percent), Blacks (5.7 percent), Asians (2.7 percent), and Hispanics (3.9 percent) showed little or no change over the month. (See tables A-1, A-2, and A-3.)

Both the labor force participation rate, at 62.1 percent, and the employment-population ratio, at 59.9 percent, were little changed in November and have shown little net change since early this year.

But what was the most troubling update is that wages came in red hot again, with average hourly earnings for all employees on private nonfarm payrolls rising by 18 cents, or 0.6%  to $32.82, double the expected 0.3% growth . Over the past 12 months, average hourly earnings have increased by 5.1% which was also above the 4.6% expected.

Here is Cornerstone Financial’s Cliff Hodge on the earnings data: “While the headline payrolls number was strong, the wage data is going to be eye-popping for the Fed. The 0.6% month-over-month wage growth number matched the highest level all year. Higher wages feed into higher inflation, which will no doubt keep pressure on the Fed and should increase expectations for the terminal rate. We got no help from the participation rate, which continues to move in the wrong direction and will keep competition for labor high until the economy inevitably rolls over sometime next year.”

In November, the average workweek for all employees on private nonfarm payrolls declined by 0.1 hour to 34.4 hours. In manufacturing, the average workweek for all employees decreased by 0.2 hour to 40.2 hours, and overtime declined by 0.1 hour to 3.1 hours. The average workweek for production and nonsupervisory employees on private nonfarm payrolls decreased by 0.1 hour to 33.9 hours.

Some more details:

• Among the unemployed, the number of permanent job losers rose by 127,000 to 1.4 million in November. The number of persons on temporary layoff changed little at 803,000.
• The number of long-term unemployed (those jobless for 27 weeks or more) was little changed at 1.2 million in November. The long-term unemployed accounted for 20.6 percent of all unemployed persons.
• The number of persons employed part time for economic reasons was about unchanged at 3.7 million in November. These individuals, who would have preferred full-time employment, were working part time because their hours had been reduced or they were unable to find full-time jobs.
• The number of persons not in the labor force who currently want a job was little changed at 5.6 million in November and remains above its February 2020 level of 5.0 million. These individuals were not counted as unemployed because they were not actively looking for work during the 4 weeks preceding the survey or were unavailable to take a job.
• Among those not in the labor force who wanted a job, the number of persons marginally attached to the labor force held at 1.5 million in November. These individuals wanted and were available for work and had looked for a job sometime in the prior 12 months but had not looked for work in the 4 weeks preceding the survey. The number of discouraged workers, a subset of the marginally attached who believed that no jobs were available for them, was 405,000 in November, little changed from the previous month.

Drilling down into the BLS’s establishment survey fabulation we get the following ridiculous modeled “data”:

• Leisure and hospitality added 88,000 jobs in November, including a gain of 62,000 in food services and drinking places. Leisure and hospitality has added an average of 82,000 jobs per month thus far this year, less than half the average gain of 196,000 jobs per month in 2021.
• In November, employment in health care rose by 45,000, with gains in ambulatory health care services (+23,000), hospitals (+11,000), and nursing and residential care facilities (+10,000).
• Government added 42,000 jobs in November, mostly in local government (+32,000). Government employment has increased by an average of 25,000 per month thus far this year, compared with 38,000 per month in 2021. Since February 2020, government employment is down by 461,000, or 2.0 percent.
• In November, employment in the other services industry rose by 24,000, as personal and laundry services added 11,000 jobs over the month. Other services employment has increased by an average of 15,000 per month thus far this year, compared with 24,000 per month in 2021. Employment in other services is below its February 2020 level by 186,000, or 3.1 percent.
• Employment in social assistance increased by 23,000 in November and has returned to its February 2020 level. Within social assistance, employment in individual and family services increased by 17,000 in November. Job growth in social assistance has averaged 18,000 per month thus far in 2022, compared with an average of 13,000 per month in 2021.
• Construction employment continued to trend up in November (+20,000), with nonresidential building adding 8,000 jobs. Construction has added an average of 19,000 jobs per month thus far this year, little different from the 2021 average of 16,000 per month.
• Employment in information rose by 19,000 in November. Employment in the industry has increased by an average of 14,000 per month thus far this year, in line with the average of 16,000 per month in 2021.  
• Manufacturing employment continued to trend up in November (+14,000). Job growth has averaged 34,000 per month thus far this year, little different from the 2021 average of 30,000 per month.
• In November, employment in financial activities continued its upward trend (+14,000). Job gains in real estate and rental and leasing (+13,000) and in securities, commodity contracts, and investments (+6,000) were partially offset by a decline in credit intermediation and related activities (-9,000). Employment in financial activities has increased by an average of 12,000 per month thus far this year, the same as in 2021.
• Employment in retail trade declined by 30,000 in November. Job losses in general merchandise stores (-32,000), electronics and appliance stores (-4,000), and furniture and home furnishings stores (-3,000) were partially offset by a job gain in motor vehicle and parts dealers (+10,000). Retail trade employment has fallen by 62,000 since August.
• Employment in transportation and warehousing declined by 15,000 in November and has decreased by 38,000 since July. In November, job losses in warehousing and storage (-13,000) and in couriers and messengers (-12,000) were partially offset by a job gain in air transportation (+4,000).  
• Employment in professional and business services changed little in November (+6,000). Within the industry, professional and technical services added 28,000 jobs, while business support services lost 11,000 jobs. Monthly job growth in professional and business services has averaged 58,000 thus far in 2022, down from 94,000 per month in 2021.

And a visual heatmap of jobs courtesy of Bloomberg:

Needless to say this report, clearly politically motivated in light of everything else taking place in the economy, has put the Fed in a corner: while most other economic indicators scream recession, Biden’s last economic silver lining – the labor market – continues to come in far hotter than expected, and as such it forces Powell to keep tightening until such time as the bottom falls out of the economy and the US goes straight from expansion to depression, skipping recession completely.

Matt Maley, chief market strategist for Miller Tabak agrees: “The number one issue for the Fed has been wage inflation. Today’s much higher than expected data on average hourly earnings shows that it is still a big problem. This will prolong the Fed’s current tightening policy.”

As BBG economist Anna Wong notes, “The robust November jobs report reinforces a point Fed Chair Jerome Powell made in his Nov. 30 speech: Signs that wage growth is moderating are only ‘tentative.’ The resurgence of average hourly earnings growth shows labor shortages are still pressuring inflation, pushing back against the idea — supported by a few Fed officials, as indicated in the November FOMC minutes — that wage growth is cooling fast. Given the slow adjustment in the labor market, Fed officials will likely have to raise their terminal-rate forecast from what they wrote down in the September dot plot.”

And in keeping with the market reaction matrix we shared earlier, the kneejerk reaction for all risk assets – stocks, TSYs, gold, and crypto – is uniformly lower.

Authored by Steve Watson via Summit News,

Senator Rand Paul asserted Thursday that Anthony Fauci is directly responsible for funding dangerous research that likely killed millions of people, and that he “won’t get away.”

“Likely there is no public health figure who has made a greater error in judgement than Dr Fauci,” Paul declared in a Fox News appearance, adding “the error of judgement was to fund gain of function research in a totalitarian country.”

Fauci funded “research that allowed them to create super viruses, that in all likelihood leaked into the public and caused seven million people to die,” Paul declared.

“This is right up there with decisions, some of them malevolent or military to kill millions of people,” The Senator further urged.

Watch:

The Senator made the comments after Fauci appeared in a fawning Washington Post interview, where he was labeled a “hero,” complained about being a victim, and couldn’t think of anything he did wrong.

Fauci: “I didn’t do a study on it, but from what I’m seeing … the people who are spreading misinformation & disinformation, seem to be relentless … It’s almost as if we’re outgunned by the people who are spreading disinformation.” pic.twitter.com/Pb1Pei7C7x

— Tom Elliott (@tomselliott) December 1, 2022

Paul further noted that “It goes to judgement, talk about errors, you think he might apologise to the world… to support that kind of research then look the other way and say nothing to see here, and to cover it up.”

“For the last two years he’s been covering his tracks, but we’ve caught him red handed and he won’t get away,” Paul asserted, adding “historically [Fauci] will be remembered for one of the worst judgments in the history of modern medicine.”

Paul also commented on efforts he is leading to overturn the Biden Administration’s COVID vaccine mandate for military personnel.

“They deserve to have their religious freedom, as well as their medical choices and freedom to decide what goes into their body,” Paul noted.

He continued, “We know this, and this is a scientific fact, the vaccine does not prevent you from getting an infection, it doesn’t prevent you from transmitting an infection, and for young people there isn’t significant evidence to show that it reduces the severity or hospitalisation.”

“The military has become so ‘woke’ and they’re demanding you get a vaccine that you don’t need, so something’s got to change,” the Senator further urged.

*  *  *

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US stock futures were muted, trading in a narrow 5 point range and unchanged for the second day in a row after a blistering post-Powell rally, as investors awaited the latest jobs report for clues around the strength of the domestic economy (with consensus expecting a +200K print, it will be the weakest monthly gain since Dec 2020) as well as its impact on the outlook for rate hikes. Contracts on the Nasdaq 100 and the S&P 500 were little changed 745 a.m. ET. The underlying indexes were also subdued Thursday after a sharp rally that was fueled by signals from Federal Reserve Chair Jerome Powell that the central bank could slow the pace of rate hikes at this month’s meeting.

Among notable movers in premarket trading, Marvell Technology dropped after the US chipmaker issued a tepid sales forecast for the fourth quarter. Zscaler Inc. also slumped after the cloud security company gave a forecast for calculated billings that fell slightly short of the average analyst estimate at the midpoint. Here are all the notable premarket movers:

• Marvell Technology shares drop 7% in premarket trading after the US chipmaker issued a tepid sales forecast for the fourth quarter. Analysts note that weakness stemmed from the company’s data-center business, as well as a broad softening in demand from China. This indicates that the decline in demand for chips continues to spread outside of the computer and smartphone industries, they said.
• Opendoor shares fall as much as 2.2% in premarket trading, after the real estate platform provider’s CEO Eric Wu stepped down to become president of its marketplace business to be replaced as CEO by Carrie Wheeler. Analysts said that the CEO change came as a surprise and raised questions around its timing amid a tough backdrop for the real estate market.
• Zscaler shares are down 9% in premarket, after the cloud security company gave a forecast for calculated billings that fell slightly short of the average analyst estimate at the midpoint. Analysts noted that revenue and billings growth decelerated as macro headwinds intensified.
• Asana shares slumped as much as 17% in premarket, after the software firm’s revenue forecast for the fourth quarter disappointed, with analysts cautious on the stock given its greater exposure to job losses in the technology industry, which could put pressure on future growth.
• Veeva shares drop 4.2% in postmarket trading after the company’s adjusted EPS and billings guidance for the fourth quarter missed Street estimate.
• Smartsheet’s strong quarterly results beat across the board and set the work-management software firm up well to deliver durable growth into next year, analysts say. Shares in the firm were up more than 9% in after-hours trading.
• Samsara rose 20% postmarket after the software company boosted its year revenue outlook. The company also posted 3Q sales that topped expectations and delivered a narrower-than-expected loss

US stocks have rallied since mid-October, with the S&P 500 posting its first two-month gain since August 2021, on bets that inflation has peaked. The blue-chip Dow is back in a technical bull market, but market strategists have warned equities could see further declines in the first half of next year amid the specter of a recession. Data from Bank of America, citing EPFR Global, showed US stock funds had their biggest outflows since April in the week through Nov. 30. US large cap funds had the largest redemptions at $14.5 billion. Among sectors, utilities and health care attracted inflows, while $600 million exited financials.

All eyes today are on the November non-farm payrolls report, with economists expecting it to show signs that labor demand is ebbing. Still, they say a bigger slowdown is needed to bring that more in line with labor supply in order to contain the wage growth that’s helped fuel inflation. We have posted a full preview here, but the median estimate for November jobs report’s employment change is 200k; crowd-sourced whisper number is 187k. Nonfarm payrolls change has exceeded the median estimate for seven months running; 2-year yield’s YTD high 4.799% was reached on Nov. 4 following October jobs report. 

In terms of the market’s reaction to the headline jobs print, this is what Goldman expects:

• >261k (aka higher than last print) S&P down at least 2%
• 175k – 261k S&P down 1 – 2%
• 125k – 175k S&P up 50bps – 1%
• 0 – 125k S&P up 1 – 2%

Many economists reckon Friday’s employment report may fall short of the turning point Fed officials are seeking in their battle to beat back inflation. The median projection in a Bloomberg survey calls for payrolls to rise 200,000 in November, cooling only slightly from the previous month. Other market watchers point to signs that steep rate hikes will tip more economies into a downturn.

“Nervous Fed-watchers will be hoping that the non-farms number comes in somewhat below consensus to strengthen the case for a moderation of aggressive rate hikes so far,” said Richard Hunter, head of markets at Interactive Investor. “On the other hand, a stronger-than-expected reading, while positive for the economy, would be damaging for that case in another example of good news being bad news for investors.”

“Consensus is that recession is coming but equities cannot bottom before it starts, inflation won’t fall quickly so central banks can’t blink, China reopening will be a messy process, and Europe remains tricky,” Barclays Plc strategist Emmanuel Cau wrote in a note.

And speaking of that, recession concerns have become more pronounced after data on Thursday showed November factory activity sliding in a range of countries, with American manufacturing contracting for the first time since May 2020. Recent company reports also hint at mounting pressure on company earnings, and companies, ranging from Amazon.com to Ford Motor Co., have announced thousands of job cuts.

In Europe, the Stoxx 50 is little changed before the release of US payroll data.  Here are the top European movers:

• Credit Suisse shares rise as much as 6.9%, halting a 13-day losing streak, as Chairman Axel Lehmann said the bank has mostly stemmed the huge outflow of client assets.
• AJ Bell jumps as much as 12% to its highest level in a year after Jefferies upgraded its rating to buy from hold, praising the strategy of the firm’s trading platform.
• Goldman Sachs upgrades both AB Foods and H&M to neutral. AB Foods shares rise as much as 4.3%, touching the highest since August, while H&M gains as much as 3.1%.
• Separately, Morgan Stanley sees a “perfect storm” ahead for apparel retail as revenue and cost pressures collide, in a note putting an overweight rating on AB Foods, equal-weights on Next and Inditex and underweight on H&M.
• Trigano hits the highest level since April, rising as much as 3.6% in a third straight day of gains since the French caravan maker announced results on Tuesday evening.
• Sanofi is the worst performer across France’s SBF 120 index on Friday, losing as much as 2.5%, after the French pharmaceutical group confirmed that any offer it would make for Horizon Therapeutics would be solely in cash.
• PolyPeptide falls as much as 37%, the most since July, after the Swiss peptides maker issued its second profit warning of 2022. The update casts a “very negative shadow” on the company’s strategic alignment and management, ZKB says, downgrading the stock to underperform from market perform.
• Kerry Group falls as much as 3.8% in Dublin, heading for a seventh daily drop, after Citi downgraded to neutral from buy, expecting the food company to face volume headwinds in 2023 as customers reduce inventory levels.
• DOF shares drop as much as 53% in Oslo, the most since 2016, after the firm said it will petition for reconstruction proceedings with Hordaland district court.

Earlier in the session, Asia stocks fell, trimming their weekly gain, as investors sold off some positions ahead of a key jobs report in the US. The MSCI Asia Pacific Index declined as much as 0.9%, with most sectors in the red, led by energy and utility stocks. Benchmarks in Japan and South Korea were among the worst performers as investors await more signs of China’s reopening and economic policy at an upcoming meeting of the country’s top leaders. Chinese stocks edged lower. Read: China Watchers See Shift to Growth at Politburo Meeting (1) All eyes will also be on the payrolls and employment data due in the US Friday. 

“The US job report will be the key risk event today,” said Jun Rong Yeap, market strategist at IG Asia in a note. “Current expectations are pointing to job gains of 200,000, which is a step closer to pre-Covid levels.” The Asian measure is poised to advance more than 2% this week, set for its fifth weekly gain. Bullish indicators are growing, with the index testing its 200-day moving average for the first time since September 2021, as global funds dip back into the region. Foreign funds pumped about $15.7 billion into emerging Asia shares outside China last month, the biggest inflows in two years, Bloomberg-compiled data shows.

Japanese stocks dropped as investors weighed data showing US manufacturing contracted in November for the first time since May 2020 and as the yen strengthened against the dollar.  The Topix fell 1.6% to close at 1,953.98, while the Nikkei declined 1.6% to 27,777.90. The Japanese currency slightly extended against the greenback, up nearly 3% on the week. Daiichi Sankyo Co. contributed the most to the Topix decline, decreasing 4.2%. Out of 2,164 stocks in the index, 201 rose and 1,919 fell, while 44 were unchanged. The yen has been gaining strength against the dollar and investors are cautious ahead of the monthly US employment report, creating a double-whammy for stocks, said Ercan Serdar Armutcu, head of electronic trading at Mita Securities. 

Australian stocks snapped a 3-day rally: the S&P/ASX 200 index fell 0.7% to close at 7,301.50, taking a breather after three consecutive days of advances. Banks and some commodity stocks dragged the benchmark most.  Still, the index posted a weekly advance of 0.6%, ending a second week in the green. In New Zealand, the S&P/NZX 50 index fell 0.1% to 11,641.85.

In FX, the Bloomberg Dollar Spot Index gave up an early Asia session gain as the greenback traded mixed versus its Group-of-10 peers.

• The euro rose to touch $1.0545, the highest level since June, and its volatility skew shifted higher as leveraged desks unwind long-term bearish bets.
• The yen led G-10 gains. The Japanese currency briefly strengthened beyond 134 per dollar and is set for its longest rising streak since April 2021. BOJ’s new board member Naoki Tamura said “it would be appropriate to conduct a review at the right time, including the monetary policy framework and inflation target”.
• Australian and New Zealand bonds rally as a drop in stocks boosts demand for haven assets and ahead of the key US employment report later Friday. Scandinavian currencies were the worst G-10 performers

In rates, treasuries twist-steepened, with the 2-year yield falling around 4bps and the 30-year yield rising by about 2bps; the 2- to 5-year yields declined to lowest levels in several weeks; 2s10s approaches Wednesday’s high.  Front-end yields are richer by 2bp-3bp curve, 10-year cheaper by ~1bp at 3.51%, steepening 2s10s by ~3bp; bunds outperform by 4bp, gilts by 6bp in the 10-year sector.  Bunds outperform in bull-steepening price action. Bund and gilt curves bull steepen. Peripheral spreads widen to Germany with 10y BTP/Bund narrowing 1.1bps to 187.2bps.  Dollar issuance slate empty so far, while no issuers announced bond sales on Thursday; December is expected to be slow for issuance with just $20b expected vs November tally of $102b

In commodities, oil headed for its biggest weekly gain in almost two months, benefiting from looser Chinese curbs, calls by the Biden administration to halt sales from US strategic reserves and an OPEC producers’ group decision to cut crude supply by the most since 2020. Crude futures were steady. WTI trades within Thursday’s range at near $81.22. Most base metals trade in the green. WTI and Brent futures are subdued in early European hours as market participants await the next catalyst, and with the clock ticking down to the US jobs report.  The G7 price cap coalition official said they are ‘very very close’ to an agreement on a USD 60/bbl price cap for Russian oil exports and there is some flexibility in determining the market price of Russian crude for the price cap. The official said oil markets seem pretty comfortable with a cap mechanism and noted uncertainty on how Russia will react to a USD 60/bbl cap but added that Russia has no good options, according to Reuters. Spot gold is flat in pre-NFP trade and probes the USD 1,800/oz mark with the 200 DMA today at USD 1,795/oz. Base metal futures are similarly flat/mixed with 3M copper off session highs of around USD 8,418/t and closer to session lows.

To the day ahead now, and the main highlight will be the US jobs report for November. Otherwise, we’ll get data on French industrial production and Euro Area PPI for October. Elsewhere, central bank speakers include ECB Vice President de Guindos, the ECB’s Villeroy and Nagel, along with the Fed’s Barkin and Evans.

Market Snapshot

• S&P 500 futures down 0.1% to 4,076.75
• STOXX Europe 600 down 0.1% to 443.62
• MXAP down 0.5% to 158.53
• MXAPJ down 0.6% to 513.09
• Nikkei down 1.6% to 27,777.90
• Topix down 1.6% to 1,953.98
• Hang Seng Index down 0.3% to 18,675.35
• Shanghai Composite down 0.3% to 3,156.14
• Sensex down 0.7% to 62,851.92
• Australia S&P/ASX 200 down 0.7% to 7,301.46
• Kospi down 1.8% to 2,434.33
• German 10Y yield down 1.2% to 1.79%
• Euro little changed at $1.0520
• Brent Futures little changed at $86.82/bbl
• Gold spot down 0.1% to $1,801.49
• U.S. Dollar Index down 0.13% to 104.59

Top Overnight News from Bloomberg

• ECB President Christine Lagarde said inflation expectations need to remain anchored and that the public needs to know price gains will be brought back to target
• The global economy may be headed for a new era of volatile inflation, making it even more crucial to anchor expectations for where prices are headed, central bank governors warned Friday
• There’s been a “significant” improvement in relations between the European Union and UK, and a landing zone in their Brexit negotiations is possible in the next few weeks, Ireland’s foreign minister said, even though there has been “no major breakthroughs” over the Northern Ireland Protocol
• Italy will meet all its second semester objectives for the Next Generation EU program by the end of this year, Economy and Finance Minister Giancarlo Giorgetti said
• Option traders are growing less concerned about potential dollar strength as the drivers of the US currency’s world-beating rally fade away
• A rush by Japan’s life insurers to protect themselves against a stronger yen may have the paradoxical effect of accelerating gains in the currency
• Central banks are facing their first test in a new world of more variable inflation that they must pass in order to re-establish confidence in the community, Reserve Bank of Australia Governor Philip Lowe said
• South African President Cyril Ramaphosa’s allies closed ranks behind him as the governing party’s top leaders prepared to discuss his fate over an independent panel’s findings that there may be grounds for his impeachment. The rand rallied and government bond yields fell

A more detailed look at global markets courtesy of Newsquawk

Asian stocks were subdued following the uninspired lead from the US where the major indices took a breather from the Powell-induced rally and finished relatively flat amid soft data releases and ahead of the looming NFP jobs report. ASX 200 was pressured as weakness in real estate, energy and the top-weighted financials sector overshadowed the resilience in defensives. Nikkei 225 underperformed and fell back below the 28,000 level, while there were notable comments from BoJ’s Tamura who called for a review of the BoJ’s ultra-easy monetary policy framework. Hang Seng and Shanghai Comp were indecisive but with downside stemmed following the recent slight easing of China’s COVID rules.

Top Asian News

• China’s top leaders will likely signal a more reasonable approach to COVID controls at the upcoming meeting of the CPC’s Politburo which usually takes place in early December, according to economists cited by Bloomberg.
• China’s Beijing City to allow passengers without a 48-hour COVID nucleic acid negative certificate to take buses and subways from Monday; busses and subways cannot reject people with no COVID test results, according to Bloomberg.
• PBoC Governor Yi said the forecast for China’s inflation in 2023 is in a moderate range, while he noted the current focus is on growth and that monetary policy has been pretty accommodative.
• Chinese Finance Minister Liu Kun said they will keep the economy within a reasonable range and strive to realise better results, while Liu added that China’s economy will keep growing at a reasonable speed with stable employment and prices, according to Reuters.
• China’s top four banks intend to issue offshore loans for domestic developers overseas debt repayments, via Reuters citing sources.

Equities in Europe are mostly mildly softer with the ranges particularly narrow ahead of the US jobs report; US futures in-fitting. DXY is under pressure with peers modestly firmer and JPY outpacing given yield differentials and Tamura’s remarks. Bunds are modest bid but failed to breach 143.00 with USTs essentially unchanged pre-NFP. Crude benchmarks similarly contained awaiting oil cap/OPEC+ developments. Beijing City is to ease its COVID travel restrictions from Monday while reports indicate the Politburo could signal a more reasonable approach. Looking ahead, highlights include US & Canadian Jobs Reports, Speakers from ECB’s de Guindos, Fed’s Barkin & Evans.

Top European News

• ECB President Lagarde said monetary policy is complicated by three uncertainties including the global economy and CPI outlook, while she added that all policies need to act in concert for sustainable growth.
• US President Biden and French President Macron made major progress in talks on how to alleviate the impact of the Inflation Reduction Act on Europe in which the US could use executive orders to give European allies the same level of exemptions on local content as countries with a free-trade deal, according to a source at the French Finance Ministry
• EU Commissioner Breton withdrew from EU-US Trade and Technology Council discussions and believed that talks will not provide enough space to EU concerns, according to Politico.

Fixed Income

• Modest overnight Bund pressure proved shortlived and appeared more of a pause for breath rather than a concerted pullback.
• Instead, the German benchmark has tested but failed to breach 143.00 while USTs are essentially unchanged in 10tick parameters pre-NFP.
• NFP aside, newsflow has been limited and of insufficient magnitude thus far to impact the above price action.

Commodities

• WTI and Brent futures are subdued in early European hours as market participants await the next catalyst, and with the clock ticking down to the US jobs report.
• Spot gold is flat in pre-NFP trade and probes the USD 1,800/oz mark with the 200 DMA today at USD 1,795/oz.
• Base metal futures are similarly flat/mixed with 3M copper off session highs of around USD 8,418/t and closer to session lows.
• G7 price cap coalition official said they are ‘very very close’ to an agreement on a USD 60/bbl price cap for Russian oil exports and there is some flexibility in determining the market price of Russian crude for the price cap. The official said oil markets seem pretty comfortable with a cap mechanism and noted uncertainty on how Russia will react to a USD 60/bbl cap but added that Russia has no good options, according to Reuters.
• Just one of these three ministries/ministers handling the oil price cap is yet to okay it, according to WSJ’s Norman’s sources.
• Turkish media says a fire broke out in the port of Samsun due to the explosion of an oil depot, according to Al Arabiya.
• India will continue to buy oil from wherever possible, including Russia, according to a source cited by Reuters; adds that India will continue to get oil, even beyond January 19th.

FX

• DXY sees another session of early European weakness for the broader Dollar and index as the JPY continues to strengthen.
• JPY is again the marked outperformer with gains fuelled by further narrowing yield differentials post-Powell, and with BoJ’s board member Tamura yesterday striking somewhat of a hawkish tone; USD/JPY down to 133.64 at worst.
• NZD, AUD, CHF, EUR, GBP are all modestly firmer against the USD and to varying degrees, whilst the CAD lags ahead of the Canadian jobs report.
• PBoC set USD/CNY mid-point at 7.0542 vs exp. 7.0563 (prev. 7.1225)
• Chairman of South Africa’s ANC has denied that President Ramaphosa has considered resigning.

Geopolitics

• Military analysts claimed that satellite images suggested Russia is planning an ‘imminent’ large-scale missile strike on Ukraine, according to Sky News Australia.
• Belarusian border guards shot down a Ukrainian march that conducted reconnaissance and photographing operations over the border areas with Ukraine, according to Al Jazeera.
• US imposed additional North Korea-related sanctions on three individuals and Japan imposed additional sanctions on 3 entities and 1 individual from North Korea, while South Korea imposed sanctions on 8 individuals and 7 agencies over North Korea’s weapons programme, according to Reuters.

US Event Calendar

• 08:30: Nov. Change in Nonfarm Payrolls, est. 200,000, prior 261,000
  • Change in Private Payrolls, est. 185,000, prior 233,000
  • Change in Manufact. Payrolls, est. 18,000, prior 32,000
  • Unemployment Rate, est. 3.7%, prior 3.7%
  • Underemployment Rate, prior 6.8%
  • Labor Force Participation Rate, est. 62.3%, prior 62.2%
  • Nov. Average Weekly Hours All Emplo, est. 34.5, prior 34.5
  • Average Hourly Earnings MoM, est. 0.3%, prior 0.4%
  • Average Hourly Earnings YoY, est. 4.6%, prior 4.7%

Central Bank Speakers

• 09:15: Fed’s Barkin Speaks in Richmond
• 10:15: Fed’s Evans Speaks at Event on Financial Regulation
• 14:00: Fed’s Evans Gives Welcome Remarks at Economic Symposium

DB’s Jim Reid concludes the overnight wrap

After the massive surge on Wednesday following Fed Chair Powell’s speech, the rally in risk assets stalled out yesterday thanks to weak US data that sparked growing concern about the state of the economy. There were lots of releases to digest, but in many ways the most notable was the ISM manufacturing print, which fell into contractionary territory for the first time since May 2020, coming in beneath expectations at 49.0, and crucially beneath the 50-mark that separates expansion from contraction. The sub-components didn’t look too promising either, with the employment reading at 48.4, and new orders down to 47.2.

Of course, we should add the usual caveats this is just one data release, but it fits into a declining trend for the ISM over the last year, and only added to fears about a potential recession. In addition, it comes on the back of some other pretty negative data over recent days. For instance, last week’s flash PMIs for November were also in contractionary territory, and Wednesday’s Chicago PMI release came in at levels that have historically been consistent with recessions.

This gloomy backdrop meant that investors once again put increasing emphasis on a dovish pivot from the Fed. Indeed, terminal rate pricing fell back to 4.86%, which is the lowest it’s been in a couple of weeks and is noticeably beneath the 5% levels before Powell’s Wednesday speech. In turn, this led to a further rally in Treasuries, with the 10yr yield coming down by a sizeable -10.1bps on the day to 3.50%, which is its lowest level in a couple of months, although we’ve had a slight +3.4bps pullback this morning. Bear in mind that the 10yr Treasury yield hit an intraday peak of 4.34% in late-October, so we’re now down by around -80bps from those levels. Furthermore, the decline yesterday was driven by real yields, with the 10yr real yield down -10.7bps on the day to 1.14%.

Those hopes for a dovish pivot from investors were given added support by the latest PCE inflation data for October, which is the measure the Fed officially target. That showed the month-on-month numbers coming in beneath expectations, with headline PCE up +0.3% (vs. +0.4% expected), and core PCE up +0.2% (vs. +0.3% expected). There were also signs that inflationary pressures were waning in the ISM release, since the prices paid indicator fell to 43.0 (vs. 45.9 expected), marking the lowest level for that reading since May 2020.

Whilst this environment proved a great backdrop for Treasuries, equities had a tougher time yesterday, with the S&P 500 (-0.09%) ending the session modestly lower as investors considered the tough outlook. Banks (-1.77%) were one of the worst-performing sectors as bond yields continued their decline, but tech was a relative outperformer and the FANG+ index (+0.55%) of megacap tech stocks even hit a 2-month high. Over in Europe the major indices advanced for the most part, but that was more a reflection of them catching up to the previous day’s rally following Powell’s speech. That saw the STOXX 600 (+0.89%) hit its highest level in nearly 5 months, with the index now on track for a 7th consecutive weekly advance.

As investors mull over the prospects for a dovish Fed pivot, attention today will turn to the US jobs report, which is out at 13:30 London time. Our US economists expect that growth in nonfarm payrolls will have slowed to +200k in November, which is in line with consensus and would mark the weakest number since December 2020. That should still be enough to lower the unemployment rate by a tenth to 3.6%, but clearly a downside surprise would only add to the jitters in markets given the negative survey data for November that we’ve already had.

Speaking of the Fed, yesterday we heard from a few officials, including New York President Williams, who said “I still think we have a ways to go” on raising rates. He added that he felt “we need to get the federal funds rate above the inflation rate”, and the two still remain some way apart even with the recent series of 75bp hikes. Remember as well that today is the last opportunity for FOMC officials to comment before their blackout period begins ahead of the next meeting, so these comments are some of the last clues we’ll get ahead of the next decision and the December dot plot. Elsewhere, we also heard that the new Chicago Fed President would be Austan Goolsbee, a former chair of the Council of Economic Advisers under President Obama. Goolsbee will have a vote on the FOMC in 2023, and has previously said on October 31 that a peak fed funds rate around 5% “kind of makes sense to me.”

Back in Europe, sovereign bonds rallied alongside US Treasuries as investors caught up with Chair Powell’s speech and priced in a more dovish outcome for the ECB as well. For instance, the hike priced in for this month’s meeting fell to 54.1bps, which is the lowest since mid-September as investors became increasingly sceptical that the ECB will continue to hike at a 75bps pace. That triggered a big rally across the continent, with yields on 10yr bunds (-11.7bps), OATs (-14.0bps) and BTPs (-17.6bps) all moving lower on the day. In the meantime, the continued weakness for the US Dollar meant that the Euro surpassed the $1.05 mark in trading for the first time since June, yesterday, where it remains this morning.

Overnight in Asia, equity markets have continued that trend lower from the US, with the Nikkei (-1.72%), the KOSPI (-1.45%), the Hang Seng (-0.60%), the CSI 300 (-0.49%) and the Shanghai Composite (-0.24%) all trading lower. The moves came in spite of further signs of waning inflationary pressures, with South Korean CPI falling to +5.0% in November (vs. +5.2% expected). That’s been echoed by US futures, with those on the S&P 500 (-0.19%) and the NASDAQ 100 (-0.33%) both in negative territory ahead of today’s jobs report.

Finally, with all the data releases yesterday, there were plenty of numbers that got relatively less attention than usual, but still told an interesting story. First, the Nationwide house price index in the UK saw a monthly drop of -1.4% in November, which is the steepest decline since early 2009 if you exclude the pandemic months of April and May 2020. Second, the Euro Area unemployment rate fell to a record low of 6.5% in October (vs. 6.6% expected). And back in the US, the weekly initial jobless claims came in at 225k in the week ending November 26 (vs. 235k expected).

To the day ahead now, and the main highlight will be the US jobs report for November. Otherwise, we’ll get data on French industrial production and Euro Area PPI for October. Elsewhere, central bank speakers include ECB Vice President de Guindos, the ECB’s Villeroy and Nagel, along with the Fed’s Barkin and Evans.

Kanye West, who now calls himself “Ye,” has been suspended from Twitter and accused of “inciting violence” over offensive tweets — just a few months after the last ban.

On Thursday evening, Ye tweeted an image of a swastika embedded with a star of David, which was immediately removed by Twitter police. The tweet was swapped out with a message that read this post violated Twitter’s terms of service. A link to the social media platform’s policy page explained more about enforcement actions. 

Twitter’s new boss Elon Musk was asked by one user to “fix Kanye.”

Musk tweeted: “I tried my best. Despite that, he again violated our rule against incitement to violence. Account will be suspended.”

I tried my best. Despite that, he again violated our rule against incitement to violence. Account will be suspended.

— Elon Musk (@elonmusk) December 2, 2022

Ye was one of the most high-profile Twitter users, besides former President Trump, to just recently be reinstated on the social media platform after Musk took over as owner. 

Hours before the rapper was booted off Twitter. Ye’s deal to purchase Parler, the rightwing social media network, was terminated by the company. And before the Parler news, fully masked Ye appeared on Alex Jones’ Infowars show and doubled down on antisemitic comments he made months ago. 

In October, Ye was initially suspended from Twitter and Instagram for posting antisemitic messages. Addidas and a handful of other companies terminated contracts with the rapper over the comments. 

Ye’s last tweet read, “Let’s remember this as my final tweet,” posting an image of half-naked Musk on the stern of a superyacht.  

Late Thursday night, Twitter users pointed out Ye began posting on Truth Social, the social media platform created by Trump. 

Ye is currently posting on Truth Social, he is either shadowbanned or the boomers running it can’t code a proper search function pic.twitter.com/TbYUzBwBqH

— Punished Spinach 🥗 (@basedspinach) December 2, 2022

Ye is suspended for 12 hours on Twitter. He is now posting on Truth Social 😂 pic.twitter.com/fvOOCTF8F8

— Ye Streams (@kanyestreams1) December 2, 2022

We’ve already written this month about how the “tax break” incentive to buy an EV is starting to vaporize into thin air in places like Japan and the U.K.. Now, the irony continues, as rising costs of energy in Europe, helped along by “green” energy policies, are making industrial projects like battery cell factories “unfeasible”. 

Volkswagen brand CEO Thomas Schaefer said this week that investments in German and EU projects will no longer make financial sense if “policy makers fail to control ballooning energy prices in the long-term”, according to the Times. 

In a post on LinkedIn, Schaefer said: “Unless we manage to reduce energy prices in Germany and Europe quickly and reliably, investments in energy-intensive production or new battery cell factories in Germany and the EU will be practically unviable. The value creation in this area will take place elsewhere.”

Last week, French and German economy ministers proposed an outline for policy cooperation that Schaefer claims “falls short in crucial areas and does not address the envisaged priorities”, the report says. 

“Outdated and bureaucratic state-aid rules” fail to focus enough on “the short-term ramp-up, scaling and industrialisation of production,” he said. 

The report says that EU officials are focused on responding to President Joe Biden’s Inflation Reduction Act, which they say “violates World Trade Organisation rules and discriminates against non-US companies.”

Meanwhile, Volkswagen is in the process of putting 6 battery factories in operation across Europe by the year 2030, the report says. The company’s lead plant in Germany broke ground this July and already has a €3bn (R53bn) joint venture with Umicore in place for cathode material production. 

Recall, just days ago, we reported that the UK was looking to raise more tax revenue from electric vehicles, shattering the years-long assumption that if you contributed to “helping the environment” by buying an EV, you’d be entitled to subsidies and tax credits.

Now Japan’s internal affairs ministry is reportedly weighing whether or not to raise taxes on electric vehicles in order to make up for a shortfall in income from taxes on traditional gas powered cars.

And so it’s turning out that the economics of an industry pivot set into motion almost solely due to government subsidization may not entirely make sense. Who would have figured?

Authored by John Cody via Remix News,

Germany just got done lecturing Qatar on human rights during the World Cup only to sign a 15-year gas deal with the Sharia-run country…

The entire German political establishment went into a rage after FIFA banned the pro-LGBT “OneLove” armband at the World Cup. Germany’s economics minister, Robert Habeck of the Green Party, told the German national team they should defy the threat of sanctions and wear the armband anyway. Various government officials protested the move, including Interior Minister Nancy Faeser, who wore a OneLove armband during the opening game while cheering on the German national team.

Now, immediately after the “scandal,” Germany is proudly announcing a new gas deal with none other than Qatar — a deal Habeck has labeled as “super.” The deal may represent an energy coup for the new government, but perhaps just as important is that the deal demonstrates the German left-liberal establishment’s raw political and social engineering power — the amazing ability to virtue signal and then completely contradict that same virtue signaling a week later with zero repercussions.

It is important to remember that European foreign and energy policy is value-based, and while Qatar’s actions last week were abominable, Germany is forward-looking. Yes, Sharia-run Qatar is still known for its persecution of women and LGBT groups, and sure, Qatar has a far more oppressive, non-democratic system than Russia, and yes, there are still plenty of instances of outright slavery in Qatar, but in the words of Habeck, “15 years is great.”

He is, after all, referring to the fact that the LNG contract will begin running in 2026 and end in 2041.

German Football Federation (DFB) President Bernd Neuendorf, left, talks to German Interior Minister Nancy Faeser, right, wearing the One Love armband on the tribune prior to the World Cup group E soccer match between Germany and Japan, at the Khalifa International Stadium in Doha, Qatar, Wednesday, Nov. 23, 2022. (AP Photo/Matthias Schrader)

How will Germany respond to future violations of human rights by Qatar? Will Germany pick up its gas in rainbow-colored tankers? Will it print special edition rainbow-colored euros to send to Qatari banks? Of course, this is all a bit of mockery, but the meaningless sentiment behind the “OneLove” armband is in essence the same strategy, and in reality, one could imagine such stunts at least being proposed by the “Twitter class” running PR for Germany’s current government.

The left is aided by the fact that the majority of German population continuously fails to process any contradiction in the German government’s smug support for “OneLove” armbands in Qatar while at the same time signing a gas deal with Qatar worth billions. While there may be some isolated grumblings in German media and the political classes, nobody in the left-liberal establishment, especially anyone with any real power among the Social Democrats or Greens, will truly dare to call out this absurdity.

The same element is at work as when the liberal darling Justin Trudeau crushing the trucker protests in Canada by literally freezing protesters’ bank accounts and seizing their property or when Gavin Newsom dined at California’s finest restaurant without a mask in violation of lockdown rules while calling those protesting lockdowns as dangerous and heartless. These politicians, just as the left-liberals in Germany, can blatantly violate the standards and values they pretend to promote because they can — because Big Tech, the media, academia, and the West’s various cultural establishments have created a force field around, rendering them nearly impervious to being held accountable for their hypocrisy.

As N.S. Lyons writes, “Hypocrisy… is simply a display of power, so the more blatant it is the better. Hypocrisy is a concrete demonstration of living without having to fear consequences.”

In this photo released by the Qatari Amiri Diwan, German Economy and Climate Minister and Vice Chancellor Robert Habeck shakes hands with the Emir of Qatar Sheikh Tamim bin Hamad Al Thani, in Doha, Qatar, Sunday, March 20, 2022. (Amiri Diwan via AP)

The reality is the gas deal with Qatar is an example of hypocrisy, but also realpolitik, even if the left-liberals would never admit it.

Germany needs gas, but it cannot obtain the amount it needs without violating its own so-called moral standards, which is why it is reaching out to all those “detestable” countries such as Qatar, which are extremely anti-gay, but also quite Brown, a combination which creates a great deal of confusion in the German mind. Interestingly, the realpolitik deal with Qatar was necessitated by Germany actually ignoring realpolitik and abandoning Russian resources, but Russians are unapologetically White and not very happy about gay people, which is far easier for the German mind to process.

Overall, there is a remarkable lack of realpolitik from the German political establishment, and some German industrial leaders, watching their fortunes potentially slip away, understand this. They may have been the ones whipping the inept Habeck to do something, anything, to secure Germany’s energy supply. However, this one act of realpolitik with Qatar will not save Germany, and a general inability to pursue national interests across a Europe still beholden to not only U.S. interests but also America’s cultural hegemony, is costing Europe dearly.

Russia and its resources are still there, and while what has happened to Ukraine is a tragedy, there are still those begging Europe to reverse course. If Germany’s Qatar gas deal flies in the face of the “liberal values” Germany portends to promote, then what real moral basis does Germany have for extending sanctions against Russia? It is a fair question. In Qatar, after all, they do not even bother with elections, and as independent opinion polls have historically shown, Putin is truly a popular leader who is legitimately elected time after time — far more popular than many of the leaders in Europe’s “liberal democracies.”

The reality is that Germany could, for the most part, avert its entire economic crisis by reverting to cheap Russian energy and resources. Hungarian Prime Minister Viktor Orbán has been ridiculed for calling an end to sanctions on Russia, arguing that Europeans are suffering more than Russians due to these sanctions. In light of the Qatar deal, Germany has little in terms of moral ground to stand on when it comes to its criticisms against Hungary, but it will continue to pretend like it does. In fact, it will likely double down on trying to remove Orbán from office. Deflection can do wonders in politics.

What is now quite clear is that Russia is not even capable of taking over Ukraine, let alone invading Germany or any other NATO country, and this war has proven it. Armed with this incredible knowledge, and with Russia’s glaring weakness on display, now would be the opportune time to press for peace and restore economic relations. Deals with Russia may not be in Europe’s “moral” interest, but neither are deals with Qatar. The U.S. has long partaken in illegal invasions of other countries, coup plots, and false flag operations, and all of this has never been a basis for Europe to stop doing business with the U.S.

Of course, the U.S., and in turn, the German media, would fight tooth and nail against such a dramatic foreign policy turnaround vis-à-vis Russia, even if some within Germany’s political establishment are secretly hoping for the war to come to an end without Ukraine necessarily pushing the Russians back to their border.

For now, moral grandstanding trumps raw national interest across Europe, and the German and European populations, even with gas deals from Qatar and the United States, will continue to pay for this new paradigm.

Kyiv’s mayor is warning residents that there’s real potential of a total blackout across the capital city of about three million people. This as Ukraine braces for more expected Russian airstrikes on its national energy infrastructure. 

“The temperature in the apartments may not differ much from the outside temperature,” Mayor Vitaliy Klitschko announced at a local security forum at a moment when temperatures have dipped below freezing, or -4 degrees Celsius (25 degrees Fahrenheit). “I appeal to the people…to have a supply of technical water, drinking water, durable food products, warm clothing,” he emphasized.

Authorities have scrambled to set up warming centers in various hard-hit cities across the country, also warning that some portions of cities may have to evacuate if the energy crisis worsens. Despite utility crews scrambling, an estimated 40% of the entire national energy infrastructure remains degraded or destroyed. 

Klitschko in his appeal told people that they must consider moving in with family or friends who have remained less impacted by the power cuts on the outskirts of Kyiv.

The Kremlin has meanwhile defended its strategy of targeting Ukrainian energy as “legitimate”. According to a New York Times update: 

As Ukrainian officials warned that Moscow was preparing to launch yet another wave of missile strikes aimed at destroying the nation’s energy grid, Russia’s foreign minister on Thursday defended Moscow’s attacks, calling infrastructure a legitimate military target despite warnings by the United Nations that they could amount to war crimes.

Sergei V. Lavrov, Russia’s foreign minister, spoke at a news conference hours after Ukrainian officials said that Russian attacks had disabled the power grid in the southern city of Kherson and six million people across the country were still without power after previous assaults.

Drawing on familiar Kremlin themes framing the Ukraine war as a battle with the West, Mr. Lavrov said that Russia is hitting targets that are used to replenish Ukrainian forces with weapons provided by Western nations and that the Ukrainian forces rely on to operate. He did not elaborate.

US Secretary of State Antony Blinken during a meeting of NATO ministers in Bucharest, Romania condemned the “barbaric” Russian actions. 

“As Ukraine continues to seize momentum on the battlefield, President Putin continues to focus his ire and his fire on Ukraine’s civilian population,” he said. “Heat, water, electricity — for the children, for the elderly, for the sick — these are President Putin’s new targets. He’s hitting them hard. This brutalization of Ukraine’s people is barbaric.”

Authored by Kyle Anzalone via The Libertarian Institute, 

Latvian Foreign Minister Edgars Rinkevics called for NATO to allow Ukraine to conduct strikes inside Russian territory, adding the alliance should not fear Moscow’s response. The White House has resisted sending Kiev missiles with the range to hit targets inside Russia. 

During an interview on the sidelines of  NATO summit in Romania, Rinkevics stated “[w]e should allow Ukrainians to use weapons to target missile sites or air fields from where those operations are being launched.” Allies “should not fear” escalation from Moscow, he added. 

While the White House has not publicly told Kiev that it cannot hit Russian territory, in May, President Joe Biden said, “we’re not going to send to Ukraine rocket systems that strike into Russia.”

However, the Biden administration has explicitly authorized attacks on the Crimean Peninsula, Ukrainian territory that was annexed by Russia in 2014. The Kremlin reacted sharply to a series of attacks in Crimea, including by destroying large swaths of Ukraine’s power grid. 

Ukraine is seeking Army Tactical Missile System (ATACMS) with a range of nearly 186 miles. So far, the White House has only been willing to send Kiev munitions with a range of 50 miles. Ukraine has offered the Biden administration targeting control.

In June, Russian Foreign Minister Sergei Lavrov threatened that Russia would annex more Ukrainian territory if Kiev received longer-range weapons. “The longer the range of armaments that you will supply, the further away we will move from our territory the line,” he said. 

In an interview with Bloomberg on Tuesday at the NATO summit in Bucharest, Italian Foreign Minister Antonio Tajani warned against direct confrontation with Russia. “We don’t want problems with the other countries,” he said, “we are not in danger directly.”

He went on to say Italy wanted to avoid escalation. “We are against an escalation of the conflict,” Tajani added.

This week US Secretary of State Antony Blinken announced the US is prepping more aid to the Ukrainian government, particularly focusing on propping up its devastated energy infrastructure, but also for the first time unveiling that the tiny country of Moldova will be receiving significant aid for its failing energy grid.

“We know that standing up for Ukraine means accepting difficult costs, particularly for our European allies, but the cost of inaction would be far higher,” Blinken began in Wednesday comments. “Caving to Russia’s aggression, accepting its brazen attempts to redraw borders by force, to tear up the rulebook that has made all of us more secure – that would have repercussions not only in Europe but quite literally around the world.”

That’s when he announced decisions made at a NATO meeting of ministers in Romania: “When we convened that group yesterday here in Bucharest, I announced that the United States will commit over $53 million to send equipment to help stabilize Ukraine’s energy grid and keep Ukraine’s power and electricity running.” 

He specified $1.1 billion going to both Ukraine and Moldova:

We’ve also submitted a request to Congress for $1.1 billion to secure Ukraine and Moldova’s energy sector and restore their energy supply.  And we will take strong, coordinated action to ensure that President Putin cannot hold the rest of the world hostage to weaponized energy.

Starting last month, Moldovan authorities began informing Western allies it is suffering “massive” blackouts in relations to stepped of Russian airstrikes in neighboring Ukraine.

“As a result of Russia’s bombardment on the Ukrainian energy system, within the last hour, we have massive electricity blackouts in the whole country,” Moldovan deputy prime minister Andrei Spinu stated during the initial round of the major Russian assault on Ukraine’s energy grid weeks ago.

Moldova, an EU aspirant (and seen as ‘NATO-friendly), is heavily reliant on Russia as well as Ukrainian transit points for all of its energy needs. 

Good meeting w/ Finland’s @Haavisto in which we discussed regional security situation, Russia’s war against Ukraine and how it affects Moldova, the energy crisis we are facing & ways to overcome it.

Look forward to deepening cooperation as Moldova advances towards EU. pic.twitter.com/hrwiEn0VRN

— Nicu Popescu (@nicupopescu) December 1, 2022

Russian energy giant Gazprom this week accused Ukraine of diverting natural gas supplies transiting to Moldova and threatened to cut supplies. Previously Gazprom threatened to cut natural gas supplies being sent to Moldova after accusing Ukraine of siphoning off a large quantity during transit.

Additionally, Moldova’s breakaway region of Transnistria is also seen as a potential flashpoint, and early in the invasion of Ukraine there was constant speculation that the Kremlin was eyeing an incursion into Moldova next. Currently Russia has what it calls “peacekeeping” troops in contested Transnistria. 

Authored by Lily Zhou via The Epoch Times,

The UK’s Foreign Office has summoned Chinese Ambassador Zheng Zeguang to explain the treatment of a BBC journalist, foreign secretary James Cleverly confirmed on Tuesday.

Foreign Office minister David Rutley told Parliament earlier in the day that the department will demand a “full and thorough explanation” from the Chinese ambassador.

Edward Lawrence, a BBC reporter in China, was arrested in Shanghai on Sunday while reporting on protests against the communist regime’s zero-COVID policy.

A BBC statement said Lawrence was handcuffed, beaten, kicked, and held for a few hours before being released.

Footage circulated online appeared to show Lawrence being tackled to the ground by a group of police and taken away. The crowd could be heard chanting, “Release the man.”

The BBC on Sunday said no official explanation or apology had been given “beyond a claim by the officials who later released him that they had arrested him for his own good in case he caught Covid from the crowd.”

Chinese Foreign Ministry spokesman Zhao Lijian later rejected the BBC’s statement, saying Lawrence didn’t reveal his identity when being arrested and refused to cooperate with the police.

On Tuesday, Zhao accused the British public broadcaster of always “distorting the truth,” lambasting the broadcaster’s reporting on the pro-democracy protests in Hong Kong, human rights abuses in Xinjiang, and the zero-COVID policy in mainland China.

“The UK side must respect facts, be prudent in what it says or does and stop its practice of double standards,” Zhao said.

Chinese Foreign Ministry spokesman Zhao Lijian takes a question at the daily media briefing in Beijing on April 8, 2020. (Greg Baker/AFP via Getty Images)

Speaking to reporters at NATO foreign ministers’ meeting in Bucharest, Cleverly confirmed he had summoned the Chinese ambassador.

“It is incredibly important that we protect media freedom. It is something very much at the heart of the UK’s belief system, and it is incredibly important that journalists can go about their business unmolested and without fear of attack,” he said.

Answering urgent questions in Parliament, Rutley reiterated Cleverly’s earlier statement saying the arrest of Lawrence was “deeply disturbing and wholly unacceptable,” and that “journalists must be able to do their job without fear of arrest or intimidation.”

Commenting on the BBC’s statement that Lawrence was beaten and kicked by police during his arrest and was held for several hours, Rutley told MPs, “In response, we are calling in the Chinese ambassador to make clear the unacceptable and unwarranted nature of these actions, the importance of freedom of speech, and to demand a full and thorough explanation.”

He said the UK government recognises that the COVID-19 restrictions in China are “challenging for the Chinese people,” and urged the Chinese authorities to “respect the rights of those who decide to express their views about the situation.”

Government Urged to ‘Get Serious With China’

The incident comes as the relationship between the UK government and China’s ruling Communist Party (CCP) becomes increasingly strained following Beijing’s upending of democracy and the rule of law in Hong Kong, its reciprocal sanctioning of British politicians who are vocal critics of the CCP’s human rights abuses in Xinjiang, and the beating of a Hong Kong protester at the Chinese Consulate General in Manchester.

The BBC has also been targeted by the CCP after the UK revoked the license of the Chinese state-controlled CGTN network.

British Prime Minister Rishi Sunak on Monday said the so-called “golden era” of the Sino–British relationship is over, and said the UK will strengthen its resilience and economic security.

But he stopped short of calling the Chinese regime a threat, and said the UK will stand up to the UK’s competitors with “robust pragmatism” instead of “grand rhetoric” and “simplistic Cold War rhetoric,” irking China hawks in Parliament.

A man is arrested while people gather on a street in Shanghai to protest on Nov. 27, 2022. (Hector Retamal/AFP via Getty Images)

DUP MP Jim Shannon, who requested the urgent question session, urged the government to take tougher actions.

Shannon said the arrest and assault of Lawrence is not the first attack on freedom of speech, but “just another example in the long line of journalists and human rights defenders, who are silenced, arrested, or simply disappear by the CCP.”

He welcomed Sunak’s commitment that the golden era of China and UK relations is over, and urged the prime minister to follow up with “tougher actions” to “protect British citizens, human rights defenders, pro-democracy activists, and religious and ethnic minorities targeted by the CCP.”

Rutley responded by saying Shannon’s points will be raised with the Chinese ambassador.

Former ministers Jacob Rees-Mogg and Tim Loughton questioned the use of summoning Zhao.

“We have had an awful lot of calling in the Chinese ambassador. If robust pragmatism is to mean anything, should there not be clear consequences?” Loughton asked.

He urged the government to expel Manchester Consul General Zhao Xiyuan, who admitted to pulling the hair of a protester, and sanction Chinese officials oppressing protests in China.

“When are we going to get serious about China?” he asked.

Rees-Mogg said the UK should also “take tougher action in international forums” and “do things that the Chinese would not want us to do” to show the UK is “not a pushover” and “not going to support the communist running dogs.”

Labour MP Marie Rimmer also mentioned the beating of a protester in Manchester, saying “action is desperately needed.”

Rutley told MPs the government is waiting for the conclusion of a police investigation into the Manchester incident, saying it will take action after seeing the process through.