Coinbase and Google partner up.

• The BOE ramps up its emergency bond buying.

• More gloom from the IMF as it cuts growth projections.

• The dash to lock in winter energy supplies pf LNG has sent the cost of chartering a ship to transport fuel to a record $397,500 per day, according to Spark Commodities.

• Coinbase and Google partner up.

• "The worst is yet to come," the IMF warns.

• Credit Suisse faces a US tax probe. Again.

• Trouble mounts for chipmakers.

• Andrew Bailey urged investors to finish winding up positions that they can't maintain as the BOE will halt its intervention on Friday.

• Indian inflation probably climbed to 7.37% year on year in September from 7% in August. Industrial output is seen falling to 1.7%.

• The pound is whipsawed by conflicting signals over the Bank of England's plans.

• The EU may agree a price cap on some gas payments.

• Intel set to cut thousands of jobs.

• China shows off its big missiles.

• Pound rallies as FT says BOE may extend bond-buys. (conflicting with BoE earlier comments)

Many crypto investors are switching to traditional asset classes. Terra`s destruction and high volatility in markets, including fx, and an increase in bond yields are attracting investors to move out of crypto as it endures a crypto winter.

Market upheaval will prevail for the rest of this year as investors continue to try and convince themselves things are not that bad and will not get worse. It does not help when Biden suggests there will not be a recession in the U.S! As I have been posting for some time now; this is exactly what I expect as I believe it is necessary for central banks to trigger a recession to reset the economy and bring inflation down.

It seems the Saudis will pay a price for cutting oil supplies, with the U.S already looking at tearing up trade deals and other options to punish them.

Global News

As much as investors don’t want to admit it, the stock market plunge has a way to go.

· Don’t be surprised if the S&P 500 loses another fifth of its value—that’s at least what Jamie Dimon said in a CNBC interview.

· If he’s right, it would mean the decline would leave the S&P 500 39% below its January high.

· Yet investors seem to be thinking stocks are nearing the bottom as they pour money into US equities—a near record last week for BofA clients.

· An overly enthusiastic teenager is what you should think about when you see the market. And Powell: the disciplinary parent. (More on that in Opinion below.)

· Those disciplinary rate hikes are slamming the brakes on growth, Mohamed El-Erian said, adding that its aggressive tightening won’t only damage the US economy, but that of the world.

· And the IMF agrees. The group cut its forecast for global growth next year to 2.7% from 2.9% seen in July and 3.8% in January. BB

The IMF warned of a worsening outlook for the global economy, highlighting that efforts to manage the highest inflation in decades may add to the damage from the war in Ukraine and China's slowdown. It cut its forecast for global growth next year to 2.7%, from 2.9% seen in July, but said there's a 25% probability growth will slow to less than 2%. Euro-area GDP will rise just 0.5% in 2023.BB

Will history repeat itself? As the Fed rate-hike saga continues, Businessweek looked back at the runaway inflation in the late 70s and early 80s and the man tasked to deal with it: Paul Volcker. The former Fed chair relentlessly tried to curb price growth, which climbed to 13% in 1980. His actions enraged just about everyone, with Volcker eventually requiring a bodyguard because the threats got so serious. Volcker doesn’t regret a thing—nor does he see a better path forward for Jerome Powell. BB

China's new yuan loan increased by CNY2.47 trillion in September, almost double the amount in August. At the same time, total social financing jumped to CNY3.53 trillion in the month from CNY 2.43 trillion in August.

This faster-than-expected loan growth in China is quite surprising as loan demand should have weakened, even though the economy has picked up slightly from more relaxed Covid measures. But there are very few details from the central bank on where the loans went. 

One thing of note is that among all the items in total social financing, government bond net issuance jumped by more than CNY5 trillion in just one month. As reported by the central bank, the net increase in government bond issuance was only CNY 399.8 billion in July and CNY304.5 billion in August, and for the whole of the third quarter the net issuance of government bonds increased to CNY5.91 trillion. So, the net issuance of government bonds increased by CNY5.81 trillion alone in September. ING

The BOE was again forced to expand measures to tackle chaos in the bond market, adding inflation-linked debt to its purchases in a bid to stop "fire sale dynamics" that risk UK financial stability.

· Yep, they really said that. The move comes after a rout that saw linker yields surge the most on record and is the first time it has bought the securities. ING likened it to "gilt selloff whack-a-mole."

• It did help. Benchmark gilts snapped their four-day losing streak and the pound stabilized. But JPMorgan warned the recent turmoil may leave a "permanent scar" on the nation’s debt market and pension funds called for more.

• Adding to the government's woes: labor shortages. UK unemployment unexpectedly fell to the lowest since 1974 as people dropped out of the workforce at a record rate. BB

A string of warnings on chip demand from the likes of Micron and Samsung is forcing analysts to slash profit forecasts at the fastest pace since 2008.

· Expectations have fallen 16% in the past three months, and Citigroup sees more pain coming, with the Philadelphia Semiconductor Index falling further.

· US-China tensions are adding to the industry's woes.BB

The CFA pass rate is getting even lower. In August, 40% of candidates passed the Level II exam, down from 44% in February. It's also below the 10-year average success rate of roughly 45%. Covid disruptions continue to impact some test takers. (We provide courses from industry experts to assist with this and many other exams. Contact [email protected]))

The UK will cap the revenue of renewable and nuclear power producers from next year, a move the government says will lead to consumers paying a fairer price for clean electricity supplies.

· The temporary intervention—dubbed a cost-plus-revenue limit—will apply from the start of 2023. Legislation will be introduced today to enact the measures.

· The plan will impact some of the country's biggest renewable power companies, and is designed to stop producers making windfall profits as high gas prices dictate the cost of electricity. BB

Cutting back. Intel is cutting thousands of job among its more-than 113,000 staff to lower costs amid a sputtering PC market, people familiar said. Some divisions, including sales, could see a 20% headcount reduction and the layoffs may be announced this month. BB

Rome’s Recession | Giorgia Meloni’s euphoria at winning the Italian election is running into reality as the far-right leader struggles to forge a coalition government. Italy risks entering a recession in the coming quarters as the gas-dependent country struggles with the energy crisis, the IMF said. The Washington-based Fund forecast yesterday that the Italian economy will contract by 0.2% next year, one of only two euro members seen shrinking, alongside Germany. BB

Commodities

France orders some fuel staff back to work to tackle refineries strike - The French government on Tuesday said it would requisition staff at some petrol depots as it battles to secure petrol supplies following weeks-long strikes, putting it on a collision course with the hard line CGT union as social tensions rise. After shying away at first from interfering in labour disputes pitting the hard line CGT union against oil majors TotalEnergies and Exxon Mobil, the government on Tuesday tried to win back control of the situation, as the first French regions needed to start rationing fuel. 

Atlantic basin diesel refining margins hit record as French strikes drag on - Diesel refining margins in both Europe and the United States have surged to all-time highs as strikes at French refineries exacerbate a global shortage of distillate fuels. Prices for diesel, heating oil and other refined products were already elevated after Russia's invasion of Ukraine and worldwide capacity to produce fuel reduced by the closure of numerous refineries over the last two years. 

Palm oil's widening discount to soyoil to boost fourth quarter demand - Global palm oil purchases are rising this quarter as buyers take advantage of the tropical oil's widening discount to rival soyoil which should entice price sensitive consumers and boost biofuel usage, according to senior industry officials. The highest discount in a decade would divert demand towards palm oil from soyoil and sunflower oil and help top producer Indonesia and Malaysia bring down stockpiles that were weighing on the benchmark futures.

Trade's luck with U.S. October corn, soy yields may put demand in focus - Grain analysts are hoping to have properly anticipated the U.S. government's Wednesday crop report after completely miscalculating U.S. corn and soybean stocks and the U.S. wheat harvest in the last report less than two weeks ago. But the trade in October is usually on target for U.S. yields, meaning that revisions to demand may be the source of surprises in the U.S. Department of Agriculture's upcoming data.

Chile's copper miners seek transport alternatives due to crime wave - Chilean miners including state-owned Codelco will evaluate transportation alternatives after a key railway suspended transport of a major copper product due to growing theft in the country's main mining region, the state firm said on Tuesday. Chile is the world's top copper producer but a recent wave of robberies have undermined the logistics of bringing the valuable red metal to market.

Russian aluminium producer Rusal reshuffles sales team - Russia's Rusal has reshuffled its sales team, the giant aluminium producer said on Tuesday, signalling the intensifying fight to keep its sales book solid despite the effect of Western sanctions imposed on Moscow. Rusal, the world's largest aluminium producer outside China, has not been hit directly by the sanctions imposed on Moscow since it sent thousands of troops to Ukraine on Feb. 24.

Germans told to unite over energy crisis amid EU divisions - Germany can weather a winter gas shortage caused by Russia's war on Ukraine provided companies and households pull together, Chancellor Olaf Scholz said on Tuesday ahead of a meeting of EU ministers divided over the best response to the energy crisis. EU energy ministers will gather in Prague on Wednesday to seek progress on a price cap and other measures after Russia slashed its supplies that once covered about 40% of Europe's gas needs.

UK moves to cap revenues of low-carbon energy producers - Britain set out plans for a temporary revenue limit on low-carbon electricity generators on Tuesday, which the government said had the potential to save billions of pounds for consumers. The "Cost-Plus-Revenue Limit" forms part of a broader energy support package announced by the country's new Prime Minister Liz Truss last month that included a cap on the price of average household energy bills.

Russia considering abolishing grain export quota - Ifx cites deputy PM - Russia, the world's largest wheat exporter, is considering abolishing its grain export quota which it usually sets up in the second half of the July-June marketing season, the Interfax news agency reported, citing Russia's Deputy Prime Minister. Russia, which supplies its wheat to Africa and the Middle East, usually sets up grain export quotas for the period from mid-February and until the end of June to secure enough supply for the domestic needs.

Algeria buys about 400,000 to 480,000 tonnes wheat in tender - Algeria’s state grains agency OAIC has bought about 400,000 tonnes to 480,000 tonnes of milling wheat in an international tender which closed on Tuesday, European traders said in initial assessments. Initial purchases reported were around $380 to $384 a tonne cost and freight (c&f) included, they said.

Crypto/Digital

·  Google Cloud will allow select customers to use Coinbase Commerce to pay with cryptocurrencies and Google will use Coinbase Prime for its institutional crypto services. Developers will also be able to use Google’s public datasets, which will be powered by Coinbase’s cloud nodes.

· Coinbase will in turn use Google Cloud to process blockchain data and build its global data platform.

· It’s another big win for Coinbase. BlackRock announced August it would offer its institutional clients access to crypto through the exchange.

· The market seemed to like the news with investors sending shares of Coinbase up 4.7% on the day. 

Alexander Hamilton’s bank is taking its shot on crypto.  Bank of New York Mellon started receiving clients’ cryptocurrencies today after earlier this month receiving approval from New York’s financial regulator, “becoming the first large U.S. bank to safeguard digital assets alongside traditional investments on the same platform,” the Wall Street Journal reported.

The US Securities and Exchange Commission is investigating Yuga Labs, the creator of the popular Bored Ape Yacht Club collection of NFTs, over whether sales of its digital assets violate federal law. The SEC is examining whether certain nonfungible tokens from the Miami-based company are more akin to stocks and should follow the same disclosure rules.BB

After an abrupt end to the US housing boom, home flippers who were winning big just months ago are now racing to stem losses. The doubling of mortgage rates since January crushed buyer demand and depressed values in investors’ most favored locations. It’s also caused mortgage firms to start firing employees. BB

The US is speeding up shipment of two advanced air defense systems to Ukraine in response to pleas by President Volodymyr Zelenskiy for the West to supply more—and more advanced—weaponry in the fight against Russia. French President Emmanuel Macron responded to Russia’s latest attacks with a decision to strengthen his nation’s military presence in Eastern Europe. On Tuesday, Vladimir Putin launched another round of missile strikes on more than 20 localities across Ukraine, Kyiv said.BB

Market levels (all analysis is based on CME futures contracts)

DISCLAIMER.

The content of this daily newsletter should only be considered a guide and views, opinions or content contained in this email is provided solely for information purposes and does not constitute investment advice or a solicitation to trade or invest.

Chris Tubby

Senior Director Trading and Education

Symax Fintech