The head of Israeli Military Intelligence has warned this week that Iran is mulling an attack on World Cup venues in Qatar amid ongoing anti-regime protests. Maj. Gen. Aharon Haliva described that he expects Tehran officials to grow more desperate amid the now months-long “anti-hijab” protests, thus the potential for lashing out by a major terror attack grows increasingly likely.

“There is a real concern within the regime that it endangers the regime. At this stage, I do not see a risk to the regime…. but as the pressure on Iran increases, including internal pressure, the Iranian response is much more aggressive, so we should expect much more aggressive responses in the region and in the world,” Haliva said.

“I am telling you that the Iranians are now considering attacking the World Cup in Qatar as well,” he said. “The only thing holding them back is how the Qataris will react.”

He issued the words Monday before a defense conference in Tel Aviv, calling the ongoing protests which have increasingly taken over university campuses and major city streets in the Islamic Republic “extremely exceptional” and now fast becoming a “civilian rebellion”.

“The death toll, the attacks on national symbols — this is very troubling for the regime, especially combined with sanctions, the existing international pressure, and the difficult economic situation,” the military intel chief described.

Outgoing Defense Minister Benny Gantz also backed the prediction related to the World Cup, alleging the Iranians are poised to create instability outside their country. 

Iranian leaders have meanwhile charged that the protests and unrest are a foreign plot, with the spiraling violence which has left scores of police and security services casualties being fueled by Israeli and US intelligence. Over 320 people have died since the demonstrations began. Authorities have denounced the “rioters”. 

As for the claims that Iran could be planning an attack on the World Cup, it remains entirely unclear if this is based on any firm intelligence. Instead, it seems more the speculative accusations which are typical from Israeli officials anytime there’s a major media-covered international event in the Middle East region.

Authored by Ryan McMaken via The Mises Institute,

As interest rates rise on everything from mortgages to car loans to Treasurys, that also means interest is rising on credit card debt. That’s not exactly great news as so many indicators point to a recession – and the worsening job situation that comes with it – on the horizon. Many Americans may soon find themselves in a situation with more debt at higher interest rates, all while real wages are falling. 

Earlier this month, Bankrate.com reported that the average credit card interest rate has climbed to 19.04%. That’s a 30-year high and the highest rate since 1991, when the rate hit 19%. That can mean real financial trouble for ordinary households, but it’s what we should expect in the wake of this year’s policy shift at the Federal Reserve to finally allow interest rates to drift upward after more than a decade of quantitative easing and ultralow-interest-rate policy. Over the past year, the Fed has increased the target federal funds rate from 0.25% from 4.0%. NBC reports on how this affects credit card debt:

Increasing the federal funds rate cranks up what’s known as the prime rate. That’s the interest rate banks charge their most creditworthy customers. Currently, it is 7%. The final annual percentage rate for a credit card is determined by the prime rate plus a bank’s margin for lending to a given customer.

The new average is a substantial increase from the 16.3% average rate for credit cards at the beginning of the year. According to Bankrate, if you carry a $5,000 balance on a credit card — which is the current national average — making just the minimum payment each month at that rate would cost $5,517 in interest over 185 months, or about 15 years. At today’s 19.04% rate, you would pay $6,546.

The Fed report also reported “The strength in credit card demand and access coincided with the record growth in credit card balances over the past year.” In its third-quarter report on household debt, the Fed further noted “Credit card balances saw a $38 billion increase since the second quarter, a 15% year-over-year increase marked the largest in more than 20 years.”

Consumers apparently also expect to be spending more with credit cards in the near future, as well, as many are applying for even more consumer credit. According to a new report released Monday from the New York Federal Reserve, Americans are pursuing less new mortgage and auto debt, but continue to turn to credit cards:

The application rate for credit cards remained robust during 2022, reaching 27.1% in October 2022, above its October 2021 level of 26.5% and its pre-pandemic reading of 26.3% in February 2020. The average application rate for credit cards for 2022 overall was 26.7%, 3.6 percentage points higher than the average rate for 2021.

Should we be worried about this? Fed economists would tell you no because it is assumed that Americans allegedly have a huge savings stockpile that they can use to avoid defaults or pay down debt. Yet, this casual attitude toward mounting debt appears less and less warranted every day. With the job market softening, real wages falling, and interest rates rising, rising debt levels can’t so easily be waved off. 

A Free Money Surge Followed by Plummeting Saving Rates

After all, back in 2021, consumers were indeed using their stimulus checks to pay off credit card debt. They were saving more than they have in decades. Plus, as the Fed further pushed down interest rates, consumers were refinancing home loans into even cheaper loans. Yet, as the new spike in credit card debt shows, those days are over. Moreover, now that the stimulus checks have dried up, the savings rate has plummeted to the lowest level we’ve seen since 2008. 

It appears that savings stockpile has not yet been totally depleted, but we’re already well on the way there. Some analysts estimate this means consumers have about nine to twelve months left in that savings cushion.

But this may prove to be optimistic depending on at least three factors: if real wages continue to fall, if job losses mount quickly, and if interest rates continue to rise. 

Falling Wages, Job Losses, and Rising Interest Rates

First, there’s the problem of real wages. As we’ve seen, price inflation has been exceeding wage growth, and this has meant ordinary Americans (on average) have seen their real wages fall for nineteen months in a row. That won’t exactly help expand workers’ savings.

Second, it can no longer be said there is an economy-wide worker shortage. Certainly, there do appear to still be worker shortages in retail services and food services, but real estate and tech don’t appear to be faring as well. Rather, every week now brings multiple announcements of new layoffs from tech firms and from real estate/construction firms. After tens of thousands of layoffs announced in recent weeks from Facebook, Amazon, and Twitter, Google announced 10,000 layoffs today, and Fidelity National Information Services announced thousands more. Real estate sales platform Redfin, has recently closed it home-flipping business and cut more than 800 employees. 

From real estate to tech to the crypto economy, we can expect more layoffs and losses as easy money tightens up.

And finally, the issue of rising interest rates which, in addition to bringing job losses in the larger economy, will accelerate the burden that new credit card debt places on consumers. This will lead to rising delinquencies and tightening budgets overall. Some observers have suggested that credit card debt is no big deal right now because total credit card debt—even with the current surge over last year’s totals—is not significantly above the longer-term trend. That would be fairly compelling were it not for the fact that these mounting debts are also happening alongside one of the fastest increases in interest rates we’ve seen in decades. Thanks to the Fed getting so behind the curve on price inflation, we’re in the midst of the fastest cycle in rising interest rates since at least the 1980s. Yet, over the past 40 years, rising debt levels have occurred alongside ongoing declines in interest costs. Now that process is going in reverse, and interest rates have rapidly returned to 2007 levels. If the current upward trend in interest rates continue, this could mean a sizable increase in the burden that consumer debt places on ordinary households. 

All of this would be made worse, of course, by further slide into recessionary territory. Up until this month’s election, both the Fed and the Administration repeatedly denied that a recession is coming or is already here. This was in spite of two quarters of row of declining economic growth which has generally been labeled a recession by economists. But even if the first half of 2022 ends up not being labeled a recession, the data now strongly points toward one in 2023. The yield curve has inverted, global trade is softening, advertisers are pulling back, and real estate prices are sliding toward declines.

Recession Almost Guaranteed

Indeed, now with the election safely over, even some Fed economists are starting to admit a recession is in the works. Eric Rosengren earlier this month admitted that a recession is likely, although he was careful to call it a “mild” recession. This is highly significant because the role of Fed economists is to generally be cheerleaders and to never speak of recessions until they are undeniable. After all, then-Fed Chair Ben Bernanke denied a recession was in the works as late as the first quarter of 2008. That was months after the recession had already started. The Fed always underplays secession risk, so it is remarkable if Rosengren is admitting any sort of recession is likely. Meanwhile, the administration now admits the boom days are over, but is now insisting that a soft landing is possible, and there will merely be a slowing of economic growth. 

Yet, for all the positive talk, Americans are piling on more debt just as real wages are falling, job losses are mounting, and debt costs are rising. In all this, we can thank the economists and technocrats at the Federal Reserve for years of malinvestments and an economy of zombie companies and fragile household budgets built on a shaky foundation of easy money and mounting debt. It didn’t have to be this way, but the regime is addicted to easy money and the Fed is more than happy to oblige. Now we have to deal with the inevitable bust that comes after the artificial and unnecessary inflationary boom. 

US equity futures were steady, trading in a narrow 15 point range before the release of minutes from the latest Fed meeting which may signal that the pace of rate hikes may slow. S&P500 futures up 0.1% by 7:30 a.m. ET, swinging between gains and losses, after the underlying index closed above 4,000 for the first time since Sept. 12 amid lighter trading before Thursday’s Thanksgiving holiday. Nasdaq 100 futures rose 0.1% after the tech-heavy index climbed 1.5% on Tuesday. Credit Suisse shares plunged below their record closing low after the bank warned of a fourth-quarter loss. Oil fell as the EU discussed imposing a price cap on Russian oil between $65 and $70 a barrel (which Russia will never comply with). The Bloomberg dollar index erased earlier declines. Ten-year US Treasury yields rose by one basis point.

In premarket trading, Nordstrom sank 10% after reporting late Tuesday that gross margin for the fiscal third quarter that trailed the average analyst estimate. The department-store operator also reiterated its full-year outlook despite topping analysts’ expectations for adjusted earnings per share and revenue. The stock had ended Tuesday’s regular session at the highest level in three months amid a rally among retail shares. Tesla gained after Citigroup upgraded the electric-vehicle maker to neutral from sell. Here are some other notable premarket movers:

• Manchester United shares jump 11% in US premarket trading as the owners of the football club, the Glazer family, work with financial advisers on a partial sale of the club or investments including stadium and infrastructure redevelopment.
• Cryptocurrency-exposed stocks rally anew as Bitcoin extended its rebound into a second session, though investors were keeping an eye out for signs of any contagion from the collapse of Sam Bankman-Fried’s FTX empire. Coinbase +3.6%, Riot Blockchain +3.8%, Marathon Digital +4%, Core Scientific +11%
• Keep an eye on Medtronic as the stock was cut to neutral from buy at Citi, with the broker saying the medical-equipment group’s quarterly results were the “straw that broke the camel’s back.”
• MacroGenics shares gained about 4% in postmarket trading on Tuesday after Guggenheim Securities raised its rating on the stock to buy from neutral, citing a stronger balance sheet and near-term clinical data catalysts.

The publication of minutes from the Fed’s Nov. 1-2 meeting — due at 2 p.m. in Washington — will be studied for how united policymakers were over a higher peak for interest rates than previously signaled in their inflation fight. Some investors anticipate that lower-than-estimated inflation figures could prompt the Fed to temper the size of its rate hikes as early as at next month’s gathering. After an initial shock from Chair Jerome Powell’s comments earlier this month, US equities have turned higher on expectations that lower-than-estimated inflation figures could prompt the Fed to tame the size of its rate hikes.

The minutes are “likely to shed some light into how many FOMC members are becoming concerned about policy lags and the impacts of such lags on the US economy,” said Michael Hewson, chief market analyst at CMC Markets UK. “With Fed Chair Powell keen to impress on the market that he wants to limit the scale of advances in the equity markets, it will be interesting to see how many other Fed officials share that view.”

The Stoxx Europe 600 crept 0.1% higher to a fresh three-month high as travel and leisure and mining stocks gained. FTSE 100 outperforms peers, adding 0.5%, FTSE MIB lags, dropping 0.3%. Miners, travel and energy are the strongest performing sectors.  Credit Suisse Group shares dropped below their record closing low after the bank warned of a fourth-quarter loss and revealed a record $88 billion outflow. Here are the most notable European movers:

• Britvic shares rise as much as 4.9% after the UK soft-drinks maker reported full-year sales and earnings that beat estimates. Goodbody said the results bode well for the year ahead.
• Glencore gains as much as 4.8%, the most since Nov. 4, after Bernstein analysts upgraded the miner to outperform from market perform, saying it is best positioned to take advantage of thermal coal prices amid the gas shortage in Europe.
• CTS Eventim shares climb as much as 5%, touching the highest since June, after Baader raised the ticket seller to add from reduce, saying it is delivering a “very strong business recovery.”
• Rotork shares rise as much as 4.5%. The industrial valve maker’s reiterated guidance and in-line results should be welcome, while the margin outlook is also positive, analysts said.
• Endesa shares drop as much as 6.5%, the most intraday since June, after the Spanish utility gave guidance for lower-than-expected profits for the next two years.
• Credit Suisse drops as much as 6.2% after the troubled lender said it will book a loss of up to 1.5b Swiss francs for the fourth quarter and reported further outflows of wealth management funds. Vontobel said massive net outflows in wealth management are “deeply concerning.”
• Siemens Healthineers shares fall as much as 4.5% after it was cut to hold from buy at Jefferies, with the broker seeing limited scope for any upside in the medtech group’s FY23 guidance.
• EMS-Chemie shares drop as much as 4.7% after the chemicals company warned on profits, citing worsening demand from the automotive sector.

European investors digested data showing that private-sector activity in Germany and France — the euro area’s top two economies — contracted in November, painting a bleak picture for a region that may already be in recession. A separate survey showed that the UK economy is in recession, with the downturn expected to worsen into 2023.

Earlier in the session, Asian stocks advanced as investors awaited the Federal Reserve’s minutes to assess the US rate-hike path while weighing risks from China’s Covid lockdowns and regulatory crackdown.  The MSCI Asia Pacific excluding Japan Index climbed as much as 0.7%, led by gains in tech and energy stocks. Alibaba and other Chinese internet firms were the biggest individual contributors to the measure’s gain.  Equities in Hong Kong snapped a five-day losing streak while those in mainland China closed with a small gain as investors analyze impact of virus curbs. Traders were also cautious following a report that Chinese authorities are planning to impose a fine of more than $1 billion on Jack Ma’s Ant Group. Elsewhere, benchmarks in Australia, Taiwan, South Korea and Indonesia posted moderate gains. Japan’s markets were closed for a holiday.  In a move to fight the spread of Covid, Shanghai will ask new arrivals into the city to stay away from public venues for five days starting from Thursday, as Chinese authorities revert to tougher virus restrictions amid a nationwide surge in infections. “China Covid will continue to create volatility, but it wasn’t completely unexpected and is somewhat priced in,” said Charu Chanana, senior markets strategist at Saxo Capital Markets. “For now, equities are getting a push from weaker yields overnight and expectations that FOMC minutes may be dovish.”  The minutes of the Fed’s November meeting will likely reveal a consensus among policymakers that the central bank needs to slow rate hikes. Investors are also digesting a slew of corporate earnings from Asia.

Indian shares rose for a second straight day, helped by gains in banking stocks. A drop in index-heavy Reliance Industries and software firms trimmed gains.  The S&P BSE Sensex gained rose 0.2% to 61,510.58 in Mumbai, while the NSE Nifty 50 Index added 0.1%. Twelve of BSE Ltd.’s 19 sector sub-gauges gained, led by a measure of banking stocks, trading close to a record high after climbing about 21% this year.  Foreign investors have largely been buyers of local shares since end of September. However, the global funds are also taking profit from some of top performers regularly.

Australian stocks rose to the highest since June as miners gained. The S&P/ASX 200 index rose 0.7% to close at 7,231.80, extending gains for a second session, following Wall Street higher amid positive earnings and a focus on Federal Reserve minutes due later Wednesday.  Mining and bank shares contributed most to the benchmarks advance.  In New Zealand, the S&P/NZX 50 index fell 0.8% to 11,323.80, as the central bank raised interest rates by a record 75 basis points and signaled further tightening ahead, stepping up its inflation fight even as it forecasts a recession next year

In FX, Bloomberg dollar spot index flatlined as G-10 peers moved in narrow ranges. Scandinavian currencies were the best G-10 performers while the yen and the Canadian dollar were the worst.

• The New Zealand dollar pared gains after earlier advancing by as much 0.7% versus the greenback. The Reserve Bank of New Zealand raised interest rates by 75 basis points, as expected, and said rates will peak at 5.5% instead of 4.1%, and forecasts a recession next year as it seeks to contain inflation. The nation’s 2-year bond yield added 20bps
• The euro steadied around $1.03. European bond curves flattened and underperformed Treasuries as markets priced in more ECB tightening following RBNZ’s hawkish move. 2-year Bund yields added 7bps while the 10-year yield rose 1bp. Italian bonds outperformed bunds.
• The pound traded little changed against the US dollar and the euro. Currency traders are focusing on an upcoming Supreme Court ruling on whether the semi-autonomous Scottish government can call a second independence referendum without approval from the UK government

In rates, Treasuries were narrowly mixed with the curve continuing to flatten; long-end yields traded slightly richer on the day, front-end and belly cheaper. 10-year Treasury yields were cheaper by 1bp on the day at around 3.765% with bunds trading cheaper by 1bp in the sector; 30-year dipped below 3.81% for first time since Oct. 7, aided by prospect of a big index duration extension at next week’s month- end rebalancing. Bunds underperformed with long-end yields cheaper by over 5bp on the day following PMI numbers and German 30-year bond sale. US session features heavy economic data slate including PMIs and University of Michigan sentiment. The Gilt curve bull flattens with 2s10s narrowing 5.7bps. Peripheral spreads tighten to Germany.

In commodities, Bloomberg reported that EU is considering a price cap on Russian oil of $65-70bbl; several EU diplomats reportedly said the proposed level was too high. Subsequently, the G7 is looking at a price cap on Russian seaborne oil in the $65-70/bbl level, via Reuters citing a European official. Crude was capped by the latest oil cap reports ahead of a potential EU Ambassadors discussion; benchmarks gave up their initial modest consolidation and now post downside of near 2.0%. WTI and Brent Jan’23 futures fell to session lows $78.94/bbl and $85.96/bbl vs $81.30/bbl and $88.80/bbl respectively prior to the below source reports. Spot gold fell roughly $4 to trade near $1,737/oz, base metals were pressured by China’s latest crackdown measures..

Looking to the day ahead now, and the main data highlight will be the global flash PMIs for November, along with the US weekly initial jobless claims, preliminary durable goods orders for October, and new home sales for October. From central banks, we’ll get the minutes from the FOMC meeting earlier this month, and there’ll be remarks from ECB Vice President de Guindos, the ECB’s de Cos and Centeno, and BoE chief economist Pill. Finally, earnings releases include Deere & Company.

Market Snapshot

S&P 500 futures up 0.2% to 4,019.00

Brent Futures up 1.1% to $89.29/bbl

Gold spot down 0.2% to $1,737.60

U.S. Dollar Index down 0.2% 107.05

Top Overnight News from Bloomberg

• The ECB should move carefully as it starts shrinking its balance sheet, opting for a “passive” approach to so-called quantitative tightening, according to Vice President Luis de Guindos
• The EU watered down its latest sanctions proposal for a price cap on Russia’s oil exports by delaying its full implementation and softening key shipping provisions
• Europe PMI manufacturing and services unexpectedly rose in November, according to S&P Global. While it still firmly indicates a recession in the 19-nation region is underway, it offers some room to think the downturn may be shallower than previously predicted.
• UK Prime Minister Rishi Sunak suffered a blow to his authority as he struggled to quell Conservative rebellions on multiple policy fronts, and downcast MPs threatened an exodus from Westminster ahead of the next election
• The UK economy is in recession with the downturn expected to worsen heading into 2023, a key survey warned. S&P Global said its poll of purchasing managers suggests the economy is shrinking at a quarterly rate of 0.4%. Gloom was widespread in November, with services firms seeing new business fall at the fastest pace for almost two years
• China’s purchases of machines to make computer chips fell 27% last month from a year earlier as the US imposed new, sweeping sanctions to try and derail the country’s chip ambitions

A more detailed look at global markets courtesy of Newsquawk

Asia-Pac stocks took impetus from the positive handover from Wall St where sentiment was underpinned amid a global risk revival despite the lack of fresh catalysts but with upside capped amid Japan’s holiday closure, tighter COVID rules in China and following the RBNZ’s historic rate hike. ASX 200 was led by strength in the mining-related industries and with the energy sector front running the advances although the index is limited by underperformance in tech. NZX 50 was the laggard following the RBNZ’s 75bps rate hike and hawkish revisions to its OCR view which it now expects to peak at 5.50% (prev. 4.10% view), while the Committee had considered either a 75bps or 100bps move compared with analysts’ forecasts of either a 50bps or 75bps hike heading into the meeting. Hang Seng and Shanghai Comp were both higher, albeit with price action in the mainland choppy amid COVID concerns after several key cities tightened restrictions and testing requirements.

Top Asian News

• PBoC adviser Wang Yiming sees China’s 2023 GDP growth to likely be above 5% if the impact of COVID ends but noted growth will depend on the rollout of support measures and that support measures are needed to lift market confidence and consumption. Wang stated there is limited room for China to cut interest rates and slower Fed hikes in H1 2023 will provide China with more policy room.
• Shenzhen will require 48-hour COVID tests to access public venues and Chengdu will conduct mass testing on November 23rd-27th, while Tianjin is to conduct complete city testing on November 24th-25th.
• RBNZ hiked the OCR by 75bps to 4.25%, as expected, while it stated that monetary conditions need to tighten further and that the Committee considered a 75bps or 100bps rate increase. RBNZ said consumer price inflation is too high and the Committee agreed the OCR needs to reach a higher level and sooner than previously indicated. Furthermore, the RBNZ noted near-term inflation expectations have risen and it raised its OCR projections with the OCR expected to peak at 5.5% by December 2023 vs prev. forecast of 4.10%.
• RBNZ Governor Orr said during the press conference that there will be a shallow recession but noted economic activity remains high and spending is strong, while the RBNZ also noted that they are mature in the tightening cycle and closer to the end than the beginning but added that new shocks are arriving all the time.
• Beijing is set to maintain COVID curbs until a turning point appears, according to reports via Bloomberg; requests residents do not unnecessarily leave the city.
• China’s cabinet will make adjustments to the RRR at an appropriate time, via Reuters citing State Media; will encourage commercial banks to issue loans to guarantee the delivery of homes.

UK Chancellor Hunt and BoE Governor Bailey are to reduce the maximum authorised size of the APF to GBP 871bln (prev. GBP 886bln), according to a BoE statement. Moody’s said the UK government set out an ambitious consolidation plan but added that low confidence in the delivery hampers its credibility, according to Reuters. UK Supreme Court rules that Scotland cannot hold an independence referendum without approval from the British government. ECB’s de Guindos says it is likely we will see negative Q4 growth rates within the EZ. Upcoming inflation projections will still be high, before starting to slow in Q1-2023; will show core also remains high.

Top European News

• UK Chancellor Hunt and BoE Governor Bailey are to reduce the maximum authorised size of the APF to GBP 871bln (prev. GBP 886bln), according to a BoE statement.
• Moody’s said the UK government set out an ambitious consolidation plan but added that low confidence in the delivery hampers its credibility, according to Reuters.
• UK Supreme Court rules that Scotland cannot hold an independence referendum without approval from the British government.
• ECB’s de Guindos says it is likely we will see negative Q4 growth rates within the EZ. Upcoming inflation projections will still be high, before starting to slow in Q1-2023; will show core also remains high.

Fixed Income

• UK debt rampant ahead of DMO supply and comments from BoE’s Pill, with Gilts posting a fresh 107.00+ post-mini budget collapse high
• Bunds tag along, but lag BTPs, former flat between 140.59-139.77 parameters and latter nearer top of 119.42-118.31 range
• US Treasuries trailing with no cash trade overnight and a hectic agenda looming on the eve of Thanksgiving, T-note subdued within a 112-21+/112-12 band

Commodities

• Crude capped by oil cap reports ahead of a potential EU Ambassadors discussion; benchmarks gave up their initial modest consolidation and now post downside of near 2.0%.
• WTI and Brent Jan’23 futures fell to session lows USD 78.94/bbl and USD 85.96/bbl vs circa. USD 81.30/bbl and USD 88.80/bbl respectively prior to the below source reports.
• US Private Energy Inventory Data (bbls): Crude -4.8mln (exp. -1.1mln), Cushing -1.4mln, Gasoline -0.4mln (exp. +0.4mln), and Distillate +1.1mln (exp. -0.6mln).
• OPEC+ delegates said Saudi’s denial of a production increase at the December meeting reflected an unease with public discussion of the group’s decision-making before an agreement with Russia was struck, according to WSJ.
• US Treasury Department issued new guidance on the implementation of a price cap policy for Russian crude and said the price cap will be set after a technical exercise is conducted by the price cap coalition. A Treasury official also noted hopes that the EU price cap consultation is concluded relatively soon to allow the coalition to announce a price, while the official added there is no reason to expect Russia will retaliate to a price cap by cutting oil output and warned that violation of price cap could be subject to civil or criminal penalties, according to Reuters.
• EU is considering a price cap on Russian oil of USD 65-70bbl, according to Bloomberg sources; several EU diplomats reportedly said the proposed level was too high. Subsequently, the G7 is looking at a price cap on Russian seaborne oil in the USD 65-70/bbl level, via Reuters citing a European official.
• EU Ambassadors will revert to the oil price cap discussion this afternoon in an attempt to agree on legislation for it today, according to WSJ’s Norman’s understanding.
• For metals, spot gold and silver are diverging modestly but remain in close proximity to the unchanged mark as sentiment struggles for clear direction alongside a gradual pick-up in the USD, with base metals pressured by China’s latest crackdown measures.

FX

• Kiwi flies as RBNZ lives up to hawkish hype, and more, NZD/USD eyes 0.6200 and AUD/NZD cross breaches 1.0800 as Aussie lags vs Buck around 0.6650 in wake of weaker PMIs and more Chinese COVID contagion
• DXY clings to 107.00 ahead of packed US agenda on the eve of Thanksgiving, Euro faded from 1.0300+ against Greenback after post-EZ PMI pop, but may glean support from hefty option expiries
• Sterling underpinned around 1.1900 after better than forecast UK flash PMIs and Supreme Court rules against Scotland holding Independence vote independently
• Yen flags following flirt above 141.00 in Japanese holiday-impacted trade
• PBoC set USD/CNY mid-point at 7.1281 vs exp. 7.1307 (prev. 7.1667)

US Event Calendar

• 07:00: Nov. MBA Mortgage Applications 2.2%, prior 2.7%
• 08:30: Oct. Durable Goods Orders, est. 0.4%, prior 0.4%; – Less Transportation, est. 0%, prior -0.5%
  • Cap Goods Ship Nondef Ex Air, est. 0.1%, prior -0.5%
  • Cap Goods Orders Nondef Ex Air, est. 0%, prior -0.4%
• 08:30: Nov. Initial Jobless Claims, est. 225,000, prior 222,000
  • Continuing Claims, est. 1.52m, prior 1.51m
• 09:45: Nov. S&P Global US Manufacturing PM, est. 50.0, prior 50.4
  • Global US Services PMI, est. 48.0, prior 47.8
  • Global US Composite PMI, est. 48.0, prior 48.2
• 10:00: Nov. U. of Mich. Sentiment, est. 55.0, prior 54.7
  • U. of Mich. Current Conditions, est. 57.8, prior 57.8
  • U. of Mich. Expectations, est. 52.5, prior 52.7
  • U. of Mich. 1 Yr Inflation, est. 5.1%, prior 5.1%
  • U. of Mich. 5-10 Yr Inflation, est. 3.0%, prior 3.0%
• 10:00: Oct. New Home Sales, est. 570,000, prior 603,000
  • New Home Sales MoM, est. -5.5%, prior -10.9%
• 14:00: Nov. FOMC Meeting Minutes

DB’s Jim Reid concludes the overnight wrap

Morning from a taxi on the way to the airport and to Frankfurt. Germany are playing their first World Cup game today so I’m not sure anyone will be at the event I’m presenting at! However at least i have an excuse if they are not. Shame I’m not off to Saudi Arabia as they have declared today a national holiday after the shock defeat of the team I have in the office sweepstake, namely Argentina!

Markets have been a bit more Saudi than Argentina over the last 24 hours, with bonds and equities moving higher despite the negative mood music that continues to overshadow markets. It perhaps hints at the technicals in the market that our equity strategists have repeatedly highlighted in recent weeks. See their updated thoughts here on how long the bear market rally might last.

In fact, not only did the Covid situation in China take a fresh turn for the worse yesterday, but we also had a fresh round of threats about a cut-off in the remaining flow of Russian gas to Europe. Both of these could have significant ramifications for the global economy more broadly, since China plays a critical role in supply chains that could have ramifications for global inflation in the event of further lockdowns, whilst Europe is already facing a critical energy situation this winter. Our German economics team did though acknowledge the improved outlook of late in a note here last night but they still believe a recession is baked in the sand with a notable real incomes squeeze. The flash PMIs today will be an important barometer in terms of how Europe is fairing.

When it comes to the latest developments in China, restrictions ramped up further yesterday against the backdrop of steadily rising case numbers. Shanghai said that new arrivals would not be allowed to enter public venues for the first five days, and would also be required to take three PCR tests within three days of their arrival. Meanwhile, Beijing said that residents would need a negative PCR test in the previous 48 hours to enter public venues and take buses, and Guangzhou said they would be extending Covid restrictions in parts of Haizhu district until the end of November 27. China-exposed stocks continued to struggle on the back of this. For instance, the NASDAQ’s Golden Dragon China index fell a further -1.43% yesterday, thus bringing its losses over the last 3 sessions to -7.77%, albeit +26.13% of the lows on October 24 after the reopening speculation started to build. That index contains US-listed stocks for whom most of their business is done in China, so offers a barometer of sentiment outside of trading hours in Asia. Overnight, Chinese equities themselves are trading in negative territory with the Shanghai Composite (-0.38%) and the CSI (-0.36%) edging lower as the daily Covid-19 infections continue to climb.

As we said yesterday it can be possible for China to tighten restrictions quite firmly in the near term but loosen them more sustainably by the spring. So its a difficult one to trade but I suspect what they do from spring onwards should be the most important.

Indeed, the negative developments in China failed to dampen risk appetite more broadly however, and the major equity indices climbed on both sides of the Atlantic. By the close of trade, the S&P 500 had advanced +1.36%, and Europe’s STOXX 600 even hit a 3-month high thanks to a +0.73% advance. To be fair in Europe, sentiment was boosted by some better-than-expected consumer confidence data, with the European Commission’s number for the Euro Area hitting a 5-month high of -23.9 (vs. -26.0 expected). Oil prices also benefited from the risk-on moves, with Brent crude (+1.03%) ending a run of 4 consecutive declines to close at $88.35/bbl. It dipped to $82 late on Monday as OPEC+ cuts were speculated upon before a subsequent Saudi denial.

Speaking of energy, the European Commission outlined their proposals for an emergency break on natural gas prices yesterday. But the cap was set at €275 per megawatt-hour (more than twice the current level), and would only come into force if futures on the front-month TTF exceed that for two weeks, and if TTF prices are also €58 higher than the LNG reference price for 10 consecutive trading days in the last two weeks. So even during the summer spike when gas prices peaked above the €275 level, the cap wouldn’t have come into force since prices didn’t remain there for two weeks. The measures still require approval from EU member states, and EU energy ministers are set to discuss the proposal in Brussels tomorrow.

Those proposals from the EU came as Gazprom threatened to cut gas flows to Europe via Ukraine yesterday, with Gazprom saying that Ukraine had taken gas that was meant for Moldova. In response, they warned they may limit volumes from November 28 based on the amount of gas not getting to Moldova. But the concern for the rest of Europe will be that previous threats from Russia to reduce volumes by a small amount end up resulting in much larger reductions, and this could be the start of a total shutdown that cuts off the last remaining pipeline to western Europe. In response, natural gas futures ended the day up by +7.21% at €124 per megawatt-hour, marking their third consecutive daily increase.

Adding to the downbeat backdrop, the US 2s10s curve pressed deeper into inversion territory for an 8th consecutive session yesterday, hitting a post-1981 low of -76.27bps. That trend wasn’t just confined to the US however, with the German 2s10s curve similarly hitting a post-2009 low of -13.8bps. That came as policymakers continued to strike a firm tone on the need to rein inflation back in, with Cleveland Fed President Mester saying that “restoring price stability remains the number one focus of the FOMC”. The November FOMC Minutes are due today. The big takeaway from the meeting was that the Fed was ready to break their streak of +75bp hikes by stepping down to a +50bp hike in December, a message well-received by the market in subsequent weeks, with +52.0bps now priced for the December meeting. While stale in that regard, the Chair also paired the stepdown to +50bp hikes with a higher terminal rate, so we’ll be looking for any indication that the rest of the Committee agrees, and if so, how much higher terminal may need to go to restrict financial conditions adequately.

Over in Europe, the debate also continued on whether the ECB should raise rates by 50bps or 75bps as well. Austria’s Holzmann echoed his hawkish remarks from the previous day, saying that he was in favour of a 75bps hike based on the current data. But Bundesbank President Nagel said “it would be too hasty to commit to how big the next rate hike could be”. Finally, Lithuania’s Simkus said that “50 basis points is a must”, and that since “we still see very strong inflation pressures and we need to dampen them as soon as possible to prevent a de-anchoring of inflation expectations. 75 is also possible.” By the close of trade, yields on 10yr Treasuries (-7.1bps), bunds (-1.3bps) and OATs (-1.5bps) had all moved lower.

Outside of China, Asian equity markets are mostly trading higher this morning following the overnight rally on Wall Street. As I type, the Hang Seng (+0.42%) is trading higher, recovering from its earlier losses with the KOSPI (+0.46%) also in the green. Elsewhere, markets in Japan are closed for a holiday.US stock futures tied to the S&P 500 (-0.07%) are little changed.

A big surprise came from the Reserve Bank of New Zealand (RBNZ) as the central bank delivered a 75bps hike, its biggest rate hike on record as it struggles to contain rising inflation. The Monetary Policy Committee (MPC) increased the Official Cash Rate (OCR) from 3.5% to 4.25% while signalling further tightening ahead. At the same time, it also warned that economic growth will slow in the near-term due to the shock of rising interest rates and elevated inflation. Shortly after the decision, yields on the policy-sensitive 2yr bond moved sharply higher (+26 bps), trading at 4.58% with the 10yr yields briefing touching 4.27% before retracing back to 4.20% as we go to print.

Separately we have data from Australia showing that the preliminary PMI indices all weakened in November. The S&P Global manufacturing PMI dropped to 51.5 from the prior month’s level of 52.7 but more importantly the services sector PMI contracted further to a weak looking 47.2 following a level of 49.3 in October.

There wasn’t much data of note yesterday, although the Richmond Fed’s manufacturing index for November came in at -9 (vs. –8 expected). Otherwise, the OECD released their latest economic outlook, projecting global growth of just +2.2% in 2023 and +2.7% in 2024. If that +2.2% number is realised, that would make 2023 the third-worst year of the 21st century so far for global growth, behind only 2020 with the pandemic and 2009 with the GFC.

To the day ahead now, and the main data highlight will be the global flash PMIs for November, along with the US weekly initial jobless claims, preliminary durable goods orders for October, and new home sales for October. From central banks, we’ll get the minutes from the FOMC meeting earlier this month, and there’ll be remarks from ECB Vice President de Guindos, the ECB’s de Cos and Centeno, and BoE chief economist Pill. Finally, earnings releases include Deere & Company.

Oil prices fell overnight as the debacle of the Russian Oil Price Cap scheme continues in Europe.

The biggest news is that the EU ambassadors are considering setting the Russian oil price cap at between $65 and $70 (which is around the level Russian crude currently trades at).

“A $65-$70 price cap on Russian oil would not mean that much considering the discount Urals is currently selling at,” said Ole Hansen, head of commodities strategy at Saxo Bank.

“The market is struggling to make its mind up given the multiple uncertainties regarding supply and demand.”

Vitol CEO Russell Hardy said “I’m only imagining this, but it’s going to be a number that looks like $60,” adding that the cap will be set at a point where it “causes the minimum amount of disruption” because the market is still facing a difficult supply scenario, particularly in Europe Western banks, insurance companies won’t want to participate unless there’s absolute clarity that the sale price is below the cap.

Amid a US-holiday-week-driven illiquid market, crude prices tumbled with WTI falling back to a $78 handle (holding around the pre-OPEC-production-hike rumor plunge)…

Ironically, as Bloomberg’s Javier Blas reports, “Just days before the US and Europe impose fresh sanctions on Russian energy – supposedly the strongest thus far – Moscow has lifted its oil output to the highest level since its invasion of Ukraine.” It seems European buyers are desperate to fund Putin’s war before the sanctions hit.

Russia has already made it clear it will not take this lying down saying multiple times that it would not sell oil to countries with a price cap in place.

“In my opinion, this is utterly absurd. And this is an interference in the market mechanisms of such an important industry as oil,” said Deputy PM Alexander Novak, who represented Russia at OPEC+.

“Companies that impose a price cap will not be among the recipients of Russian oil,” a Kremlin spokesman said on Friday, adding “We simply will not cooperate with them on non-market principles.” 

Former US Treasury Secretary Steve Mnuchin panned the proposal to cap prices as “not only not feasible, I think it’s the most ridiculous idea I’ve ever heard.”

The chances of a G7 price cap on Russian oil being remotely effective are perhaps best summed up by a recent tweet from a Bloomberg energy and commodities columnist:  

“My friends and I have agreed to impose a price cap on our local pub’s beer. Mind we actually do not plan to drink any beer there. The pub’s owner says he won’t sell beer to anyone observing the cap, so other patrons, who drink a lot there, say they aren’t joining the cap. Success.”

What is of course the most ironic thing about this oil price cap is the simple fact that once again politicians can only think linearly and one-step ahead. In their efforts to punish Russia and make this scheme as bearish as possible for oil prices, they will inevitably drive the price dramatically higher as Russia pulls its exports from any nations that agree with the price cap (as they have explicitly warned).

Authored by Patrice Douglas via RealClearEnergy.org,

Our nation’s Strategic Petroleum Reserve (SPR) is running dangerously low. New statistics released indicate our national emergency oil stockpile, which is intended to protect the United States from unexpected and severe supply disruptions, has hit another historic low. It’s a dangerous point for the United States, and even worse, it’s self-inflicted. With these facts in mind, new reports indicate the Biden administration plans to sell oil from the Strategic Petroleum Reserve in an attempt to assuage fuel prices, which was on the forefront of the mind of voters in last week’s midterm elections.

According to new data released from the Energy Information Administration, our oil reserves stockpile is down to just 396 million barrels. The sharp drop, now down to its lowest level since April 1984, isn’t due to natural disasters, trade embargoes, or acts of God, but instead due to politics.

Congress established the SPR following OPEC’s 1973 decision to halt oil trading with the United States. This situation illustrated the vulnerability of being overly reliant on foreign producers to supply our energy needs. As a result, President Ford signed the Energy Policy and Conservation Act, which permitted the federal government to hold up to 1 billion barrels and disperse as necessary in cases of “severe energy supply disruptions.” 

President Biden has been using the SPR, which historically has been used in the wake of natural disasters like Hurricane Katrina or in times of war, as his personal political tool. Knowing high oil and gasoline prices may be a political liability to his party in the November midterms, President Biden has been withdrawing from the SPR to keep prices artificially low. Since being inaugurated in January 2021, President Biden has drained 230 million barrels of oil. That is the steepest drop in reserves by any president in U.S. history. 

Even needing to tap the SPR is an acknowledgment of the president’s hostile oil policies and how they have contributed to the imbalance between supply and demand. This imbalance has caused volatility in the oil markets, resulting in record-high gasoline prices over the summer. 

This concerning reality could have been avoided if President Biden had prioritized American energy production, specifically of crude oil and natural gas. Instead, his administration has championed harmful oil and gas policies that have handcuffed the energy sector. He canceled the Keystone XL pipeline, halted new drilling on federal lands, implemented regulatory hurdles, and raised taxes on energy companies. 

Moving forward, if the SPR is too depleted, we must have viable options to effectively respond to natural disasters and times of war. Unleashing American energy production, not draining our own emergency supply, is the lasting solution to stabilizing prices at the pump and protecting national security. Still, oil production is far short of where it was prior to the pandemic. In 2019, the U.S. Energy Information Administration calculated that we produced roughly 12.3 million barrels per day, but in 2021, we produced roughly a million fewer barrels than that period. 

Despite the ongoing energy crisis, and with gas prices beginning to creep back up to an average of $4 per gallon, this president is unwilling to encourage more oil from U.S. producers. The White House and Department of Energy signaled all options are on the table to stabilize prices and now they’re pivoting back to tapping the SPR again. In mid-October, the Biden administration announced it will withdraw another 15 million barrels over the next few weeks to lower prices before the midterm elections.

Now, nearly 50 years after an OPEC decision spurred the creation of the SPR, the U.S. is once again facing the consequences of allowing our energy supply to be reliant on the OPEC cartel. In October, OPEC+ announced their intention to slash oil production by 2 million barrels of oil per day. This massive cut will have sharp consequences for Americans – pushing high energy costs even higher. President Biden is running out of ineffective solutions now that he has depleted the SPR to a dangerous low. Instead of utilizing our robust resources at home, President Biden is looking abroad, and even to hostile nations, for answers. In fact, recent reports have revealed that the White House is in talks with Venezuela. 

High gas prices are a real national concern, and steps must be taken to lower energy costs for Americans. But playing politics with a national security asset is not the way to address the problem.

We need a real long-term strategy to keep both energy prices affordable and our country’s oil reserves fully stocked. We can accomplish this through building more pipelines, reducing regulatory burdens, reforming our permitting laws, and supporting energy producers. 

On Wednesday, unrest broke out at Foxconn’s massive iPhone factory in Zhengzhou, central China, reported Bloomberg. Videos on social media showed hundreds of workers, if not more, clashing with security personnel after a month of strict Covid restrictions. 

Manufacturer Foxconn confirmed the outbreak of “violence” and said it would work with local authorities to quell further violence. It released a statement that said workers were furious about pay and living conditions. 

“Regarding any violence, the company will continue to communicate with employees and the government to prevent similar incidents from happening again,” the world’s largest producer of iPhones wrote in a statement. 

As Covid infections increased across Zhengzhou and iPhone factory, Foxconn adopted a “closed loop” system for employees in October. Workers were forced to live on campus and were prohibited from physical contact with the outside world – including family members.

Then by late October, strict Covid restrictions for workers sparked minor unrest at the facilities of about 200,000 workers — all were banned from eating in public and forced to eat meals back at their dorms. 

By early November, while Beijing ramped up its zero Covid policy by locking down the surrounding metro area — workers began to flee the factory. 

Now in videos posted on Weibo and Twitter that AFP and Reuters have verified, all hell appears to have broken out as hundreds of workers clash with security guards and people in hazmat suits. 

Violent #protests erupt at #Apple‘s Main #iPhone Plant ( #Foxconn ) in #China ……Staff clash with security as tensions boil over in #Zhengzhou pic.twitter.com/xUjvhSz5sX

— Smriti Sharma (@SmritiSharma_) November 23, 2022

At #Foxconn, #Zhengzhou City, #CCPChina, newly recruited workers break out of the #iPhone city after they found they have to live and work together with veterans who might have #Covid. The terms of their contracts were not the same as they were promised, social media post says. pic.twitter.com/QTtBpLpVUD

— Jennifer Zeng 曾錚 (@jenniferzeng97) November 23, 2022

China: Workers inside Foxconn iPhone plant protest. Earlier, the workers were locked inside the plant as part of COVID measures. pic.twitter.com/35T5l6iVmi

— Annu Kaushik (@AnnuKaushik253) November 23, 2022 Annu Kaushik (@AnnuKaushik253) November 23, 2022

A worker who resisted is said to be surrounded by security guards at the Foxconn plant in Zhengzhou (China’s iPhone factory).#TheGreatTranslationMovement pic.twitter.com/lBbRuJQEoS

— The Great Translation Movement 大翻译运动官方推号 (@TGTM_Official) November 23, 2022

According to Reuters, delayed bonus payments triggered Wednesday’s protest. Workers were heard chanting, “Give us our pay!”

China: Protests break out at Foxconn’s largest iPhone factory in Zhengzhou over tight Covid restrictions

Live Updates: https://t.co/9F4fILNLBT pic.twitter.com/R4q9ga0kqF

— Economic Times (@EconomicTimes) November 23, 2022

Escalating unrest at the factory added new uncertainties for iPhone production. Weeks ago, Apple said it had reduced iPhone 14 production because of the Covid restrictions at the plant. The latest round of unrest could dramatically impact output. 

A source told Reuters that Foxconn would be unable to achieve production targets. They said much of the unrest is centered around recruits hired to replace a gap in the workforce. 

“Originally, we were trying to see if the new recruits could go online by the end of November. But with the unrest, it’s certain that we can’t resume normal production by the month-end.”

Wednesday’s protest underscores how President Xi Jinping’s zero Covid policy that requires factories like the iPhone one in Zhengzhou to operate as “closed loops” can backfire. 

“It’s really a mess,” Barry Naughton, a professor at the University of California San Diego who specializes in Chinese economics, told Bloomberg. “They’ve created a situation where the local decision-makers are under intolerable pressure,” he said. 

Besides backfiring zero Covid policies, mounting trade conflicts and geopolitical tensions have forced Apple to review its global supply chain, primarily centered in China. Some iPhone 14 production has been shifted to India as Apple begins to diversify away from China.

Authored by Alexander Zhang via The Epoch Times,

The UK economy will contract more than any other G-7 nation next year, according to the latest forecasts from the Organisation for Economic Cooperation and Development (OECD).

The OECD expects the UK economy to shrink by 0.4 percent in 2023 and grow by just 0.2 percent in 2024.

Germany is the only other G-7 country set to see a contraction in GDP next year, with a 0.3 percent drop, according to the report.

Italy will see only paltry growth of 0.2 percent, while the United States will eke out 0.5 percent expansion, with GDP set to rise by 0.6 percent in France, 1 percent in Canada, and 1.8 percent in Japan.

The UK is also the third-worst performing nation of all the G-20 countries worldwide, with only Russia and Sweden seeing a bigger decline in GDP, at 5.6 percent and 0.6 percent.

‘Untargeted’ Energy Support

The OECD blamed the predicted downturn partly on the UK government’s energy support scheme, which caps average household energy bills at around £2,500 ($2,960) until April.

Under the energy price guarantee introduced by then-Prime Minister Liz Truss, the cap—limiting the price companies can charge customers per unit of energy they use—was to have lasted for two years from Oct. 1.

But after Jeremy Hunt replaced Kwasi Kwarteng as chancellor of the Exchequer, he announced that it would end at its current level after six months, after which more targeted help would be provided to the most vulnerable.

In his autumn budget, unveiled on Nov. 17, he announced that the energy price guarantee will continue for a further 12 months from April, but will rise from the current £2,500 to £3,000 ($3,560) per year for the average household.

The OECD report said the support package will push up inflation, forcing policymakers to raise interest rates further as they try to rein in price and wage rises.

It said: “The untargeted Energy Price Guarantee announced in September 2022 by the government will increase pressure on already high inflation in the short term, requiring monetary policy to tighten more and raising debt service costs.

“Better targeting of measures to cushion the impact of high energy prices would lower the budgetary cost, better-preserve incentives to save energy, and reduce the pressure on demand at a time of high inflation.”

A woman selects fruits at a supermarket in London, on Nov. 17, 2021. (Frank Augstein, File/AP Photo)

Risks ‘Considerable’

The OECD said UK inflation—which hit a 41-year high of 11.1 percent in October—will likely peak at the end of this year and remain above 9 percent into early 2023, before slowing to 4.5 percent by next year-end and to 2.7 percent by the end of 2024.

The report sees UK interest rates rising further from 3 percent currently to 4.5 percent by April 2023, while unemployment will lift from 3.6 to 5 percent by the end of 2024.

On Britain’s outlook, the OECD cautioned: “Risks to the outlook are considerable and tilted towards the downside. Higher-than-expected goods and energy prices could weigh on consumption and further depress growth.

“A prolonged period of acute labour shortages could force firms into a more permanent reduction in their operating capacity or push up wage inflation further.”

But it said households may choose to return to the jobs market to help boost stretched finances.

“While households may seek to boost their real income by striking for stronger wage increases, they may also increase their labour supply either by returning from inactivity or by increasing working hours, which would be an upside risk,” the report stated.

‘Tory Failures’

When asked for Prime Minister Rishi Sunak’s response to the OECD, his official spokesman said, “These are challenges that are affecting different countries at slightly different times.”

On the criticism over the energy support package, he added, “We’re taking a different approach post-April to the energy support, targeting it towards the most vulnerable.”

The main opposition Labour Party blamed the dismal outlook on the Conservative government’s economic management.

Shadow Exchequer Secretary to the Treasury Abena Oppong-Asare said it was a “direct result of 12 years of Tory failures on both our energy and our economic security.”

“They’ve failed to secure our economy and get it growing which has left us exposed to any external shocks,” she said.

Recession

The Office for Budget Responsibility (OBR) confirmed on Nov. 17 that Britain was officially in recession and that the previous eight years’ growth would be wiped out.

The OBR, in its assessment of the UK economy, said: “Rising prices erode real wages and reduce living standards by seven percent in total over the two financial years to 2023–24 (wiping out the previous eight years’ growth), despite over £100 billion of additional government support.

“The squeeze on real incomes, rise in interest rates, and fall in house prices all weigh on consumption and investment, tipping the economy into a recession lasting just over a year from the third quarter of 2022, with a peak-to-trough fall in GDP of two percent.”

The OBR also predicted unemployment would rise to 4.9 percent in the third quarter of 2024.

The head of Twitter’s France office announced he’s leaving the company ahead of more potential layoffs at the recently-acquired social media platform.

Damien Viel, who led Twitter France for around seven years, announced in a Sunday tweet that he would be leaving.

“It’s over. Pride, honor and mission accomplished,” Viel tweeted, apparently unaware of what “mission accomplished” means. “Thank you all for these 7 incredible years.”

C’est fini 🫡 Fierté, honneur et mission accomplie. Au revoir #twitterfrance 🇫🇷. Quelle aventure ! Quelle equipe ! Quelles rencontres ! Merci à tous pour ces 7 années incroyables et intenses💙. #workhardplayhard #OCaptainMyCaptain #LoveWhereYouWorked

— damien viel (@damienviel) November 20, 2022

As Bloomberg notes;

A number of workers at the Paris office, which had fewer than 50 employees before billionaire Elon Musk took over last month, are focused on advertiser relationships.

Musk, who’s already slashed Twitter’s workforce in half in sweeping job cuts that included much of the company’s management, is considering additional layoffs to begin as soon as Monday. They’ll likely focus on the sales and partnerships side of the business, people familiar with the matter have said.

Viel’s departure follows mass layoffs of around 3,700 jobs, which was then followed by a company-wide email from new boss Elon Musk requiring employees to opt in to a “hardcore” work environment, or take a pay cut.

By Tsvetana Paraskova of OilPrice.com

Surging tanker rates are weighing on the crude trade two weeks ahead of the biggest uncertainty for physical oil flows this year—the EU embargo on Russian crude oil imports and the associated price cap on Russian oil.

On Monday, the earnings on the benchmark key crude oil trading route hit $100,000 per day, according to Bloomberg’s estimates. That’s the highest crude oil tanker rate since the beginning of 2020, just before Covid sapped global oil demand.

The much higher cost of shipping crude this year is the result of the longer voyages many tankers are now making because of the EU sanctions on Russian exports. Russia’s oil cargoes from the Baltic ports in Russia are now traveling months on a return trip to Asia – now Moscow’s key export market – instead of just a week from a Russian Baltic port to Rotterdam in the Netherlands 

Falling premiums on spot prices for various crudes, however, could offset some of the high shipping costs, traders told Bloomberg.

The surge in freight rates adds an additional layer of uncertainty for crude oil buyers, on top of the EU embargo and price cap set to enter into force on December 5. After that date, Russian oil will have to be sold at or below a certain price – yet to be announced – otherwise the cargo will not be able to use Western maritime transportation services, including financing and insurance.

Some analysts say that there aren’t enough non-Western tankers available to carry the current volumes of Russian oil to markets. Yet, other analysts note increased vessel-buying from unknown entities in recent weeks in preparation for what they believe is Russia’s copycatting the oil export tactics of Iran and Venezuela, which have been exporting their crude under the radar for years now after the U.S. sanctioned their oil exports in 2018 and 2019, respectively.   

Europe is facing a mounting diesel crisis as a strike at one of the largest refineries on the continent begins, reported Bloomberg. The combination of a labor action – depleted crude product stockpiles – and the EU preparing to choke off Russian supplies might be a toxic cocktail for the EU and could worsen the energy crisis. 

Dutch unions appear to have stopped the restart of production units at BP Plc’s refinery in Rotterdam after a technical issue brought fuel production to a standstill last week. The refinery processes 400,000 barrels of oil annually and is a top supplier of diesel to Northern Europe.

A spokesperson for one of the unions, CNV Vakmensen, told Bloomberg that workers wouldn’t restart production unless a pay dispute is resolved.

BP has indicated that it plans to restart the refinery early this week.  

“We will help resolve the problems until the facilities are ready to be restarted, and then we’ll stop, that’s our intention,” Jaap Bosma of the CNV union told Reuters on Monday.

European refinery outages are closely monitored after strikes in France led to a severe tightening in the continent’s diesel supplies. Supply woes come as the EU plans to cease Russian diesel imports. 

Last week, BP workers started a work-to-rule action but called it off following a technical issue at the facility that hindered production. The unions previously gave BP a Nov. 23 deadline to resolve pay disputes.

Labor actions affecting one of the largest refineries on the energy-stricken continent come as global diesel markets are incredibly tight. 

According to Wood Mackenzie Ltd, stockpiles of fuel in northwest Europe may slide to record lows.

The strike at one of Europe’s biggest refineries comes weeks after strikes at refineries in France left more than 60% of the country’s refining capacity offline while gas stations in and around Paris and in the northern part of the country began to run out of fuel.   

A delay in the BP Rotterdam refinery restart also comes as Europe is scrambling for diesel supply and stocking up on Russian diesel while it still can. Europe has hiked its diesel imports from Russia this month as the EU embargo on imports of Russian oil products starting on February 5 draws closer, oil flow analytics showed. 

As the EU embargo on imports of Russian diesel enters into force, “The competition for non-Russian diesel barrels will be fierce, with EU countries having to bid cargoes from the US, Middle East and India away from their traditional buyers,” the International Energy Agency (IEA) said in its Oil Market Report for November.

The disappearing supply leaves Europe vulnerable this winter as the continent’s refining capacity has been falling recently. There’s also a diesel crunch in the US.