The White House has unveiled another $400 million in defense aid to Ukraine, which is also to include urgently needed generators as the national energy grid has been severely degraded by Russian airstrikes, leaving at least 10 million people without power. 

This brings military aid committed thus far to more than $19 billion in weapons. Secretary of State Antony Blinken announced Wednesday in a statement, “Pursuant to a delegation of authority from the President, today I am authorizing our twenty-sixth drawdown of U.S. arms and equipment for Ukraine since August 2021. This $400 million drawdown includes additional arms, munitions, and air defense equipment from U.S. Department of Defense inventories.” 

“This drawdown will bring the total U.S. military assistance for Ukraine to an unprecedented level of approximately $19.7 billion, since the beginning of the Administration,” the statement continued.

Blinken underscored that the US coordinated the new aid with partner nations, “including the £50 million in air defense systems offered by UK Prime Minister Sunak,” according to the State Dept. readout.

Meanwhile, there remain growing concerns over the US and Western partners greatly depleting their own stockpiles, as The Independent observes: 

The continued push of weapons to Kyiv is raising questions about how long the U.S. and partner nations can continue to sustain the fight without an impact to military readiness. Many European nations have already expressed that they have pushed forward all the excess they can afford to send.

The White House push for more defense aid comes as the administration grows nervous about GOP objections. “The flow of weapons comes as the Biden administrations seeks to pass an additional $37 billion in military and humanitarian aid for Ukraine during the post-election session of Congress, before Republicans take over control of the House in January,” The Independent writes.

The Pentagon has lately emphasized it is prioritizing getting the Ukrainians ready for the harsh winter months. There’s also a push to keep providing advanced anti-air systems to protect against attacks on the electricity stations and facilities…

Defense Secretary Lloyd Austin says the 2 NASAMS air-defense systems provided to Ukraine by the US have “a 100% success rate” against Russian missiles thus far. Delivery was this month. (Remarks from the start of another meeting of Ukraine’s partners to source arms for the war.) pic.twitter.com/rhIgXIRzIk

— Andrew deGrandpré (@adegrandpre) November 16, 2022

Currently an estimated half the national electricity grid has been degraded or destroyed due to repeat waves of Russian airstrikes. Parts of the capital on Wednesday were even said to lack water, which emergency services are working hard to restore.

As we discussed last night, Sam Bankman-Fried has now demonstrated that he is both a pathological liar and a sociopath, the kind who in “explaining” to his employees how he stole billions (over $4 billion according to new FTX CEO John J. Ray) from the now bankrupt FTX, an act which left it insolvent and without liquidity, called it “loans” which were “generally” not used for “large amounts of personal consumption” (just “small amounts” used for such trivial items as $40 million penthouses and private jets).

And the only reason we don’t officially call him a criminal just yet, is because he has not yet confirmed he used client money from his exchange to fund his personal hedge fund, an act which would cost any other individual decades in jail… but not prominent democrats like SBF or Jon Corzine, of course. Plus it’s the US legal system’s job to do that, not ours. Although we are growing increasingly skeptical this prominent Democratic donor will ever see the inside of a courtroom.

It’s not just us: with much of the entire world demanding to know how this corpulent 30-year-old still has not been thrown in prison, or at least charged with a variety of crimes, the NYT just confirmed to the entire world what a farce the one-time paper of record has become, and how it is willing to whore itself out for clicks – not to mention prominent Democrat donors – because moments after SBF tweeted that he will be speaking with Andrew Ross-Sorkin moderated NYT “summit” on Nov 30…

I’ll be speaking with @andrewrsorkin at the @dealbook summit next Wednesday (11/30). https://t.co/QocjPtCVvC

— SBF (@SBF_FTX) November 23, 2022

… Sorkin quickly confirmed as much.

A lot of folks have been asking if I would still be interviewing @SBF_FTX at the @nytimes @dealbook Summit on Nov 30…

The answer is yes. 👇

There are a lot of important questions to be asked and answered.

Nothing is off limits.

Looking forward to it… https://t.co/lShAqXLKGS

— Andrew Ross Sorkin (@andrewrsorkin) November 23, 2022

And so, instead of being under arrest, SBF will instead be treated like a luminary alongside other such other Democrat icons as Zelenskyy (who according to some may have been intimately familiar with FTX fund flows in the past year) and of course the woman who along with Ben Bernanke and Jerome Powell, made it all possible by blowing the biggest asset bubble of all time: Janet Yellen.

And while we are certain that the NYT – which we assume is done writing puff pieces on behalf of SBF after it became a laughing stock last week – would be quick to mercilessly cancel and expel from its “prestigious” conference anyone who had misgendered some post-op transsexual, it is willing to give this thieving pathological liar and sociopath a forum in which to profess his innocence to the entire world, and by association with other Democrat “celebrities” such as this one…

…  to boost his standing within a legal system that is clearly as much as joke as the venue that he will be sharing with the following individuals:

Here are all the other “top business and policy leaders” at the NYT whitewashing summit:

• Eric Adams, New York City mayor
• Ben Affleck, Artists Equity C.E.O.
• Sam Bankman-Fried, FTX founder
• Gerry Cardinale, RedBird Capital Partners founder, managing partner and C.I.O.
• Shou Chew, TikTok C.E.O.
• Larry Fink, BlackRock chairman and C.E.O.
• Reed Hastings, Netflix founder and co-C.E.O.
• Andy Jassy, Amazon president and C.E.O.
• Van Jones, CNN host, author and Dream.Org founder
• Scarlett Lewis, Jesse Lewis Choose Love Movement founder and mother of Sandy Hook shooting victim, Jesse
• Mike Pence, 48th vice president of the United States and author of “So Help Me God”
• Benjamin Netanyahu, former Prime Minister of Israel, current leader of the Likud party
• Priscilla Sims Brown, Amalgamated Bank president and C.E.O.
• Secretary Janet L. Yellen, U.S. Department of the Treasury
• President Volodymyr Zelensky of Ukraine
• Mark Zuckerberg, Meta founder, chairman and C.E.O.

The shocked, stunned and simply disgusted reactions are still coming in:

“SBF needs to go to jail!”

The New York Times: pic.twitter.com/ynSzdFdl0Q

— Dr. Parik Patel, BA, CFA, ACCA Esq. (@ParikPatelCFA) November 23, 2022

The @nytimes event right? Makes sense. 😂😂😂 https://t.co/mgMhc0YNrA

— Dave Portnoy (@stoolpresidente) November 23, 2022

I’ll be speaking with @SBF_FTX at the @dealbook summit next Wednesday (11/30) by hiding in one of the bathroom stalls and surprising him while he’s using the urinal.

What questions should I ask him?

— davis 🐺🦊 (@basedkarbon) November 23, 2022

How did this dude steal billions of dollars and is now speaking at a summit as a free man?

Make it make sense.

— Chairman (@WSBChairman) November 23, 2022

let’s hop on a spaces right now.
Just me and you, 1 on 1.

— Bitcoin Archive 🗄🚀🌔 (@BTC_Archive) November 23, 2022

That CNBC, the NY Times and far-left extremist Andrew Sorkin would be protecting, apologizing for and promoting this guy is zero surprise. https://t.co/xhGh0gePV0

— John Tuld (@BradHuston) November 23, 2022

FTX SBF is scheduled to speak at a @nytimes business summit with Andrew Sorkin, after defrauding clients billions of dollars. More proof that paid off politicians grant you amnesty.

— TaraBull (@TaraBull808) November 23, 2022

SORKIN: “Internet trolls are scapegoating Sam, but we should celebrate entrepreneurs even when they fail. There’s nothing illegal about taking big risks.” https://t.co/mB9KkFsRdt pic.twitter.com/FKyTtdsfl9

— Bitcoin is Saving (@BitcoinIsSaving) November 23, 2022

My theory is that Andrew Sorkin is a sensible guy disgusted by the ruling class who tries to insult it by showing how bad it’s leading figures are. He’s surprised no one gets it but at least he makes a lot of money until that happens. https://t.co/ii9pGTz3R0

— P.C. Outsider (@PhilOutsider) November 23, 2022

PERFECT—ANDREW ROSS SORKIN IS MORE FULL OF SHIT THAN SAM IS. https://t.co/Y5PsRaRgVu

— INVESTMENT HULK (@INVESTMENTSHULK) November 23, 2022

“So, what’s your favorite color lol”

— litquidity (@litcapital) November 23, 2022

Damage control is in overdrive. We can’t be the only ones observing this? This is outrageous. https://t.co/OCTOMeOY3D

— Autism Capital 🧩 (@AutismCapital) November 23, 2022

“This can’t get any worse!”

Universe: “LOL, watch me!”

— Helin ULKER (@beautyofhelin) November 23, 2022

Hey @andrewrsorkin, can you also please invite AG Merrick Garland to the summit: we’d love to see him shake hands with SBF https://t.co/twLcOLQUtP

— zerohedge (@zerohedge) November 23, 2022

When SBF flies safely back to the Bahamas after attending the @dealbook summit pic.twitter.com/qgYCyQMlUA

— Ramp Capital (@RampCapitalLLC) November 23, 2022

While prevailing consensus was that the Fed didn’t really say anything unexpected, or anything that wasn’t already telegraphed both in the Nov 2 statement and subsequent Fed speak, Wall Street commentators agreed that “the statement overall comes across as dovish” as BBG Economics chief Anna Wong put it, With Integrity Asset Management’s Joe Gilbert adding that “it is constructive that Fed participants were becoming increasingly aware of the lagged impact of all the rate hikes this year. Generally, this is bullish for equities and fixed income because there is now a slight change in consensus at the Fed which means that significantly more rate hikes are now less likely.”

Wong added that “there’s widespread agreement within the committee to slow the pace of rate hikes soon, with only ‘a few’ preferring to wait until the policy stance is more clearly in restrictive territory. We think Powell belongs to this latter group.“

The market agrees with the dovish take and stocks have jumped to session highs while the market implied Fed Funds curve has dipped on the outer end,

Here are some of the initial reactions to the FOMC Minutes:

Chris Low, FHN Financial

“The two big headlines are most Fed officials favor slower tightening pace soon and various Fed officials see higher peak rates. Both of these confirm post-meeting press conference guidance from Powell.”

Interactive Brokers’ Chief Strategist Steve Sosnick:

“With pivot off the table, and with no pause coming yet, slower pacing seems to be enough for stock traders now.”

Lara Rhame of FS Investments:

“This rate-hike cycle has been “fast and furious” and the Fed has to slow down eventually. But the central bank can’t afford to let markets just rip higher.”

Doug Fincher, hedge fund manager of Ionic Capital Management:

“Amazed at the magnitude of tightening in credit spreads over the weeks since the CPI print. Curve is inverted, all kinds of risks (including recession) yet credit spreads tightened by 30% and signal all clear…. A slowdown is not a cut and many hurdles remain — like strong employment. It’s good, but a lot already priced in, I think, and many risks need to be solved for soft landing to play out.”

Childe-Freeman of Bloomberg Intelligence:

“The reference to slowing rate hikes will grab headlines. This will add to the bearish-dollar view for now, with $1.04 euro-dollar in sight again.”

Dan Suzuki, deputy chief investment officer at Richard Bernstein Advisors LLC.

“There isn’t much to glean from the minutes. From what I’ve seen, it’s exactly the same message we heard at the press conference: slower and possibly higher peak Fed funds rate. Any major reaction off of the minutes is probably an overreaction.”

Joe Gilbert, portfolio manager at Integrity Asset Management

“Keeping in mind that these minutes are before the October CPI print, it is constructive that Fed participants were becoming increasingly aware of the lagged impact of all the rate hikes this year. Generally, this is bullish for equities and fixed income because there is now a slight change in consensus at the Fed which means that significantly more rate hikes are now less likely.”

Anna Wong, head of Bloomberg Economics

“We think the statement overall comes across as dovish. There’s widespread agreement within the committee to slow the pace of rate hikes soon, with only ‘a few’ preferring to wait until the policy stance is more clearly in restrictive territory. We think Powell belongs to this latter group.”

US natural gas prices jumped Wednesday on a combination of thin holiday trading ahead of Thanksgiving, colder weather forecasts, and a bigger-than-expected draw in inventories. 

Futures in New York for December jumped as high as $7.60/mmbtu, or about 82 cents, on cooler forecasts, peaking around 0900 ET. Prices slid from the high but gained slightly after EIA reported a bigger-than-expected draw in inventories at 1030 ET.  As of 1400 ET, prices were up 59 cents to $7.37. 
 

“The United States has officially flipped over to withdrawal season as the cold set across the East and Midwest in the last week, driving gas burns higher and ramping industrial and residential plus commercial (ResComm) demand. The cold was coupled with weak production in Appalachia, but strong production in South Central and Canada helped meet that rising demand,” Houston-based energy firm Criterion Research said. 

They added: “The current weather outlook is setting up for another burst of cold in early December, which will stack on top of the partial return of Freeport LNG in mid-December. We likely roll into January and February with record-high LNG demand to help supply Europe, so if the US winter is colder than average, it sets up a very interesting March equations of state (EOS) storage picture.”

Month-ahead forecasts for the Lower 48 show what could possibly be a colder December than what the 30-year trend calls for. This would mean ResComm demand would spike due to increased heating demand and add to more significant declines in inventories. 

The flip has begun as the withdrawal season from NatGas storage is underway.

For this time of year, NatGas storage is around normal levels compared to a 25-year trend. But what can happen from here, as Criterion Research explained, is colder weather and LNG exports ramping up could draw down inventories down much quicker. 

Besides fundamentals, Dennis Kissler, senior vice president of Bok Financial Securities, told Bloomberg the move today was due to technical short covering as prices climbed above the 50-day and 100-day moving averages. 

Authored by Robert Rapier via OilPrice.com,

• The U.S. energy policy is clear about its intention to phase out fossil fuels.

• This has forced refiners to exercise caution in order to stay afloat. 

• It has also resulted in a loss of U.S. refining capacity. 

One of the under-reported factors behind the ongoing diesel shortage is the loss of U.S. refining capacity since the start of the Covid-19 pandemic. Today I will discuss the factors that led to this loss.

According to the Energy Information Administration (EIA), at the beginning of the pandemic U.S. refiners had 19.0 million barrels per day (BPD) of operable refining capacity (Source). This was the highest number ever reported by the EIA.

By December 2021, that number had fallen to 17.9 million BPD — a loss of 1.1 million BPD of capacity in less than two years.

Here is the thing many need help understanding about refining. It is a boom-and-bust business, and these refiners do not have crystal balls. It is widely reported when they make huge profits, but they also regularly endure huge losses.

U.S. energy policy has been clear about the intent to phase out fossil fuels. If you are a refiner forecasting billions in losses — and you require massive investments in order to keep your refinery operating safely and in compliance with the laws — you may very well simply make the decision to close down.

There are two excellent sources of information detailing which refineries closed, and why they closed. The first is the EIA.

During the summer, the EIA reported U.S. refinery capacity decreased during 2021 for second consecutive year, in which they discussed one of the major closures in 2021. They also showed this excellent graphic of how refinery capacity has evolved in recent years:

But I stumbled upon a more detailed look recently. In a Twitter thread, Laura Sanicola, an oil and energy reporter at Reuters, highlighted the individual refinery closures from the start of the pandemic through June 2022:

She reports on nine refinery closures, but the theme is consistent. Most of the refineries were closed due to demand loss as a result of the Covid-19 pandemic.

But, aren’t these companies earning billions of dollars? Isn’t that an argument for keeping these refineries open? There are two points to make on that argument.

First, it is possible to make billions of dollars as a company, but to lose money consistently in an individual refinery.

We have seen this happen a lot with East Coast refiners that didn’t have access to cheaper oil from the U.S. shale boom. They had to continue to procure crude oil on the international markets, and that put them at a competitive disadvantage.

Second, current refiner profits are a snapshot in time. Today, U.S. demand for petroleum has largely recovered. In fact, distillate demand has recovered to pre-pandemic levels. But, these companies are projecting the future.

They are looking at long-term demand forecasts for petroleum products. Those projections indicate declining fuel demand over time. Thus, they do not want to invest billions of dollars that could take a decade or more to pay off.

Imagine that you are running a chain of stores. Overall, your company is highly profitable, but you have stores that are consistently unprofitable. Further, those stores are outdated, the outlook for demand in these areas is weak, and it will cost a lot of money to upgrade them. You would probably close those locations.

That, in a nutshell, is why we have lost refining capacity in the U.S. It’s going to take some changes in our energy policy to address this.

The European Parliament on Wednesday voted to formally recognize Russia as a “state sponsor of terrorism” for what it called “deliberate attacks and atrocities carried out by the Russian Federation against the civilian population of Ukraine.”

European legislators also cited “serious violations of human rights and international humanitarian law amount to acts of terror” in the overwhelming vote in favor of the terror label. The move is more symbolic than anything, however, carry no specific legal consequences for Moscow.

The EP is now urging the European Union to enact the same, which would mark a major escalation in already spiraling relations, as it would also likely require more sanctions. 

The parliament statement said it “recognizes Russia as a state sponsor of terrorism and as a state which uses means of terrorism.”

Ukraine’s President Volodymyr Zelensky praised the designation, saying Wednesday, “Russia must be isolated at all levels and held accountable in order to end its long-standing policy of terrorism in Ukraine and across the globe.”

At the same time, Russian Foreign Ministry spokesperson Maria Zakharova angrily dismissed the move, writing on Telegram: “I propose recognizing the European Parliament as a sponsor of idiocy.”

Immediately after the vote, European officials accused Russia of mounting a “sophisticated” cyberattack:

“I confirm that the Parliament has been subject to an external cyber attack, but the Parliamentary services are doing well to defend the Parliament,” Dita Charanzová, Czech MEP and Parliament vice president responsible for cybersecurity, said in a statement.

Another senior Parliament official, requesting not to be named, said “it might be the most sophisticated attack that the Parliament has known so far.”

Eva Kaili, who is the Greek vice president of the European Parliament, pointed the finger at Moscow, saying, “We have a strong indication that it is from Killnet, the hackers with links to Russia indeed. This is my information, but it is under control. It only cut the external access to the Parliament’s website … Unless there is extra attacks we expect it to be back and accessible very soon.”

Shortly after, a group believed by the West to have ties to the Russian state claimed responsibility: 

PRO-RUSSIA GROUP KILLNET CLAIMS RESPONSIBILITY FOR DDOS ATTACK

And similarly, the German Greens’ MEP Alexandra Geese said on Twitter: “This morning Russia was still designated as a terrorist state in an official resolution. This afternoon the entire network collapses in [the European Parliament].” The attack mainly impacted the European Parliament website.

Tl;dr: Perhaps most critically when breaking down the FOMC statement – the focus falls on one word: “various”.

Bloomberg concludes that while policymakers stressed their “strong commitment” to reducing inflation, support for a higher rate peak may have been less than universal.

Hence the dovish lean to a hawkish message from the Minutes

*  *  *

Since The Fed hiked rates by 75bps (for the 4th time) on Nov 2nd, the dollar has been monkeyhammered lower while bonds and bullion have outperformed (along with gains in stocks) as hopes for a pause (the FOMC statement) dominated reality of no pause (Powell and dozens of Fed Speakers since)…

Source: Bloomberg

While there has been lots of volatility, the market’s expectation for The Fed’s terminal rate is basically flat while the market’s pricing in a more dovish reaction by The Fed after they have reached the peak and sparked a recession…

Source: Bloomberg

The yield curve has flattened dramatically since the last FOMC statement (inverting ever deeper as recession risks get priced in)…

Source: Bloomberg

So, all eyes will be on the Minutes for any signs of the ‘pivot/pause/slow-down’ that was hinted at in the statement but which Chair Powell destroyed in the press conference. Additionally, the ‘higher for longer’ narrative that has been pushed by numerous Fed Speakers in the last two weeks will be important to pay attention to (i.e if a higher terminal rate than previously thought is needed… and then maintaining that restrictive stance for longer before cutting rates to save the world). Any signals on financial stability anxiety, especially related to QT, will be monitored closely.

The bottom line is that the Minutes will be eyed for commentary on the central bank’s reaction function to both labor and inflation.

Ahead of the Minutes, the market priced a just 12% chance of 75bps at December’s FOMC (100% chance of 50bps), and 63% chance of 50bps in February.

So what do The Minutes Show?

The Doves:

A substantial majority of participants judged that a slowing in the pace of increase would likely soon be appropriate.

Several officials also voiced concerns that “continued rapid policy tightening” would raise risks of financial instability.

The Hawks:

In discussing potential policy actions at upcoming meetings, participants reaffirmed their strong commitment to returning inflation to the Committee’s 2 percent objective, and they continued to anticipate that ongoing increases in the target range for the federal funds rate would be appropriate in order to attain a sufficiently restrictive stance of policy to bring inflation down over time. Many participants commented that there was significant uncertainty about the ultimate level of the federal funds rate needed to achieve the Committee’s goals and that their assessment of that level would depend, in part, on incoming data.

A few other participants noted that, before slowing the pace of policy rate increases, it could be advantageous to wait until the stance of policy was more clearly in restrictive territory and there were more concrete signs that inflation pressures were receding significantly

With monetary policy approaching a ‘sufficiently restrictive’ level, participants emphasised final destination of Fed funds rate had become more important than pace.

Even so, various participants noted that, with inflation showing little sign thus far of abating, and with supply and demand imbalances in the economy persisting, their assessment of the ultimate level of the federal funds rate that would be necessary to achieve the Committee’s goals was somewhat higher than they had previously expected.

On inflation:

Participants concurred there were very few signs of inflation pressures abating.

In light of the continuing broad-based and unacceptably high level of inflation and upside risks to the inflation outlook, participants remarked that purposefully moving to a more restrictive policy stance was consistent with risk-management considerations.

This was before the big drops in CPI/PPI and so this will likely shift dramatically in the next FOMC statement.

On being clueless about the economy:

Participants generally noted that the uncertainty associated with their economic outlooks was high and that the risks to the inflation outlook remained tilted to the upside…. Participants observed that recent inflation had been higher and more persistent than anticipated.

On market stability:

A few participants commented that slowing the pace of increase could reduce the risk of instability in the financial system.

Fed officials discussed turmoil in the UK government bond market, and while they judged that the market for US Treasuries remained “orderly,” a few participants suggested the Fed should be prepared to address any US market functioning issues in ways that “would not affect the stance of monetary policy, especially during episodes of monetary policy tightening”

On the labor market:

Participants observed labor market remained tight; many noted tentative signs it might be moving slowly toward better balance of supply and demand.

On the dreaded wage-price spiral:

few participants commented that the ongoing tightness in the labor market could lead to an emergence of a wage–price spiral, even though one had not yet developed

Interactive Brokers’ Chief Strategist Steve Sosnick says:

“With pivot off the table, and with no pause coming yet, slower pacing seems to be enough for stock traders now.”

*  *  *

Read the full Minutes below:

Submitted by Newsquawk

At its November confab, the FFR target was lifted by 75bps to 3.75-4.00%, as expected. The statement was dovishly received by the market after it stated that the Fed will consider the “cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments” when determining the pace of future rate increases. Analysts rationalized that with rates becoming more restrictive, the Fed can downshift to a slower pace of normalisation to assess the impact of the 375bps worth of tightening unleashed since March.

However, Chair Powell’s press conference injected a hawkish bias after he suggested that it was “very premature” to consider pausing the course of hiking. He said that the time to slow rate hikes might come as soon as the December meeting, but stressed that inflation remains well above the Fed’s longer-run goals, with price pressures evident across goods and services. And although longer-term inflation expectations still appear well-anchored, the Fed wants to see inflation coming down decisively, and is prepared to stay the course until the job is done, with the Fed strongly committed to its inflation target of 2%. He added that there was still “some ways to go” on rate hikes, while the ‘ultimate rate level’ might even be higher than previously expected (NOTE: the Committee forecast a 4.50-4.75% terminal rate in its forecasts).

The Fed chair said the debate on how far to lift rates was the important question, but there was still ground to cover before the Fed can ‘meet that test’, adding that there is a lot of uncertainty regarding the lagged impact of policy tightening. These themes have been largely echoed by officials in wake of the November meeting. And after CPI and PPI data eased in October, money market pricing implies a 50bps rate hike in December, with the terminal rate expected to be a little over 5% by mid-2023 – it is worth noting that for most of last week, expectations of the terminal rate were sitting between 4.75-5.00% until FOMC voter Bullard delivered hawkish remarks, where he suggested that rates were not yet “sufficiently restrictive”, “even under the most generous interpretation”; Bullard has been a policy leader in the post-pandemic era, with his hawkishness coming before other colleagues.

RATES: After the cooling October CPI inflation data, markets are pricing in a 50bp hike in December, which has been in fitting with commentary from some officials, although others do note that 75bps is still on the table and markets are currently implying a 23% probability of a 75bp move. We will look at the minutes to gauge the appetite among the FOMC on their keenness to start slowing the pace of rate hikes at next month’s confab. Many officials – including Powell – have stressed the terminal rate, or where the Fed gets to, as being more important than how it gets there, nonetheless, the hike increment decides how fast we get there and gives clues to how close we are to the terminal. The September SEPs (‘Dot Plot’) saw a peak rate of 4.50-4.75%, but it is likely that this will be revised higher in December so commentary in the minutes on participants’ views of the terminal rate will be key. Recent commentary from officials has implied a terminal rate of between 4.75-5.25%. Of course, how long the Fed needs to stay at the terminal rate is key as well, although that is inherently harder to forecast given the longer timeframe, participants are instead likely to suggest it will depend on how the economy evolves (‘data dependence’) and stress that the FOMC wants to see inflation clearly showing evidence it is returning back to its 2% target.

DATA: The October CPI report was not available to the Fed at the time of the November meeting so it will not be incorporated into the minutes, but the release has been a welcome report, though officials have stressed they want to see a more sustained inflation slowdown and are not to be over-persuaded by one month’s data. The labor market has remained resilient/tight despite all the policy tightening, something which the Fed would ideally like to see loosen. SGH Macro’s Tim Duy writes, “The Fed expects that markedly softer labor market conditions will precede the restoration of price stability and has not prepared for the opposite possibility”. Duy adds the Fed sees elevated inflation as having both transitory and persistent components, with persistent components preventing a return to target level inflation without softer demand, which will be realised with a substantially softer labour market. The Fed watcher also highlights this could create some messaging problems for the Fed, “If inflation is falling, what is the need for ongoing rate hikes? First, the Fed will say it needs to at least follow through with what has already become embedded in market expectations. Second, it can’t step down from the inflation fight with labor markets still tight and risk a reacceleration of activity”. Therefore, the minutes will be eyed for commentary on the central bank’s reaction function to both labor and inflation

Authored by Rita Li via The Epoch Times (emphasis ours),

Rep. Carolyn Maloney (D-N.Y.) is under investigation for allegedly asking for an invitation to the Met Gala, which would violate House rules and federal law on solicitation of gifts, according to a congressional ethics watchdog.

In a June report (pdf) released on Nov. 21, the Office of Congressional Ethics (OCE) said it has “substantial reason to believe that Maloney may have solicited or accepted impermissible gifts” associated with her Met Gala attendance in 2016. The charity event, considered a fundraiser for the New York Metropolitan Museum of Art’s Costume Institute, is generally frequented by celebrities, singers, actresses, and fashion luminaries.

“If Rep. Maloney solicited or accepted impermissible gifts, then she may have violated House rules, standards of conduct and federal law,” the OCE board wrote in the 15-page report, before transferring the matter to the bipartisan House Ethics Committee. In a Monday press release, the committee publicized the findings and said to look further into the matter, though noted the mere fact of the extension and disclosure didn’t indicate any wrongdoing.

Maloney, 76, a longtime attendee of the Met Gala, had secured $2.75 million in federal funding for the Met from 2003 through 2011, and requested in March 2020 $4 billion in federal assistance for nonprofit museums, including the Met, for COVID-19 relief, according to the OCE report. The congresswoman also said she couldn’t recall a year in which she was not invited to the gala.

Yet investigators obtained an internal memorandum from the Met showing Maloney’s name crossed out of its 2016 invitation list. Citing a witness testimony, the report said the congresswoman had specifically requested an invitation to the 2016 event.

“I received a call this past week from Carolyn. She is unhappy to say the least that she is not receiving an invitation to the Party of the Year,” former Met President Emily Rafferty wrote in an email dated April 2, 2016 to then-director and CEO of the museum, Thomas Campbell. “She went on about how much she does for the Met, always responsive when you call, and proactive re the institute’s concerns in DC,” the email reads.

Maloney told investigators she didn’t remember the call with staffers.

She received an invite that year and every year since then. The OCE report also cited a 2018 email that suggests Maloney’s 2016 outreach played a role in future invitations. It also cited an email thread showing Maloney may have requested an invitation as recently as 2020, asking whether she was invited to the ball and how to contact a Met government affairs employee.

Maloney, an outgoing New York Democrat, denied the allegation (pdf), saying the House Ethics Committee “has provided no concrete evidence” that she was actually requesting an invitation.

Read more here…

US cold storage of orange juice plunged to the lowest level in half a century after extreme weather in Florida and citrus greening damaged production. Dwlinidnig supplies boosted breakfast inflation as prices of orange juice hit record highs. There has since been a dramatic increase in the orange juice trade between the US and South America to balance out supplies. 

Brazilian exports of orange juice to the US in the first four months of the season surged 58% from a year ago to a record 112,500 metric tons at the end of October, according to Bloomberg, citing data from Brazil’s Secretariat of Foreign Trade.

US ag traders are resorting to Brazil, one of the world’s top exporters of citrus, comes as US stockpiles of cold-stored orange juice plunged by 43% in September from a year earlier — the lowest level since 1977, according to the latest US Department of Agriculture data. 

A combination of diseases across Florida’s citrus groves and Hurricane Ian destroyed crops are creating a supply crunch that has catapulted orange juice futures to record highs of more than $2 per pound. 

We recently outlined “Orange Juice Prices Could “Increase Substantially” As Hurricane Pummels Florida’s Top Citrus Grow Region.” And that’s precisely what’s happening. So much so that demand exceeds supply boosting prices to record highs, and US ag traders resort to South South America to fill gaps. 

Rabobank analyst Andres Padilla wrote in a recent note to clients that orange juice prices are set to rise 20-30% in US and Europe by early 2023.